On 12 December 2008 Monitor, the independent regulator for NHS Foundation Trusts (FTs), published its decision on the interpretation and application of the private charges cap.

Following consultation on the issue, it has decided to change its current approach. With effect from 1 April 2009, in addition to income derived from services provided by FTs directly to private patients, income derived through the provision of services by joint ventures or associates will also be treated as private patient income. Therefore, that income will count towards the private charges cap.

Although this was not the approach supported by the majority of respondents, Monitor has adopted it on the basis that it is easily understood, is a logical extension of the accounting advice underlying the current approach and is capable of translation into clear, coherent rules. Monitor's decision, which will be implemented by revising the definition of "private patient income" in the Financial Reporting Manual for NHS FTs (the FT FReM), means that FTs are more likely to find themselves getting close to or exceeding their private charges cap.

For a summary background to Monitor's consultation and the private charges cap see Wragge & Co's previous alert & analysis or read Monitor's decision.