NHS loses millions of pounds annually due to obsolete law

With NHS not recovering the true cost of the service it provides, a leading personal injury lawyer has suggested it could boost annual income with updated legislation.

A report by Monitor, an executive public body of the Department of Health, has shown that NHS trusts are suffering the 'worst financial crisis in a generation', after recording an overall deficit of £930m in the first three months of the financial year.

Between April and June, the NHS made a loss of £445m with an estimated £2bn deficit predicted for the 2015/16 financial year.

Trevor Sterling, a partner Moore Blatch, has called for change and written to the Health Secretary, Jeremy Hunt, to explain the scale of the problem.

'There is an urgent need for review of this legislation, which could go a considerable way to help alleviate the financial burden that many trusts are reporting,' he said.

The Health & Social Care (Communities Health Standards) Act 2003 extended the recovery of NHS charges beyond road traffic accidents as part of the personal injury process. The law has seen over £200m returned to the NHS in 2013/14 with individual Major Trauma Centres recovering approximately £3m.

The NHS is allowed to recover a fixed tariff repayment of approximately £796 per day for in-patients with a cap of £47,569 per patient

'While these figures appear to be reasonable,' said Sterling, 'there is in fact a huge disparity in costs, which means that NHS trusts are never being fully reimbursed for the service they provide.'

In 2007, a Health Impact Assessment estimated the average cost of a hospitalised patient to be £16,000. Under the current recovery legislation the NHS would recover only £5,572 per week considerably less than the actual cost incurred.

Where costs surpass these figures, due to longer term treatment or in major trauma cases, the NHS is unable to recover any costs above the threshold. A prosthetic alone, for example, could cost the NHS around £50,000 and over a patient's lifetime considerably more.

It is estimated there are at least 20,000 major trauma cases in England per year, costing the NHS £0.5bn for immediate treatment.

'The whole scheme needs to be reviewed, or at the very least consideration should be given to the recoverability of in-patient and out-patient costs (not one or the other) with the cap being increased or removed,' added Sterling.

'The current situation is wholly inadequate especially at a time when trusts are struggling to ensure they balance the books.'

The rehabilitation code, which encourages greater collaboration between claimant lawyers and the insurers for personal injury claimants, was recently updated to ensure it remains as relevant and effective in an ever-changing climate.

Sterling suggested that a similar movement for costs recovery legislation would allow the health service to meet the demands of what one NHS leader called a 'triple whammy': rapidly rising patient demand, an extra £2bn unfunded staff cost, and funding cuts.

'No one can disagree that these are challenging times for the health service - any reform hat can bring about additional financial resources to the NHS must be considered seriously and urgently,' he concluded.

Matthew Rogers is an editorial assistant at Solicitors Journal matthew.rogers@solicitorsjournal.co.uk