Private Hospitals and the NHS - The story continues...
This subject has been a regular feature of these updates for well over a year now. It continues to be the most important issue to hit the private hospital industry since the widespread development of commercial hospitals in the late 1970's. Just how important was illustrated by a recent report from the market analysts "Laing and Buisson" which estimated that by 2010 the NHS will be providing 47% of private hospital patients. If this is the case, the Government will be the sector's largest customer by far, leaving BUPA - currently about 25% of patients well behind.
At the moment, according to Laing & Buisson, the NHS accounts for about 14% of private hospital business, but the roll out of the Government's plans shows no sign of slowing down despite the change of health secretary. The most recent developments are as follows:
- The issuing of contracts worth 54 million to the three biggest hospital groups, BMI, BUPA and Nuffield to ensure waiting list targets are met. The operations needed are mostly complex orthopaedic procedures such as hip and knee replacements
- The request for bidders for a second wave of independent sector treatment centres (ISTCs). These are facilities built to take NHS patients needing routine surgery, but owned and managed by independent providers
It is worth reminding ourselves of the Government's grand plan:
- Initially, the aim is to drastically reduce waiting lists using the private sector to clear backlogs. This is achieved through the bulk contracts for defined numbers of procedures.
- Bulk contracts cannot go on indefinitely, however, if the problem of waiting lists is to be finally solved. Hence the development of ISTCs as permanent additions to the stock of health resources. By December this year it is hoped that NHS patients needing surgery will be offered a choice of five hospitals, at least one of which must be an independent provider, and that they will be able to book their initial hospital appointment electronically.
- Eventually - in fact by 2008 according to the plan - every NHS patient will be able to choose any hospital, public or private, for their operation provided that the hospital meets the required standards and accepts the fixed tarrif that the NHS is prepared to pay.
The latest request for bidders reflects this progression in that successful contractors will not be guaranteed volumes of patients. In part this is to meet criticism from G.P.s and others involved in primary care referrals who have resented being told to send patients to the new facilities. It also signals a move towards providers having to compete for NHS business.
What does it all mean for private patients? It is too early to tell with any certainty. We know that most private hospitals have been seeing low growth in their traditional business and reductions in some specialties, particularly heart surgery. The improved NHS seems to be the chief reason for this, but it appears that self pay patients are the ones who are mainly choosing to go public while the numbers of insured patients is holding up well.
The changed environment is offering some challenges to insurers and we have yet to see how they will respond. Most private hospitals have reformed all or some of their hospitals to be able to compete for the NHS business. Some of these lower costs must have spread across all business as, for instance, high cost scanners and other equipment is more fully utilised. NHS work is likely to come with low profit margins and hospitals will want to maximise income from their traditional market, but there should be some scope for insurers to improve the deals that they have with private hospitals and thus moderate premium increases.
Sale of BUPA Hospitals
As flagged in earlier updates, BUPA have now completed the sale of a large slice of their hospital business to Legal and General Ventures (LGV). There was a surprise in the final announcement in that one of the 10 Hospitals up for sale, Hastings, was excluded from the deal and remains in BUPA ownership. It seems that LGV were not prepared to allow any more time to solve the legal problems involved with this Hospital's links with the NHS.
The future of this hospital remains uncertain, but all other BUPA hospitals are now fully focused on competing for NHS business as a dominant part of their strategy.
Parentcare
Looking after aged parents is a problem for many of us at some time. The insurance market offers plans to cover medical expenses and even Care Home costs, but until now there has never been anything to help with that period after a hospital admission when a parent may need a range of services to help them get back to looking after themselves.
WPA, the Taunton based medical insurer, have now decided to offer a product that meets 75% of the cost of personal care, domestic help and home nursing after a hospital stay. Premiums start from 7.79 a month and vary according to the amount of time that the services can be covered after discharge.
WPA see the product as ideally suited to people who may live at some distance from their parents, especially those who are working abroad or whose parents have decided to live abroad. To help with finding service providers, the product has been partnered with Allied Health Care Group who have a Nationwide network of nurses and care workers and who will accept direct settlement of their fees from Parentcare.
If you are interested in finding out more about this new product, please contact us.
For further information, please telephone your usual contact at Buck Consultants (Healthcare):
Tel: +44 (0)118 955 7700
Fax: +44 (0)118 955 7701
Email: healthcare@buckconsultants.com
Web: www.buckconsultants.co.uk
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