Increase in work for NHS lifts private hospitals’ profits

Private hospitals bucked the recession in 2009 – but only by massively expanding the amount of work they carry out for the National Health Service, according to the analysts Laing and Buisson.Increase in work for NHS lifts private hospitals' profitsOverall, revenue rose by 7.5 per cent to £3.76bn. But patients treated under private medical insurance fell by 30,000 between 2007 and 2009 as the recession hit. The numbers paying out of their own pocket dropped further – down by almost 45,000.

However, work for NHS patients, who now have the right to go to any private hospital willing to treat them at the NHS price for waiting-list type treatments, rocketed.

Their numbers almost quadrupled between 2007 and 2009, up from 55,900 to 212,000, so that NHS patients made up almost 22 per cent of private hospital cases, up from 6.3 per cent in 2007.

The result was a rise in independent hospital activity, with about 975,000 patients treated, against 888,000 in 2007.

Some NHS patients are sent by NHS hospitals to keep waiting times down.

But the numbers exercising their right to choose are rising sharply – running at a rate of 200,000 procedures a year in July this year, according to Laing’s Healthcare Market Review, the bible on private sector activity. That is business worth £400m a year.

William Laing of the review said senior health department officials believe patient choice activity in the private sector could triple. His own estimate is that it might ultimately rise five fold to about £2bn a year – although that would still be less than 20 per cent of NHS waiting list activity.

“Expanding the services they provide for the NHS has obvious attractions for independent hospitals because the publicly paid market is massively greater than the traditional private healthcare market.

“But it has great dangers as well, since too much focus on publicly paid patients could compromise their appeal to traditional, privately paying customers. There is a conflict which independent hospital providers have not yet fully resolved.”

If the independent sector seriously wanted to address the potentially huge public market, he said, it would “have to grow a lot more capacity”.

That could come from a mix of the existing players and new hospital providers entering the market with lower cost business models that generate reasonable profits from the prices that the NHS is prepared to pay.

The figures came on the day the Office of Fair Trading launched a wide ranging review into the private healthcare market – among other issues examining the barrier to new entrants joining it.


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