Private healthcare patients stand to benefit from taxpayer subsidies of private care under the government’s contentious health bill, the opposition has said.

Andy Burnham, shadow health secretary, said the bill’s relaxation of rules over private patients being treated in NHS hospitals threatened a “taxpayer subsidy of private care”.

The bill, which the government hopes will be passed on Tuesday, will allow NHS foundation trusts to earn up to 49 per cent of their income through treating patients privately.

The law change is being seen as an opportunity by private hospital groups to enter into joint ventures with NHS hospitals to help them increase their volume of private work and split the profits gained by offering cut-price deals to patients whose charges will not include the full cost of the NHS facilities.

Rob Roger, chief executive of Spire Healthcare – the second-largest private hospital chain in the UK – told the Financial Times: “From the NHS’s perspective, they’ve got to operate those theatres, so anything that comes in, as long as they are covering their directly related costs [the price] is almost irrelevant, because it’s actually adding marginal contribution for running that theatre.”

There has been a flurry of activity over the past year with Guy’s and St Thomas’ hospital and North Bristol NHS trust both tendering for private partners to help them expand their private work. Spire Healthcare already works with the Royal National Orthopaedic hospital in Stanmore and the Papworth hospital in Cambridgeshire.

When an NHS patient is treated in hospital, health service commissioners pay the hospital a price based on the full costs of the procedure, including a contribution to the hospital’s fixed facilities and overheads, which can amount to around half the total cost.

But Mr Roger – who was speaking to the FT on behalf of the Private Hospital Alliance – said the same did not need to happen for private patients. If an NHS hospital’s overheads and fixed costs were covered by NHS patients, private patients could be viewed as “profitable” as long as their fees added a “marginal contribution” over their direct costs such as drugs, bandages and prostheses.

The government has said NHS “revenue” funding – which is distinct from funding to cover capital equipment and buildings – should “never be used to . . . subsidise private patients”.

Sue Slipman – the director of the Foundation Trust Network which represents NHS hospitals – told the FT it was not clear what that meant and said that if NHS hospitals had to charge private patients the full cost of their care, they might lose out to competition from local private hospitals.

“We would like a sensible approach that recognises it is better to bring these funds into the NHS than see it go elsewhere,” she said. The comments come at a time when NHS commissioners are restricting funding for common hospital procedures, such as hernia repairs and hip and knee replacements, which have been deemed “low clinical value”.

Mr Roger said those moves had triggered a 16 to 17 per cent growth in such procedures for his business and added: “If I was an [NHS] private patient unit I would say: ‘Well you can’t get it done on the NHS; come and see Mr Jones and he will do it privately’.”

While some NHS hospitals are indeed advertising those treatments to fee-paying patients, others also offer more diverse treatments, including the privately-run Hinchingbrooke NHS trust, which offers private cosmetic Botox and filler treatments from £150.

The government has sought to appease concerns around the changes by tabling an amendment to the bill requiring a majority vote of an NHS trust’s board of governors if business plans entail a 5 percentage point or more increase in the share of income earned through non-NHS work.

But FT analysis of the latest data on actual NHS income earned through private patients shows that no single hospital trust would have been caught by the safeguarding amendment in the last year.

Great Ormond Street Hospital, for example, increased its income from private patients by 19 per cent between 2009-10 and 2010-11 to £25m. In percentage point terms the increase was equivalent to less than 1. Mr Burnham said that rendered the government’s safeguards around the bill “meaningless”.

Monday will see a last-ditch attempt by opponents of the bill to halt its passing into law when crossbench peer David Owen will attempt to pass an amendment in the Lords calling for further debate to be delayed until after the government has published the risk register on its implementation. If that fails the bill will return to the Commons on Tuesday for final deliberations.

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