How much does the NHS lose from foreign 'health tourists'?

2 August 2013

According to the government, the National Health Service is in danger of becoming the International Health Service. But what's the evidence for so-called 'health tourists' - overseas visitors who aren't entitled to free healthcare - abusing the system?

First of all, there was Jeremy Hunt's statement that "we identify less than half of those who should be paying", which, it turned out, was based on questionnaire responses submitted by 22 NHS trusts. Using the same data, the Secretary of State also said that "we collect payment from less than half those we identify".

According to an internal report, which the Department of Health has recently made available to us, the government estimates that NHS Trusts "only manage to recover around 40% of all invoiced charges". 

This 40% figure is based on the following approximate calculation: that NHS Trusts currently invoice £35-55 million to overseas visitors who owe money, and they manage to recover £15-25 million of this. 

Number crunching

As it stands, NHS Trusts are legally obliged to identify patients who aren't "ordinarily resident", to invoice them, and then to recover the payment. According to Trust account data, in 2009/10 foreign visitors were liable for payments totalling £35 million. The upper estimate (£55 million) allows for discrepancies in the way Trusts file their accounts, including the fact that some report overseas visitor income under 'private income'. 

In the same government survey of 22 NHS Trusts, on average only about 40% of the income charged to overseas visitors in 2010/11 had been recovered by the following year. Taking this as a "reasonable estimate" of the situation at a national level, the Department of Health concluded that this would mean that NHS Trusts in England recovered some £15-25 million each year out of the total (£35-55 million).

As the report admits, there's a considerable degree of uncertainty surrounding these numbers. The Department has relied on a small, limited sample of Trusts - and extrapolated the national picture.

Blame the system?

Some of the costs incurred will never be recoverable - after all, the NHS must provide urgent treatment to anybody who needs it, regardless of whether or not they can pay for it. Yet the government argues that too few 'health tourists' are being identified and too little money is being recovered.

However - and this is crucial - NHS Trusts don't have any incentive to identify overseas visitors. This is because an NHS Trust, by flagging concerns about a patient's entitlement to free treatment, would be rejecting money that it would otherwise receive from government. Once an overseas visitor is identified, the commissioner will not pay the Trust. As well as losing this income, the Trust will also run up administration costs in recovering the debt it's owed. 

The government's internal analysis even suggests that the system might be costing more than it saves:

"Overall the costs of operating the OV [Overseas Visitor] charging system may add up to more than £18m. Given our estimate of £15m - £25m per year being recovered by the current OV charging system, it is not clear whether, under current rules, the OV charging system is generating a net benefit to the NHS or a net loss."

Time for perspective?

The Department of Health's report suggests that at present the NHS is recovering less than 20% of what it might. But it acknowledges that even if hospitals identified all of the overseas visitors who might be charged, with such a low recovery rate and the financial disincentives still in place, it's unlikely that this would generate more than £20-50 million of additional income. The government appears to have recognised this - in July, it launched a consultation into extending the system of NHS charges.

As it stands, if the NHS identified every overseas visitor, the government suggests that the "best estimate" for income would be £125 million. According to its sample survey, Trusts are recovering £15-25 million of this, which means approximately £100 million is lost.

To put these sums in context, the NHS's budget for 2012/13 is £108.9 billion. This means, according to the government's own calculations, that overseas visitors currently account for about 0.1% of total NHS expenditure. In terms of a drain on resources, it's less open artery, more papercut.

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