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Monitor, the Independent Regulator of NHS Foundation Trusts, is seeking views on the rules that NHS foundation trusts should follow in relation to the legal ‘cap’ on the income they may earn from charges for services to patients.

This follows the decision taken by Monitor’s board at its January 2008 meeting to open the subject to public consultation.

The legislation establishing NHS foundation trusts makes specific provision to limit the proportion of income an NHS foundation trust can earn from charges for services to patients – the Private Patient Income Cap.

Monitor is responsible for operating reporting and compliance regimes for NHS foundation trusts. This includes making rules for NHS foundation trusts to follow. The approach that Monitor has taken to the application of the private patient income cap to date has been set out in the NHS Foundation Trust Financial Reporting Manual (FReM).

In light of a recent challenge to Monitor’s interpretation of the private patient income cap, the complexity of the issues involved and the scope for different interpretations and approaches, Monitor has launched a formal consultation to allow for an informed discussion on the possible options and expression by interested parties of their views.

Monitor’s Board will use the responses to this consultation to inform its decision on the rules to apply the private patient income cap.

The consultation will close on Tuesday 9 September 2008.

Notes:

1. By way of application for judicial review, in February 2008 Unison formally commenced a legal challenge to Monitor’s interpretation of the private patient income cap. In acknowledging service of the proceedings, Monitor has requested the court to defer them pending the outcome of the consultation. Proceedings are currently adjourned.

2. Section 44 of the NHS Act 2006 creates a limitation on the percentage of an NHS FT’s turnover that may be derived from activities related to the treatment of private patients. For each NHS FT is restricted to the percentage of their income generated by these activities in the ‘base year’ – 2002-2003

The document is not a consultation on the legislation and does not seek views on whether there should be a legal limit on the proportion of income generated through private patient related activity. It is a consultation on the rules which should be applied in order to fulfil this legal requirement.

3. Copies of the consultation document can be found on Monitor’s website at: http://www.monitor-nhsft.gov.uk/publications.php?id=1138

4. Monitor announced its intention to hold a consultation on 11 February 2008. The previous statement and extract from Monitor’s Board minutes can be viewed on Monitor’s website: http://www.monitor-nhsft.gov.uk/news.php?id=1092