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22.03.17

Foreign patient charges are a distraction from the real issues

Vivek Kotecha, research officer at the Centre for Health and the Public Interest (CHPI), explains why the charging of foreign patients distracts from our home-grown NHS issues. 

The Department of Health’s (DH’s) PR team must be run ragged by now with the constant stream of negative news about the NHS. In early February, the BBC and other news outlets were running a week’s worth of coverage on the growing NHS crises: bed shortages, underfunding, planned closures or downgrades of A&E departments and the impact of Brexit on EU staff. Amidst the rising crescendo of criticism of historically poor government stewardship, a positive news story was announced: foreign patients (aka ‘health tourists’) were to be charged upfront for non-urgent care. 

The tabloid press duly seized upon the chance to reprint their annual ‘health tourism’ headlines, but with the NHS being cumulatively underfunded by £54bn between now and 2021 the key questions are: how much money will it raise for the NHS? Is it an area worth focusing the NHS’s limited manpower and resources in? 

How big is the problem? 

So, firstly, how big is the scale of the problem? Reliable data is hard to find, but the DH estimated that in 2012-13 the NHS charged 65% of the total amount (£40m out of a potential £62m) it could to visitors from outside the European Economic Area (EEA), and 16% of the total amount (£49m out of £305m) from visitors from the EEA. On top of this, health tourism was estimated to cost between £70-300m a year. The upper estimate suggests a total loss (£667m) equivalent to 0.6% of the DH resource budget for that year. 

Much of this gap is due to the difficulty in assessing who is eligible for free NHS treatment. Only those who are ‘ordinarily resident’ in the UK are automatically eligible, which excludes holiday-makers, former residents living overseas, and short-term migrants. However, there’s no single document that can be used to determine who should pay and residency status can change over time. Indeed, up to half of the health tourism figure is estimated to be British citizens who live overseas (expatriates) coming back for routine NHS treatment which they should pay for. 

In July 2014, the DH set itself a target to recover £500m a year of lost overseas visitor income by 2017-18, an increase of nearly 600% on the £73m received in 2012-13. By 2017-18 it is forecast to fall short of this target, receiving £346m. This is a rise from the £289m collected in 2015-16 of which the majority (£164m) was due to a new health surcharge of up to £200 a year paid by students and temporary migrants.

To put the target in perspective, £500m is equivalent to 0.5% of DH’s 2015-16 resource budget and roughly comparable to the £433m spent on consultancy, with both dwarfed by the £4.1bn spent on agency staff. Whilst there is definite scope for improvement with charging EEA citizens (where reciprocal health charging arrangements already exist), it is telling that the majority of the amount collected so far is from a new source of income instead: the annual health surcharge. 

Effective charging requires spending on overseas visitor managers, staff training and pursuing debts. All tasks that the NHS is not well set up to do due to its ‘free at the point of use’ model and constrained by the lack of documents clearly showing entitlement for free NHS care. Whilst it is fair that overseas visitors pay for their treatment, the National Audit Office cautions that for some hospitals the cost of implementing a better charging system will outweigh the additional income received. This calls for a targeted approach, with hospitals which receive large numbers of overseas patients being sensible places to spend on effective charging systems. 

What to focus on 

So where should the NHS’s remaining resources be focused? With money so tight it is important to focus any spending on the areas with the highest cost saving/money generating value. Two areas stand out for immediate attention: consultancy and agency costs. 

With around £433m spent on consultancy last year, and larger amounts in previous years, there has been scepticism about its value for the NHS. Lord Carter, who published his efficiency review of the acute sector last year, criticised the usefulness of management consultants’ advice and recommended a more clinically-led approach to solving problems. 

Almost 70% of NHS hospital spend is on staff, and they spent £3.6bn alone on agency staff in 2015-16 (7.5% of total staff costs). NHS staff are overworked and stressed, with staff sickness rates 27% higher than in any other public sector organisations and 39% of cases citing stress and overwork as the causes. These and the desire for child-friendly schedules have driven many staff to move to agency work. Spending money on training more healthcare workers, improving working conditions and flexibility for parents could rebuild morale and save the NHS a lot of agency costs in the long term. 

The idea of health tourism being a large drain on the NHS, and offering a firm sounding solution, is attractive for press headlines. But often the best solutions, when faced with a funding gap, involve a lot more mundane but highly effective steps to improve the NHS. 

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