Private health bosses have again been pumping out press releases to give the impression that private hospitals and insurers across the UK are booming as a spin-off from bloated NHS waiting lists.
Aviva has reported sales of health insurance were up by 41% in 2023 compared with the previous year, with more businesses and individual customers taking out policies as the NHS crisis continues.
But of course the key to profits for insurers is wherever possible to insure people who don’t make claims, and so far Aviva has done this well. Last year they managed to increase annual operating profits from their health insurance business by 9% to £1.5bn — better than analysts had forecast.
So either more people are being persuaded to pay premiums but not needing healthcare, or premium payments have increased more than fast enough to cover any increased spending on treatment. Either way the punters are the source of any increased profit.
Private hospitals
So if the health insurers are doing well, how about the private hospitals?
Here it is difficult to gain any clear understanding of what’s really going on, because official figures for the performance of the private health care sector lag way behind those published by the insurers, and so far only run up to September 2023.
The latest (March 2024) figures from the Private Healthcare Information Network (PHIN) – the body given charge of the task of reporting the state of the private hospital sector by the Competition and Markets Authority – cover only the first three quarters of 2023.
They show numbers of private patients declining from a peak of 230,000 in the first quarter of 2023, but still averaging almost 16% above the level in the equivalent period before the pandemic in 2019.
Total numbers of privately insured patients treated last year were up slightly on 2019, and have remained strong. By contrast numbers of self pay patients, while remaining well above 2019 levels, have been more or less static or falling for two years (since Quarter 2 of 2021).
The last 4 quarters for which figures have been published show the private hospital sector treating almost 8% more private patients a year than in 2019.
Percentages can be misleading when applied to relatively small numbers. The 8% overall increase equates to around 100,000 more patients than 2019. Likewise the 38% increase in numbers of self-pay patients compared with 2019 sounds dramatic: but the increase is from a very small base. In numbers the increase has been just an extra 76,000 patients per year.
In each case the increase in private sector caseload is a negligible fraction of the 3 million-plus increase in the waiting list.
Despite the legitimate fears that the private hospital sector is mushrooming at the expense of the NHS, or becoming the “new normal” it is still tiny and priced beyond the reach of most on the NHS waiting list.
Moreover being on a waiting list means NHS patients have a pre-existing condition, and so cannot cover costs of private care by taking out insurance.
So if we look at real numbers rather than percentages it’s clear that while private hospitals have made some gains, they have not had the bonanza of increased business they might have expected from the huge increase in NHS waiting lists.
PHIN sums up, with less bravado than other private sector bodies:
“The number of admissions paid for with private medical insurance remained at the second highest level in PHIN records. There were 11,000 more insured admissions than in the same period in 2022 (8% increase). …
“Self-pay admissions were down by 1,000 (-1.5%) in Q3 2023 compared to Q3 in 2022. This is, in itself, only a small decline, but it means self-pay admissions were at their lowest levels since the before the pandemic. Admissions financed by ‘self-pay’ fell in every English region. The biggest percentage fall in England came in the South West (10%) and London (-9%).”
Unlike this sober estimate, the ginger group promoting the private sector, the Independent Healthcare Providers Network (IHPN) remains determined to put a more positive spin on the same figures. IHPN director of policy and delivery David Furness pumped up the bravado, commenting:
“The latest data shows strong continued demand for private healthcare, with large numbers of patients choosing to use the private sector to access healthcare. Since the pandemic we have seen a significant increase in the numbers of patients choosing private healthcare – paying for this either by their own means, or through insurance.”
All this is of course technically true (depending on the definition of “significant”), but tends to exaggerate the scale and rate of the growth of the private market.
Other signs of growth in the private market come from Healthcode, the clearing house that processes invoices issued by private hospitals for treatment. These show that over 10 million invoices were submitted in 2023, 3.8m by hospitals and 6.4million by private non-hospitals – representing a year-on-year growth of 24% for non-hospitals and 12% for hospitals.
These figures give a glimpse of the wider range of activity carried out in the private sector – including outpatient and diagnostic appointments, physiotherapy and chemotherapy – that do not appear in the PHIN figures.
Soaring profits
Clearly private health bosses have managed to coin in more profit from each patient. Spire Healthcare demonstrates this clearly, boasting of a 14% increase in income and an astonishing 32% increase in operating profit comparing 2023 with 2022. Both figures far outstrip the 10% increase in Spire’s patient numbers, meaning patients must be forking out far more for their treatment than any increased costs.
Spire’s financial report insists that it is ‘not meaningful’ to compare their figures for profits after tax (which show an even more startling 340% increase to £28m in 2023 from £8.2m in 2022).
But of course the company’s growth is by no means all down to more patients raiding savings to pay for self-pay treatment or people with private health insurance.
The company also treated increased numbers of NHS-funded patients in 2023, notably a 14% year on year increase in orthopaedics, (the specialty which now accounts for 58% of all Spire’s NHS referrals).
Treating NHS patients
A recent Guardian report revealed: “Private operators carried out 1.67m procedures on NHS patients in 2023 – the most ever […] 29% more than the 1.3m they did during 2019.” This equates to one in ten elective NHS procedures now done by private providers.
However there are contradictions. The IHPN “internal briefing” on which the report is based goes on to claim: “[private hospitals] undertook the largest number of NHS procedures ever in a single month last November – 85,460.”
The IHPN spin doctors don’t seem to have noticed that if this “highest-ever” monthly rate was sustained for 12 months it would give a total of 1,025,520/year, which is LESS than the 2019 figure and not even two thirds of the claimed 1.67m in 2023.
The IHPN seems also to have forgotten that in May last year the Times (no doubt using IHPN figures) reported: “the private sector performs about 140,000 procedures a month [=1.68 million/year] paid for by the NHS out a total of 1.5 million [i.e. 9.3%] …”.
The same article reported that in March 2023: “around 1 in 10 elective procedures carried out for the NHS were delivered by independent providers …..”. So that’s not new, either.
In February the Health Service Journal noted the varied but increasing use of the private sector for NHS patients, and listed areas where up to 20% of NHS elective patients are treated by private providers.
However these figures if anything understate the extent of NHS utilisation of private providers.
The most recent NHS figures for services commissioned from the private sector add up to an astonishing FIVE MILLION appointments and procedures in 2023 – including 728,000 day cases, 108,000 hospital admissions, 1.1 million outpatient appointments, 2.1 million follow-up appointments, and 722,000 diagnostic tests.
Peak privatisation?
It’s not obvious that much more expansion of private provision beyond this point is viable. Last year’s Times article referred to earlier warned: “There are questions about how far this can be scaled up.” Moreover the IHPN itself published a blog admitting the private sector’s limitations, saying: “we’re quite clear on this – the independent sector alone cannot solve the ongoing electives crisis in the NHS.”
The IHPN also went on to claim, more questionably: “What the IS [Independent Sector] does deliver, however, is genuinely additional capacity to the NHS, and capacity that can be responsive to need and scaled quickly if the demand is there.”
However The Lowdown has argued that scope for the NHS to make increased use of the private sector is restricted by the limited size of private hospitals (average size 46 beds) and the limited facilities they have available. This means they cannot, and do not wish to take on more complex cases – which means these patients inevitably wind up waiting for the limited number of available NHS beds.
The NHS Confederation in December 2022 also told the Public Accounts Committee that both the NHS and private sector “are recruiting from the same pool” of qualified staff, so far from offering “genuinely additional capacity,” so any growth of the private sector inevitably undermines the NHS. The Confed went on:
“the independent sector will not have the capabilities, workforce or capital to take on the cases which are more complex in nature and acuity. The NHS will likely be left with the more complex and costly procedures to carry out because of the expertise and infrastructure needed. People on waiting lists, many of whom have been waiting several months, have deteriorated in their health and will need more complex care than they did when they first joined the waiting list. Due to this, these patients will not have the choice to use the independent sector, and this further complexity of care means health inequalities worsen.”
NHS Providers, representing trusts and foundation trusts, also warned:
“The role of the independent sector is limited … Independent sector provision largely covers high volume, low complexity cases as most independent sector providers do not have intensive care capacity. Therefore, independent sector provision can only really accommodate low risk patients.”
Private sector as a last resort
There is no denying that NHS capacity has been seriously weakened by 14 years of real terms under-funding and increasingly inadequate investment in NHS capital projects, together with the inadequacy of social care provision leaving upwards of 13,000 patients a day stuck in front line hospital beds for lack of support at home or in the community.
For most NHS bosses increased dependence on private providers has therefore been not so much a policy choice but a last resort, in the effort to stem the growth of waiting lists.
It is leading (as in so many other parts of the NHS) to disproportionate resources being focused on patients with relatively minor, easy to treat symptoms, while more complex cases are left to wait even longer.
The reluctance of NHS managers to see funding – and potentially staff – flow from trusts in to private hospitals (and their shareholders) can be seen from the fact that the target of 10 percent of patients to be treated by the private sector was first set by New Labour almost 20 years ago in 2006. It was never achieved then, and if it has in fact now been surpassed it has only been achieved through the most brutal austerity and decline of NHS capacity.
The latest figures, with all their inconsistencies, do remind us of the extent to which the NHS is being undermined (or as Dr John Puntis of Keep Our NHS Public puts it, “cannibalised”) by the increasing focus by ministers and NHS leaders on expanding the private sector’s role.
The private hospital sector, which is still not yet profiting as much as it hoped, keeps pressing for more NHS-funded patients to fill its under-used capacity, while the NHS, hobbled by real terms cuts and lack of capital investment, is unable to make full use of its own capacity, and bullied by government in to more private contracts.
That’s why in the fight to defend and expand the NHS, and roll back privatisation it would be a mistake for campaigners to draw defeatist conclusions from the puff and swagger of the IHPN: there is plenty of NHS still left to fight for.
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