NHS Private Patient Units - navigating the indemnity maze

Making up an estimated 6% of the UK private healthcare market^[1]  NHS Private Patient Units (PPUs) are increasingly offering a wide range of services from plastic surgery to ophthalmology.

However, their insurance arrangements are far from straightforward.

Due to PPUs operating under a dual service model – offering private healthcare treatment within an NHS site – it is often assumed that the Clinical Negligence Scheme for Trusts (CNST) would cover the PPUs as well.

However, despite being owned and managed by the NHS, the CNST does not necessarily stretch to cover private work.

Without a separate insurance policy, taken out specifically to cover private work, PPUs could be exposed to potential claims without having adequate insurance cover.

Blurred lines

These blurred lines can create quite complicated indemnity arrangements because it is often unclear who is contracted directly through the NHS hospital and who is in fact part of the PPU’s arrangements.

This leads to both gaps in coverage and coverage that is misaligned. It is something PPUs need to make sure they are aware of. There is the hospital CNST coverage and, on top of that, you have individual malpractice elements to think about.

I think it is an education piece as not many people are fully considering the implications.

This issue stems back to the fact that PPUs were set up by the NHS to do their private work, with the aim of generating extra income to put back into the Trust.

As part of this process, doctors are regularly being transferred over from the NHS Trust to the PPU, often without holding their own indemnity cover. They potentially could be uninsured but are often unaware of this and the risks involved.

PPUs can buy into the CNST as a seperate entity, taking out coverage as the NHS Trust does. However, based on our current experience and understanding, many do not.

One potential reason for this is there is a common assumption that they are already covered under the NHS Trust’s CNST, and doctors would be covered under their own indemnity to carry out private work. In reality, the situation isn’t so clear cut, leaving PPUs at risk of leaving significant gaps in protection.

Insurance cover depends on who pays into the CNST. Many doctors working within PPUs may not have separate policies, often assuming extra cover isn’t needed, and that is where the issue lies.

Keeping things separate

For insurance purposes, a PPU is categorised as a private clinic within an NHS hospital, which should be differentiated going forwards.

Without proper separation, PPUs may not realise the need for cover until a claim arises - yet without adequete insurance in place, problems are likely to arise over time. 

Overseas sites

It is relatively easy for PPUs to be correctly insured as demonstrated by those NHS Trusts with overseas campuses, particularly those in the Middle East.

At overseas sites, insurance is considered a necessity when setting up and operating these sites.

Unfortunately, this does not translate to English sites, despite the fact they are operating on the same model. For UK-based PPUs, there is the misconception that no cover is needed, or it is covered as part of the NHS Trust.

While PPUs can operate on a commercially successful model, they may face significant risk exposure if suitable insurance arrangements are not in place for their operation, which negates the income generating purpose of the PPU.

Without appropriate insurance, the financial and reputational risks could outweigh the benefits.

Consultants

In addition, I would recommend to all individual consultants to ensure they fully disclose their earnings for any private work they have undertaken to their provider, whether that is a Medical Defence Organisation (MDO) or insurer. 

If the individual is bought into a claim, it’s our experience that the MDOs will ask for income of the doctor and if it doesn’t match what was disclosed at the renewal, they may charge extra, or they could deny the claim, leaving the doctors in a very precarious situation.

This is particularly important with MDOs as the basis of their cover is discretionary, which can be cancelled if the organisation decides it hasn’t been given accurate information.

For example, one consultant who did not disclose their income fully, has had their application to renew rejected, their cover retrospectively cancelled for a year, and been informed that the hospital will not grant any practicing privileges moving forward until the situation is resolved.

This has meant the consultant has had to cancel all his clinics until the cover is restored.

While some insurers allow consultants to renew their insurance on a yearly basis without disclosing their earnings, they need to proactively declare their income to avoid being left without cover. Not doing so leaves the door open to issues further down the line.

PPUs represent a valuable opportunity for NHS Trusts to diversify income streams and expand patient services. However, the risks associated with unclear or inadequate insurance arrangements are significant.

Both PPUs and individual consultants must ensure they have appropriate insurance in place and understand their obligations. Only then can they operate with confidence and protect the long term sustainability of private services within the NHS.

Risk management for PPUs

While PPUs generate revenue for the NHS, they also bring regulatory complexity. Without tailored governance, clear indemnity arrangements, and robust documentation, Trusts expose themselves to litigation, reputational damage, and insurer scrutiny.

Properly managed, however, PPUs can be a safe and sustainable solution in a financially challenged system.

Insurers are increasingly assessing PPU risk profiles separately, as underwriters want clarity on governance, handover processes, and clinical accountability.

There is also a risk that NHS Trusts may face vicarious liability even when consultants are independent, due to perceived association with the hospital.

Medical malpractice claims commonly relate to inadequate consent especially when NHS templates are reused for private patients; delays in diagnosis or follow-up due to unclear patient pathways; and ambiguous handovers between NHS and private care streams.

Non-clinical claims can include data breaches, as private patients expect higher confidentiality, billing disputes, especially where consultant and hospital bills are separate, and employment law issues if NHS staff are cross-deployed to PPUs without clear contracts.

To mitigate this risk, Howden recommends creating a dedicated PPU risk register and governance framework; and using bespoke documentation for private patients, such as consent forms, billing agreements, patient pathways.

It is also best practice to verify consultant insurance annually in line with the Medical Professional Assurance Framework (MPAF) and require clear service-level agreements defining roles/responsibilities.

Those operating PPUs should build parallel governance and complaints procedures instead of relying on NHS systems for private patients, as well as regularly audit billing processes to mitigate fraud, double-charging, and disputes.

Finally, staff should be trained to understand the differences in liability, duty of care, and patient expectations in private care settings.