Headlines: October 13th, 2005

Growth in private medical insurance payment and self-pay treatment to independent medical and surgical hospitals and clinics in the UK was barely above inflation in 2004. This compares to a growth of some 10% in 2002. Although the healthcare market is complex and outcomes are influenced by a range of factors, growing satisfaction with the NHS is clearly influencing the situation. The slowdown in private healthcare growth has occurred in parallel with delivery of the NHS 10 year plan and substantial injections of cash.The weak self pay healthcare market has been under pinned by growth in cosmetic surgery. This now accounts for 120m pounds out of a total of 470m pounds. Sir Nigel Crisp, Chief Executive of the NHS speaking earlier in the year said indicators of progress, other than the published targets, are beginning to appear. He highlighted the effect of the NHS on private healthcare. In past years many people opted to pay for treatment and this enabled the private market to grow steadily. This trend has been reversed and private healthcare organisations are revising their plans, scaling down activity and in some cases closing hospitals.

Private healthcare, however, is benefiting from NHS contracts and particularly from the growth in independent sector treatment centres. Annual revenue from two waves of new centres is expected to reach one billion pounds. This will add almost a third to the value of the existing independent acute medical and surgical market. Hospital providers have formed business strategies to meet the NHS’s escalating appetite for additional capacity to deliver NHS Plan promises. This development has energized a major re-structuring of operations by independent sector hospital groups to deliver healthcare at prices the NHS can afford.