More hospital news!
With all the merger and acquisition activity in the private hospital world, every Corporate Health Update from Buck seems to bring news from the arena which is so central to the care your employees receive and the price that is charged.
The latest news is also surprising news. No sooner has Bupa sold its chain of hospitals than it buys back into the market. This time, though, it is Bupa’s insurance division (rather than the now disbanded ‘hospital division’) buying London’s Cromwell Hospital. This £90m investment gives Bupa control of one of London’s most prestigious (and expensive) hospitals and will undoubtedly be used for strategic purposes as well as increasing accessibility to London facilities for all insured patients. Bupa plans to invest a further £30m in the breadth of facilities offered by the Cromwell – but, at this stage at least, is not suggesting that it will be buying more sites.
Meanwhile, Nuffield Hospitals has sold nine of its hospitals to General Healthcare (the UK’s largest hospital operator) and bought Cannons, the health club chain, in a major revamp of its business. Other, smaller, ownership changes are occurring, but the central message seems to be that investors remain prepared to put large amounts of cash into ‘healthcare’ businesses. Furthermore, those healthcare businesses are recognising that the high-volume/lower-cost models that they had been planning to operate (with the National Health Service providing large numbers of patients) is not actually the best approach any longer. Their strategies are re-focusing back to the ‘business class’ experience and corresponding pricing models.
What does this mean for the corporate purchaser of private medical cover? Our view is that these changes bode well for the quality, breadth and availability of private medicine, but it will come at a price – and a rising price. ‘Medical inflation’ is not a tamed beast – indeed, our own measurements show that, within a year, annual inflation has risen by another percentage point, with the 10% barrier close to being broken. Yes, insurers will continue to work to ‘do deals’ with hospitals, but it will be within an increasingly expensive marketplace. Scheme (or product) design will, for many, increasingly be the means to keep costs affordable.
THE INFORMATION CONTAINED IN THIS DOCUMENT IS OF A GENERAL NATURE ONLY AND SHOULD NOT BE RELIED UPON AS ADVICE IN ANY SPECIFIC SITUATION
For further information, please telephone your usual contact at Buck Consultants (Healthcare):
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