Predicted rise in trusts’ income from private patients fails to materialise

BMJ 2018; 360 doi: (Published 12 March 2018) Cite this as: BMJ 2018;360:k1159
  1. Nigel Hawkes
  1. London

Private patients remain a very small proportion of all patients treated by NHS hospitals, in spite of legislation in 2012 that opened the door to increased private income.

Critics of Andrew Lansley’s Health and Social Care Act 2012 said that raising the amount a hospital could earn from 2% to 49% of total earnings would lead to a flood of private patients to the detriment of the NHS. But the study, published by the Centre for Health and the Public Interest, found that this income increased by 16% in cash terms (12% in real terms) between 2012-13 and 2015-16.1

As a proportion of completed treatments, private patients rose from 0.49% to 0.5% over the same period. The proportion was actually higher as long ago as 2009-10, at 0.61%. There were also slightly fewer beds in private patient units in 2016 (1142) than in 2013 (1155).

Income from private patients rose from £511m (€575m; $708m) to £596m over the four year period studied, but in a few cases costs rose more quickly and hospitals admit to having made a loss, banishing hopes that this revenue stream could help hospitals survive hard times.

The most consistent loss maker was Frimley Health NHS Foundation Trust in Surrey, long celebrated as one of the best hospitals in the NHS in England and the first to be rated outstanding by the Care Quality Commission. In response to a freedom of information request, Frimley said that it had made losses on its private patient unit every year since 2010-11, amounting in total to £18m.

Many other trusts either did not reply, or claimed not to know if they had made a profit. Of 114 trusts that reported earning private income, 73 were unable to say if it was profitable, in most cases because spending went unrecorded.

London figures large among the high earners, with the Royal Marsden the top scorer. In 2015-16 it earned £83.1m, 27.6% of its income, from private patients. Great Ormond Street came second, with £47.9m (13.7%), and Imperial College Healthcare third, with £44.4m (5.3%). Moorfields Eye Hospital also ranked high, with £23m (12.6%).

Why any hospital should run a private patient unit at a loss remains unexplored in the report. But it does say that some clinicians interviewed thought having private patients added status to the hospital and enabled it to attract good staff.

Another puzzle is why hospitals make losses. This must be because they under price the services provided. The report finds there are a range of methods used, from taking the NHS tariff and adding a profit margin, to agreeing tariffs with insurance companies, or calculating costs and adding a margin. But more than a fifth of those who replied said they had no standard method. In some cases, hospitals with empty private beds may be in a weak position to negotiate prices with private medical insurers.

The report found only modest evidence that private patients damage NHS care. Some junior doctors said that taking notes on private patients is a chore, and suggested that they get better care from consultants if they have previously consulted them privately. But two nurses who were interviewed said they had seen no evidence of this.

A theoretical danger is that patients who see consultants privately and then switch to NHS care jump the queue, though if they do it is against the rules. Beds set aside for private patients increase occupancy rates in NHS beds, which at peak times could be dangerous. However, it is also the case that some hospitals close their private beds during winter to avoid this issue arising.

The report’s author, Sarah Walpole, a registrar, said: “The recent winter hospital beds crisis has brought this sharply into focus. Around 1140 beds are currently set aside across some 90 NHS hospitals for private patients. Could they have made a difference to the many patients waiting hours for treatment in recent months, had they been available for NHS care?

“Given that the resources that are being devoted to private patients are significant, in terms of beds and staff, and that NHS income from private patients is predicted to grow by 6% a year till 2020, it is important to determine whether treating private patients represents a net financial gain for the NHS.”


View Abstract

Log in

Log in through your institution


* For online subscription