News / Monitor set to revisit private income cap

Monitor is to revise its financial reporting manual after a court ruled that its latest interpretation of foundations’ private patient income cap was unlawful.

The Administrative Court, ruling on Unison’s judicial review of the private patient cap, said the limit should apply to a wider range of income sources.

In response to the union’s initial legal challenge, the foundation trust regulator consulted on three options in 2008 – do nothing, include joint ventures and associate arrangements, or include these and income received from the provision of goods and services to third party providers of private healthcare, as well as income from charitable donations where funded by the provision of private healthcare.

After the consultation, Monitor chose the second option and included joint ventures and associate arrangements from April 2009. However, Unison pressed on with its bid to ensure Monitor used the widest possible definition of private patient income.

The court has now ruled in its favour, although it stopped short of endorsing the widest definition in last year’s consultation. The ruling said using this option was a decision for Monitor.

Neither did it support Unison’s argument that NHS foundation trust accounts for earlier years should be unravelled and recalculated, seeing this as a ‘waste of public resources’. The court added that the current government review of the cap might address some of the problems with Monitor’s interpretation.

Monitor executive chairman Bill Moyes said the regulator sought to apply the cap fairly and reasonably, but added: ‘We accept the outcome of this judicial review and will now focus on amending the regulatory framework in line with the ruling.’

Monitor has announced proposals to refocus its annual risk assessment process on effective planning, renaming it in the process as the annual plan review.

There would be no change in the submission date for 2010/11 plans, although earlier submissions could be required in future years.

The annual plan would become shorter  and a trust’s strategy would be more clearly reflected in and integrated with its financial forecasts, moving the document away from being a marketing tool.

Monitor believes that the changes would enable it to hone in on plans that could pose risks to financial stability, healthcare or governance issues There is no formal consultation on these proposals.