05 October 2007
Great Ormond Street hospital has gone public on its intention to establish a trading charity to circumvent the cap on private patient income for NHS foundation trusts.
The 2003 Health Act capped the percentage of income an NHS foundation trust could gain from private patients at 2003 levels. But trusts have discovered that as long as private income is channelled through a separate entity, it will not be consolidated into their accounts and will therefore not count against the cap.
'We need to find a legal, open, fair and sound solution to our international patient issue,' said Great Ormond Street chief executive Jane Collins. 'We want to become a foundation trust… However, the private patient cap would require us to limit our international income. At a time of financial pressure, this would have a significant effect on our financial stability.'
Private patients account for over 12% of Great Ormond Street's income – around £25m a year. But its cap would be 9%, which would imply an £8m revenue cut when the hospital gains foundation trust status in 2008.
The hospital has therefore published plans to transfer its private patient work to a new, legally distinct, charitable company to which the trust will formally sell its clinical services. The charity will then donate any surplus to the hospital for NHS services.
Earlier this summer, Public Finance revealed that two other NHS hospital trusts were planning similar charity models, while two more were exploring how joint ventures could help them avoid private patient income consolidation.
MPs and trade unionists have condemned those models as contrary to the spirit of the 2003 Act, but Trevor Clarke, chief operating officer at Great Ormond Street, told PF that the children's hospital was different.
'Over 90% of our private patients are international. They are not your traditional private patients,' he said. 'These are children who are extremely sick in other countries where there aren't services for them. We're not talking about your plastic surgery-type cases.
More than three-quarters of the hospital's private patients are funded by their governments or national health care systems.
But Clarke admitted that the reluctance of some of these customers to pay on time was a problem. By June 2007 the hospital was owed £10.9m on its private patient work – equivalent to over 40% of total private income.
PFoct2007
