District general hospitals look to private income

In an in-depth briefing, HSJ has analysed information on trusts’ income from private patients, and their plans for the last financial year, as an indication of their intentions.

More than 70 non-specialist type trusts, of which there are around 130, had planned for private patient income to increase in 2012-13, compared with the previous year.

In many cases the planned increases were small, but others saw a potential for large increases. They included Buckinghamshire Healthcare Trust, which wanted to move from an income of £1.12m in 2011-12 to one of £1.56m, and East Sussex Healthcare Trust, which planned an increase from £2.68m to £3.51m.

HSJ has found that while the market for private patients in the NHS is dominated by tertiary and specialist trusts, mainly in London, there has been renewed interest from district general hospitals in recent years. This may be due to the squeeze on NHS funding or a reaction to the government lifting the cap on private income, which was announced in 2010 and made law in the Health Act 2012.

Trusts are taking a variety of approaches, in addition to routine private patient healthcare units. Some have tendered for independent firms to develop and run a private unit on their premises; some have ventured into cosmetic services. One example of the latter is Rotherham Foundation Trust, which is offering treatments including “paid for hair removal delivered by NHS professionals”.

Surrey and Sussex Healthcare Trust has recently opened 11 amenity beds for enhanced “hotel” facilities for patients at a cost of £250 a night, but with NHS treatment.

Trusts that have indicated plans to invest in private facilities in 2012-13 include Derby Hospitals, Countess of Chester Hospitals, and Milton Keynes Hospital foundation trusts. Industry experts told HSJ they believed there was potential for district general hospitals to increase profit from private patients. However, they also identified significant pitfalls and challenges; indeed there are already some examples of trusts appearing to face problems.

At Maidstone and Tunbridge Wells Trust a private patient unit opened in 2011, with the trust expressing hope it would capture up to a third of the area’s £30m annual private healthcare spend. In November, the trust’s chief executive said it was making a “positive contribution” financially, but that early targets for the unit may have been over-optimistic. Board papers show the project was red rated and the trust has developed a “recovery plan” for it.

The trust told HSJ the unit delivered £714,000 profit in 2012-13 and said: “We see no reason why this shouldn’t grow, given the quality of the service and positive feedback from patients. The Wells Suite makes careful use of spare capacity, while generating additional income for NHS patient care.”

The main challenges for trusts include the fact that overall demand for private care is not growing, and trusts may not be able to win business from insurers, who already have arrangements with existing providers.

Low waiting times and, in many cases, improved hotel facilities – such as single rooms with en suite facilities – in NHS hospitals, remain a disincentive for private individuals to pay for care themselves. In addition, there is stiff competition from both private hospitals and other, perhaps better known, NHS trusts – especially for those close to London. Finally, consultants often have established working relationships with private hospitals and may be reluctant to bring work to their NHS employer, even though that may seem to be an easier option.

Trusts require expertise and specialist knowledge to plan for, and run, units well, and to identify what private patients are looking for.

Gareth Thomas, the Labour MP to whom information on trusts’ private income plans were released under freedom of information rules, said the “huge expected rise in income from private patients” was “a further sign of an underfunded NHS”. He said it risked creating a “two tier service”.