Beleaguered hospital phone business Patientline has been hit by ward closures and a drop in customer confidence.

The company, which charges for the use of bedside telephones and TVs, said an Ofcom inquiry into its rates for incoming calls had caused a reluctance in some patients to use its systems.

It added that "ward closures and an increasing number of empty beds have reduced the number of terminals being used".

In addition, some primary care trusts had relaxed their policy over the use of mobile phones in hospitals.

Chairman Geoff White said all of those factors had hit the performance of Patientline's UK business.

Mr White said: "Average revenue per terminal per day decreased by seven per cent from £1.87 in the prior year to £1.73p and this decline has continued into the new financial year."

The level of revenue per terminal per day for the first two months was running at seven per cent below the comparable period.

By the end of the year, the UK arm of the business had 74,700 terminals at 157 hospital sites.

In the Midlands they include: Good Hope, Sutton Coldfield; Birmingham Heartlands; Walsgrave in Coventry; Worcester Royal

Infirmary; Cannock Chase; the Royal Shrewsbury and numerous others.

Patientline reported pretax losses before exceptionals in the full-year narrowing slightly to £11.3 million from £11.5 million, while sales rose 12 per cent from a year earlier to £55.4 million.

Mr White said the business had been "exonerated" by the Ofcom inquiry over making excessive charges for incoming calls, although the watchdog remained concerned about the level of charges.

Ofcom referred the issue to the Department of Health for a review "with the specific objective that incoming call charges be substantially reduced", he said.

An Ofcom spokesman said the evidence had been that Patient-line had not broken competition law.

However, it closed its inquiry with a recommendation that the DoH looked into all aspects of the installation and operation of bedside telephone and entertainment systems in hospitals.

It said the DoH review, which is in progress, should include the way in which the cost of providing services "appears to be borne disproportionately by friends and family calling patients in hospital".

The Ofcom inquiry was launched last July following complaints about incoming charges - in most cases 49p per minute peak and 39p per minute off-peak.

Ofcom's investigation identified that high call prices were a result of a complex web of Government policy and agreements between the providers, the NHS and individual NHS Trusts.

Patientline said its share price was hit after the the Ofcom inquiry was under way.

The company had launched an in-depth strategy review.