Opinion: If the cap doesn’t fit, don’t wear it

The NHS Emergency Motion which was not debated at Conference in Birmingham had a clause that stated the cap on Private Patient Income (PPI) by NHS Foundation trusts should be retained. Shirley Williams has since stated that this is one of four main aspects of the bill which she will be trying to change in the House of Lords.

But Lib Dem peers would be wrong to press for retention of the cap. Even for those who want to preserve a strongly public sector provided NHS the retention of the Private Patient Income (PPI) cap makes no sense.

The cap limits the proportion of income an NHS foundation trust can earn from private charges. The limit is set so that the proportion of income earned from private charges does not exceed the proportion of income accounted for by patient charges in the base year (2002/03 for all NHS foundation trusts that were previously NHS trusts).

What is so bad about that? Well it means that if an NHS foundation trust were to lose NHS income for example, if its PCT decided to buy services from other providers, then it may have to reduce its income from private charges to stay within its PPI cap – leading to a vicious cycle of decline. And if the Foundation Trust has spare capacity it cannot increase its income from private patients so keeping down costs to the NHS.

The Private Patient Income cap actually stops Foundation Trusts from competing on a level playing field with private providers. Private providers can provide services to private and NHS patients, whereas NHS Foundation Trusts can in effect only provide services to NHS patients.

The cap was introduced, purportedly, to ensure that Foundation Trusts continued to focus primarily on NHS patients. That is right and proper but there is little danger of that changing if the cap were dropped. Whilst the Royal Marsden has a cap of 30.7% because of its world renowned treatment many have a cap of 0% and the average for the NHS Foundation Trust sector as a whole is just 1.5%. Surely the NHS would benefit from having more hospitals with the reputation of the Royal Marsden.

NHS Foundation Trusts could be given the duty to give primacy to NHS patients to ensure that pursuit of private patient income does not crowd out NHS patients but the PPI cap must go if we are to let NHS Foundation Trusts compete with the private sector on a level playing field.

Chris Nicholson was the Liberal Democrat Parliamentary Candidate in Streatham in the 2010 General election.

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4 Comments

  • Simon McGrath 26th Sep '11 - 8:53pm

    Fascinating stuff. Why on earth would Shirley Williams want to keep this?

  • So, the ideal for you would be that NHS trusts were independent stand alone businesses who would be allowed to fail and close or be taken over by another company if financially unviable, that in order to stay afloat they would be incentivised to take as much private work as they could, that the minister for health would no longer be obliged to ensure and provide health care free at the point of delivery, that these businesses that are being incentivised to take as much private work as possible would not be obliged to take NHS work at all, and that the only way to guarantee receiving treatment when needed will be to have private insurance or sufficient wealth. Are you going to continue to argue that this is not privatisation? And perhaps those Liberal Democrats who fought against Tony Blair when he tried to establish such a cap free system could remind us why they objected to it then.

  • Chris Nicholson 27th Sep '11 - 12:45pm

    JRC If you read the last two paras of the article you will see that I am not arguing for the things you allege. I state very clearly that primacy should be given to NHS patients. Nor am I arguing that the NHS should cease to be free at the point of use

  • Chris Nicholson,

    You may not be arguing for such things but the white paper puts those things in place. Lifting the cap on the private work a trust is allowed to undertake would remove the only guarantee that the proposals in the white paper would not result in a privatised system accessible primarily by those with private insurance.

    You argue that the reason it should be removed is that a foundation trust would be unable to adjust its intake of private work in response to the market choices of PCT’s (or the privately run replacements for them that are envisaged in the white paper, with whatever vested interests they are permitted to have). This argument presupposes the acceptance of the conditions I outlined. So whilst you claim not to argue for them you make an argument that relies upon their pre-existence. Whilst you argue that primacy should be given to NHS patients you also argue for a system that incentivises the opposite and removes any capability of government or health provider to do enforce such a primacy.

    You also argue that NHS trusts must be allowed compete on a level playing field with the private sector. If not for access to private patients then what is it competing for? How can it be possible to compete on a level playing field with the private sector to serve the needs of their patients without offering primacy to those patients?

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