Waiting lists in British health care are headline news as records are being broken but the situation is also attracting investor interest in the bottom line.
PureHealth, the largest healthcare group in the Middle East, announced its acquisition of the British company Circle Group in a $1.2bn deal that left it in control of the single biggest portfolio of UK private hospitals.
“The NHS has an established and important role in our society but with over 7 million people on the waiting list, an ageing population and strikes about pay and conditions ongoing, it’s clear that it needs help more than ever," Dr Ian Gargan, chief executive of Private Healthcare Information Network (Phin), told The National.
"The private sector is the most readily available partner to provide that help.”
By its own admission, the National Health Service said the number of patients waiting to start treatment at the end of April was 7.4 million.
Of those, 371,111 patients had been waiting more than a year, with 11,477 patients on the waiting list for more than 18 months.
While treatment on the NHS is free, record numbers are now opting to go private and pay for treatment themselves, according to Phin.
Last year, 272,000 people paid for the cost of having an operation or diagnostic procedure at a private hospital, up from 262,000 in 2021, Phin research showed.
Private hospitals treated 820,000 patients in 2022, more than ever.
There is also some evidence that lengthening NHS waiting lists are behind a surge in private medical insurance, as individuals and companies weigh up the cost of being off work for a long period against the price of insurance premiums. Circle was owned by the US insurer Centene and some of the attractiveness of the group undoubtedly lies in the recent long waiting lists in the public-sector NHS.
However, a report by the King's Fund points out: "History shows us that once NHS waiting lists start to come down then the public appetite for out-of-pocket expenditure on health care reduces considerably, so this is unlikely to be a long-term trend."
'Unlocking capacity'
There has been a long-established relationship between the UK's private healthcare sector and the NHS, with certain areas, such as dentistry and optical care, having always been independent.
Indeed, general practitioners (GPs) are essentially freelancers and most practices are private partnerships.
The government this month announced the involvement of private-sector companies to help reduce the waiting lists will be expanded.
From October, the government has pledged that patients who have been waiting for longer than 40 weeks for their first NHS outpatient appointment or treatment can request switching to the private sector.
Reducing waiting lists
The government established the Elective Recovery Taskforce last year to explore ways in which the private sector could be best utilised in reducing waiting lists.
Dr Gargan told The National: "We welcome plans it [the taskforce} has outlined to make more of our ‘twin track’ public/private healthcare system, including unlocking capacity, workforce and the exemplary skill set in the private sector to get NHS patients seen sooner and reduce the strain on the NHS."
There will also be a relaxation of the rules, by which NHS contracts are awarded to the private sector, which should make the whole process more flexible at local level.
Allowing the private sector to share the burden of reducing pressure on the NHS has received cross-party political support, with Health Secretary Steve Barclay commenting that "every available resource" was needed.
“The independent sector can’t fix waiting lists on its own but the sector does have more capacity it can make available to the NHS – at the same price that NHS providers are paid – and every additional piece of activity the sector delivers is one less person waiting to be seen," John Hopgood, of the Independent Healthcare Providers Network, told The National.
"Using the sector efficiently, will also free up capacity for the NHS to deliver more itself – and allow NHS providers to better focus their resources.”
In 2019, before the pandemic, NHS commissioners spent £9.7 billion, or 7.2 per cent of the Department of Health and Social Care revenue budget on services delivered by the private sector and, according to the King's Fund, this percentage had barely changed since 2012.
But others dispute those figures.
In a report for the London School of Economics, David Rowland, director at the Centre for Health and Public Interest, said the ratio was closer to 25 per cent, because of flaws in the way the government calculates the figures.
Successive governments since as far back as the 1970s have sought to reform the NHS and open the door to private-sector involvement, a process that escalated under Tony Blair.
Some argue the overall level of government funding for the NHS has changed very little since 2010, when the figures are adjusted to reflect changes in population, demographics and, more recently, high inflation.
Private equity
Nonetheless, while the private sector will, undoubtedly, continue to play a role in patient care in the UK, some point out that by itself it is not a panacea for the problems that beset the NHS – it can take up some of the slack but by no means is it a miracle cure.
"We need to be careful not to overstate the role of the private sector – either as a threat to the NHS or a solution to long and growing waiting lists," said Sarah Scobie, acting director of research at the Nuffield Trust.
However, if there is one indicator that often points to the viability of a sector for investment, it's the interest of private equity.
Private equity firms have clinched 150 deals with UK healthcare companies in the past two years, from eye-care clinics to fleets of ambulances, according to the consultants LaingBuisson.
So far this year, merger and acquisition activity has been flat in the UK market overall but the UK healthcare sector has been a relative bright spot.
