What's the fuss with the NHS cap on private income?

After a significant misinterpretation by the New Statesman, a lot of people got very concerned on Twitter about the potential for the rules on how much income NHS hospitals could make from private sources.

I feel this is a subject that is incredibly fraught with symbolism over substance, and wanted to just delve in to the realities of the cap, the law, current reality, and how it all ties together.

What is the cap?

There are rules over how NHS Foundation Trusts (FTs) operate. these FTs were created by Labour to enable a form of lessened state control, local staff and public were intended to drive the direction of their local NHS services. In return they get to keep any profits they make, can work with and are in essence in competition with other FTs.

It was privatisation of sorts, just without the (direct) commercial influence of a company running the board, and it started the whole ball rolling to where we are now.

To balance the extra freedoms they have to operate, a means of capping how much money these FTs can make from private patients was introduced. It's disparate and not necessarily "fair", in that it is whatever their income was in 2003. This means that some hospitals have much higher caps than others, but all under the currently proposed less than half of all income level (erroneously referred to as a 49% cap, but which I'll use as it's understood when talked about).

In fact the reality is that less than 1% of all money coming in to FTs this country is from private healthcare sources.

Side Note: NHS Trusts

The whole situation with the NHS is complex, FTs aren't the only providers of care, NHS Trusts that provide services in the more "traditional" structure are being essentially abolished with the new NHS reforms, the intent is to give patients more say and the only way the government (both the current and the last) sees that as being practical is by trusts becoming FTs.

Of course this is why you'll hear people claiming that the 49% cap is new, and that there was no cap for NHS Trusts before. Technically it's true, but it's a bit of a side point as they are being told to become the equivalent of foundation trusts, which means they would have been capped, albeit at an income level of lower than 49%...hence why this is still ultimately a rise on the potential income hospitals can make.

Reaching the cap?

It's no surprise, when looking at the FTs figures, that analysts and those in the sector aren't actually too bothered about this cap; in the short to medium term at least there is little chance of foundation trusts reaching the 49% cap anyway.

With only a handful of hospitals having significant income from private sources, it is inconceivable that all NHS hospitals will suddenly be putting NHS patients second to a vastly increased private constituent, in only as the rate of rise would be completely out of step with the amount of private money circulating (the amount FTs took from private patients DROPPED compared to 2010/11, presumably due to recessional forces).

The reality is that the law as set out isn't about capping anything, given there is no need for most FTs to have such a high cap anyway, it's about symbolically enshrining in law that hospitals are primarily there to provide services for NHS patients, not for private ones.

This doesn't mean less beds for those using the NHS

One way that opponents of the raising of the cap put their case is that they make grand claims about resources being requisitioned for private patients, meaning they won't be there for normal NHS patients. Some go as far as to claim (as Polly Toynbee tried) that it means that half the beds could be reserved for private patients.

The reality is that if we look at those FTs generating a lot of income from private sources, it's through infrastructural investment and partnerships that involve new technologies and better facilities being developed for the express purpose of bringing private patients in from outside the area, not only from within the UK but from around the world. Some people just want to have the opportunity to pay for what they see as the best specialist services in the country, even if they wouldn't usually be able to on the NHS (or at all, because they are international patients).

The result of this is money coming in from wealthy sources to provide profits for an FT that can be reinvested in NHS services, while at the same time having newer, better facilities on site that NHS patients can also be using to the improvement of their health. Indeed by allowing partnerships with private hospitals (and to , and therefore being able to provide a "better" experience for private patients (through finding them a space, and thus a shorter waiting time, with the partnered institution), the side effect is more capacity to deal with non-private patients at NHS facilities.

Of course this causes it's own issues, with it being clear that cashflow will largely pool in London and the South East, with little prospect for the North; indeed this is why the overall private patient income gained by FTs is so low despite those like Royal Marsden already commanding significant percentages of income from private sources.

The misplaced outrage over no cap

So if the 49% cap is symbolic, almost entirely unable to be reached, what is the problem with a removal of the cap? Opponents to the idea (and I must stress, I'm not in favour of a removal of the symbolism of the current law) claim that it would lead the the wholesale privatisation of the NHS, that normal patients would be put second.

I say this is rubbish.

For NHS FTs to generate 100% income from private sources it would have to also become a requirement in this country for everyone to take private insurance, and for hospitals to HAVE to generate it's income from private insurance. It would also require the current reform laws to change to allow hospitals to be selective over how they treat people, and what their duty is.

On the second point there, let me just reiterate what it says in the reform act...

(4) Monitor must exercise its functions with a view to enabling health care services
provided for the purposes of the NHS to be provided in an integrated way
where it considers that this would—
(a) improve the quality of those services (including the outcomes that are
achieved from their provision) or the efficiency of their provision,
(b) reduce inequalities between persons with respect to their ability to
access those services, or
(c) reduce inequalities between persons with respect to the outcomes
achieved for them by the provision of those services.

The same is said of the Secretary of State for health, of the Clinical Commissioning Groups and the board that monitors those CCGs. It is a core principle in the law that the NHS is not to introduce policies or to integrate in such ways that those without private health insurance see a widening gap between the quality and effectiveness they receive versus a private patient.

Even if this was not the case, until the law is changed to require people to take private insurance, ala the US of A, and that the state will NOT provide funding for patient care it is fundementally impossible for a 100% private income situation to be reached, and can we honestly see this happening given how vociferously opposed to these rather tame (in comparison) reforms has been?

While people look at the removal of the cap as something that means privatisation, I just can't see it adding up to that. Those who complain about the idea of a FT making 50% of it's income from private sources completely ignore that this could be achieved without reducing the level of income from non-private care. In essence hospitals could DOUBLE their income from current levels, provide no worse care for NHS patients, and hit that 50% income level from their private patients.

Is this really a problem, assuming that all the various levels in the new structure of the NHS do their job and ensure that hospitals adhere to the principles of increasing quality and effectiveness of care for NHS patients, and a commitment to reduce inequality between patients on the issue of ability to pay? I'd say that in practice, it is not.