"The NHS will last as long as there are folk left with the faith to fight for it"
Aneurin Bevan

Tuesday, 27 December 2011

Private Patient Income Cap

The private patient income (PPI) cap was imposed to limit the private income of NHS trusts. The cap includes the income from actual physical, in-the-flesh, patients, but it also includes income from other services like providing pathology or income from intellectual property. This cap is arbitrary, Foundation Trusts are limited to the percentage of their income that came from private work in 2003. In 2010/11 FTs generated £252m income from private patients, this is 1.1% of their total income of £26,867m. There are, however, a few FTs that make considerably more than this (as I outlined in my post earlier this year):

The Royal Marsden 30.7%
Royal Brompton and Harefield 14.4%
Moorfields Eye Hospital 13.7%
University College London Hospitals   6.6%
Papworth Hospital  6.1%
Guy's & St Thomas'  3.0%

The arbitrary nature of the PPI cap is unacceptable and needed fixing, but removing it entirely is not the solution. For a start, Intellectual Property should have been NHS IP and new techniques should have been used for all NHS patients, not just for those in the hospital that developed them. Then there is the fact that the cap does not distinguish between income from services provided by NHS hospitals for private hospitals and income from private patients. There is clearly a difference between the two, and I think that private patient numbers should be capped to prevent a two tier system, but the services  should be regulated but excluded from the income cap.
The Times, apparently have a leak that says that the PPI cap will be raised to a maximum of 49%. I guess this is a "compromise" by Lansley to his Lib Dem opponents. The original policy in the White Paper (and in the Bill) was to abolish the cap completely. A "cap" of 49% will, frankly, have the same effect as abolishing the cap.

This leak has lead to some quite hysterical comments. The Independent, for example, reports:
"It is expected to cause more friction within the coalition with a senior Liberal Democrat warning that it was part of an ideological drive that many in the party would oppose, the newspaper said. "
without realising that the 49% figure was Baroness Williams' idea! (Again, I explain this in an earlier post.)

It may be that the large London teaching hospitals (basically the hospitals listed above) will attract more foreign patients (but sufficient to get 49% of their income from private work?), but it is unlikely that your average bog standard district general hospital will be able to do that. In terms of private patients from England, the last few years has seen a fall in the number of people with private medical insurance (PMI), and a slight rise in the number of self-pay. Can it be possible that literally millions of people from England will choose to have private treatment in an NHS hospital either as self-pay or PMI? I mean, actually choose to pay?

Lansley says:

"If these hospitals earn additional income from private work that means there will be more money available to invest in NHS services."
which he knows to be nonsense.

I have had discussions with governors at my local FT on this subject and the more naive Conservatives take Lansley's line. The majority of governors are more wary. Incidentally, my local FT was founded in the 1850s as a workhouse with an infirmary; the workhouse has closed and the infirmary (ie the hospital) has taken over the workhouse site. The current management offices occupy what remains of the original workhouse buildings, I am sure there is an allegory there... The infirmary treated the poor through charitable funds. The suggestion that private patients will fund NHS patients (the rich paying for the treatment of the poor) is not a million miles from the original founding principles of this hospital: is this what we want?

However, those governors who naively believe Lansley's statement seem to ignore the fact that private patients will not want to be treated with the hoi poloi, they will not want to have the same accommodation, nor be subject to the same waiting times, and all of this means that the trust will have to make the investment to provide a separate private patient unit so that the private patients will be kept separate from the great unwashed. Parking is a perennial problem at this Foundation Trust, and the relatives of private patients will not want to suffer the same problems that relatives of NHS patients do to obtain a parking place, so the hospital will have to provide a separate car park for them. Where will the capital for all this investment come from? We know that the large London teaching hospitals have been able to get such investment using their international (NHS-funded) reputation, but your average district general hospital won't. I know that my local DGH FT needs a new NHS eye clinic, so if they can find the money for a private patient unit with its own private car park, why can't they find the capital for an NHS clinic? When the conversation gets to this point governors make it clear to the hospital management that private patients are just too costly.

The second issue is that, as mentioned above, private medical insurers have found that in the last few years they are getting less business and consequently they are trying to squeeze their providers. For example, BUPA have recently de-listed BMI because the private hospital chain would not cut their rates. Under these circumstances would PMI accept that the private patient units in an NHS hospital deliberately subsidises NHS patients? Would self-pay patients be happy to learn that a proportion of the fee they are paying will pay for a patient to get the same care for free? I think not, and especially not if self-pay patients have been denied NHS care themselves (which will become increasingly the case in the next few years). This brings me to another issue.

The meme that is going round Twitter at the moment is that there are 160,000 beds in NHS hospitals and that if the PPI cap is raised to 49% 80,000 beds will be occupied by private patients. There are currently 11,200 beds in private acute hospitals at the moment, so even if all of those patients decided to go to a NHS hospital instead there would still be a shortfall of almost 70,000. This is not 70,000 per year, this is 70,000 at any one time, and represents a huge number of patients.

Where will all these new patients come from? This leads me to clause 10 of the Bill. This clause says that the responsibility of making the decision about charging for NHS treatment will be removed from the Secretary of State and it will be handed to Clinical Commissioning Groups. There will be about 250 of these, so it is likely that at least one will decide that the NHS will not pay for common treatments like cataracts, hips and knees. Further, the NHS cuts that is causing the impending NHS financial crisis will lead to Draconian rationing. CCGs will literally tell patients that they are not yet in enough pain for the NHS to pay for their hip operation, or they are not blind enough for a cataract operation. Such patients, understandably, will look to their savings, or will cash in a life insurance policy, or raid their pension fund, indeed anything to find the money to pay for the operation they desperately need.

These are the patients who will become private patients in NHS hospitals (since NHS private rates will be cheaper than the private hospitals). This is how the NHS will be privatised. The irony is that two years prior those patients would have had the same treatment for free, and this free-at-the-point-of-use principle would have been preserved if they had voted differently at the 2010 election.


  1. "and this free-at-the-point-of-use principle would have been preserved if they had voted differently at the 2010 election."

    Except they weren't told of these plans at the GE, so unfair to blame them.

  2. Do you think demand for private treatment is sensitive to price? If it was surely more patients would go to Estonia, or India?

  3. I think the people of Britain who contribute to the funding of our health service ought to wake up and demand that ownership remains with the people and accountability remain with the secretary of state. The NHS is not free, we pay for it collectively, and now a few people are making huge decisions on it's future. Leave BUPA where it is and let it treat it's customers in BUPA hospitals, the rest of it feels like a cheap confidence trick to damage and seek profit from the NHS. people could examine how much how much has been paid to PFI initiatives to seek a clue as to where this is all going - it's marketisation by the back door.

  4. Great Blog. I've been asking this question (where are all the private patients to come from) for some time now.

    I'm trying to persuade anyone that will listen that the only way to save the NHS at this 11th hour is to get millions into Trafalagar Square every (day/week?) until they stop the bill!

  5. What about the point that those Trusts with a higher PPI cap are essentially in London which has a higher number of specialists per capita? Hence one of the most obvious consequences of raising the cap is just leading to more expensive healthcare.

  6. They've already been telling people that they are not in pain/not blind enough to have the relevant treatment yet. Yes, some folk may well find money to fund the operation themselves, but the relatives I have are made of sterner stuff and are continuing to live their lives in pain and discomfort until such time as they will be offered an operation. Also, look to the number of people who no longer have a Dentist? Many, many people will just lose out and give up as a result.

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