NHS trusts' insurance promotion deal collapses

A potential deal under which National Health Service hospitals could promote the sale of private health insurance by Norwich Union Healthcare, Britain's third-biggest private medical insurer, was thrown in doubt yesterday by the Department of Health.

"NHS trusts should not align themselves with a single insurer," a departmental spokesman said. "Or promote their goods and services on hospital premises. The last thing we want is a big Norwich Union sign saying 'join here'. That would not be acceptable."

There was, however, nothing to prevent trusts working with a range of insurers, he added, but not in a way which would put patients under pressure to take out private cover.

The prospect of NHS hospitals actively promoting private medical insurance has been attacked by the health workers' union Unison and was criticised yesterday by Chris Smith, Labour's health spokesman.

NHS hospitals "should quite simply not be involved" in promoting private health insurance, he said. "Whether it is one insurer or many, there will inevitably be pressure on patients to opt for insurance. It flies in the face of everything the NHS stands for and must be stopped immediately."

The DoH's view - a matter almost certainly of guidance to NHS trusts, rather than any statutory bar on them agreeing to promote a particular product - may also lead to Norwich Union and other insurers going cold on the deal.

Tim Baker, Norwich Union's commercial director, said the company would not be looking for exclusivity in the sense that NHS pay-bed units and private wings would treat only patients covered by the company. But, he added, "a degree of marketing exclusivity for a period would be needed to make it work".

With trusts actively promoting Norwich Union's Trust Care policy - which provides cover only in NHS pay beds - local markets could be developed and more patients might over come the "guilt" some feel about private insurance if they knew the profits from their treatment was supporting their local NHS hospital, he said.

The NHS Trust Federation is looking for tie-ups with private insurers to offset the effect of Bupa, Britain's biggest health insurer, developing a policy which excludes patients from treatment in NHS pay beds - a move the federation says could cost trusts pounds 50m in lost revenue over the next four years.

Industry analysts believe Bupa's move is a defensive one, attempting to raise occupancy in its own 29 hospitals and those of other private operators who have been losing market share to NHS pay beds.