Several existing and aspiring foundation trusts are keen to extend the percentage of their income gained through private patient work, arguing that the profits can then be ploughed back into the NHS. But figures obtained by HSJ suggest private patient work may not be that profitable, as millions of pounds are either written off as “bad debts” or paid months late.

The figures come as the foundation trust regulator Monitor prepares to consider whether it will continue to allow foundation trusts to make use of a loophole around a statutory cap designed to prevent them increasing their private work.

The loophole has been challenged by the trade union Unison, which has threatened Monitor with a judicial review.

HSJ collated the details of private patient income from four trusts that do a lot of private work. Together this income was reported as £39.3m for 2006-07. But six months after the bills were overdue, 15 per cent of the total was still outstanding. And by the end of the year, the trusts had written off more than £4.8m worth of private bills.

Of these, North Bristol trust had the largest proportion outstanding. As of 31 March 2007, 57 per cent of its total private income of £1.8m was owing and private debt write-offs that year were £855,000 – excluding those made to insurance companies, which were not disclosed to HSJ. But the trust’s business plans show it still wants to use the loophole to expand private IVF services.

Great Ormond Street Hospital for Children trust in London reported its income from private UK and international patients for 2006-07 as £24m, but one third of that was still outstanding a month after the invoices were due and 15 per cent after six months.

At the end of the year just under £3m was written off as “bad debt”.

A spokesman for Great Ormond Street denied that the large levels of bad debt meant the hospital’s private work was unprofitable.

He added: “Historically the issue has been slowness in recovering sums due, rather than failure to pay. Most of this income comes from sovereign governments or large insurers who wish to continue to use us.”

As of June 2007, the biggest single debtor was the Kuwait health office, with outstanding invoices of £2.8m, after £1m of bad debts had been written off.

The largest insurance debt was to the Greek insurer IKA Elefsina, with outstanding debts of £310,600 after £110,000 had been written off. BUPA owed £280,300 after £86,000 was written off.

Great Ormond Street claims its private patient work is exceptional because it is known as a specialist centre internationally.

But figures collected by HSJ show a similar picture at other trusts. These include Chelsea and Westminster Hospital foundation trust, which has said it intends to exploit the loophole to expand its private maternity services.

Last year the trust earned approximately £5.6m from private patients but had to write off the equivalent of 17 per cent of that (£1m) as bad debt. Approximately half of that was debt owed by overseas patients for emergency treatment while the other half was insurance companies.

Chelsea and Westminster director of finance and information Lorraine Bewes said: “We had a big clear-out of debt last year, so quite a lot of the £1m relates to the last few years’ worth of private patient work; it is not just from one year.”

Ms Bewes estimates that if Chelsea and Westminster’s income for private patients was considered over three years, it would be around £18m and that would bring the write-off closer to 6 per cent. But the trust’s breakdown of private debtors shows that £817,000 was outstanding or late in 2006-07 alone. Ms Bewes denied there was any risk that NHS funds subsidised private treatment.

From:
http://www.hsj.co.uk/news/2008/01/private_patient_debts_question_profit_claims.html