BUPA offer 10 hospitals for sale
BUPA Hospitals has taken the drastic step of putting 10 of its 35 hospitals up for sale. The ones on offer are the smaller hospitals, which BUPA feels will not fit into its new marketing strategy. BUPA expects to sell all 10 as a package and it is not likely the announcement will make any difference in the short or medium term to private patient's use of these hospitals. The full list is:
- Clare Park - Farnham
- Dunedin - Reading
- Elland - Halifax
- Fylde Coast Hospital - Blackpool
- Hastings
- Hull & East Riding
- Methley Park - Leeds
- Regency Hospital - Macclesfield
- St Saviour's - Hythe
- Yale - Wrexham
The move is the latest development in the scramble among private hospital owners to win NHS waiting list business. This is a race BUPA has been losing. As reported in the March edition of Corporate Health Update, it recently failed to get contracts for 25,000 NHS orthopaedic operations, which instead went to Nuffield and Capio.
BUPA Hospitals believes the smaller units cannot be made to run efficiently enough to meet the Government's demands on price. Concentrating on a more limited range of specialties in larger units will enable BUPA to make better use of expensive equipment such as MRI, CAT and PET scanners. Among other cost-cutting measures, BUPA Hospitals may choose, as others have done, to employ doctors from abroad to work at fee levels that will be a fraction of the customary rates charged by the average British consultant.
Despite its intention to continue to chase NHS business, BUPA has stressed it will not be giving up on the privately insured patient. In fact, it is taking the view that the greater efficiencies it hopes to achieve will enable it to do better in this area as well. In support of this belief, BUPA claims that insurers, including BUPA Insurance, are already saying they want to use the lower cost providers to control and even reduce the relentless rise in insurance premiums. Included in these low-cost providers are the mainly foreign-owned independent sector treatment centres that have entered the market recently in response to the Government's commitment to purchase from the private sector.
What effect will the developments in the NHS have on the private sector?
Apparently, the 10 hospitals up for sale are doing well commercially and most are providing a valued service in their respective areas. But, however hard they try, these and other small, isolated units cannot offer a full range of specialties and still compete on price with larger hospitals or ones with a more limited range. Nevertheless, is it likely patients and, perhaps more importantly, their consultants, will be prepared to abandon a hospital like St Saviour's and travel 25 miles to Canterbury in order to save on insurance premiums? History says no, since whenever severely limited access insurance products have been tried in the past they have invariably failed.
In fact, people in South Kent who opt for any new, cut price insurance product, might have to go even further afield if they need to use it. The main private hospital in Canterbury is owned by BMI, who, before the announcement of the sale, was closely competing with BUPA for the industry's dominant market share. After an early and unsuccessful sortie into the NHS arena, BMI appears to have withdrawn from the fray and are instead concentrating on the traditional privately insured patient. By making what many would describe as a clear move downmarket, BUPA Hospitals may be making things much easier for BMI.
We will continue analysing and commenting on the changes that are happening within the NHS and private sectors.
For further information, please telephone your usual contact at Mellon - Human Resources & Investor Solutions (Healthcare):
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