Yahoo Finance England is sleepwalking towards a two-tier health system
The pandemic has driven both the NHS and a growing number of its patients towards private healthcare. Heightened awareness of the health service’s frailties, fuelled by repeated warnings that it could be overwhelmed, has prompted a surge in private medical insurance. As the UK drifts into a possible future of two-tier healthcare, with the wealthy given more chances to skip the queue, we need to ask whether the founding principle of the UK’s health service – free at the point of need – is being eroded in front of our eyes.
There are about 90 private healthcare providers in the UK, such as HCA, Circle, Ramsay, Bupa, Spire and Nuffield Health. The industry is worth about £9bn a year, compared with £177bn of government healthcare spending across the UK in 2019. It includes hospitals, clinics, diagnostics and imaging and urgent care; typical work is general surgery, oncology, obstetrics, trauma and orthopaedics.
Its customers are medical tourists, NHS referrals, people with private medical insurance and self-pay individuals – so-called “out of pocket” payers. This last group includes people paying for one-off operations to avoid waiting for NHS treatment. Ramsay earns about 80% of its revenues from NHS referrals, Spire 30%.
The need to clear the operations backlog has made NHS trusts a lot less squeamish about working with the private sector
Alongside the private companies, many NHS hospitals – particularly specialist ones – provide private care. The Royal Marsden cancer centre’s income from private practice has been growing strongly, reaching £133m in the year to March 2020. This sort of activity is justified on the grounds it helps fund NHS care but is vehemently opposed by anti-privatisation campaigners who argue it is simply a mechanism for the wealthy to jump NHS queues in the same hospital.
Private healthcare firms have done massive business with the NHS during the pandemic, worth around £2bn. In May, the Independent Healthcare Provider Network said its members carried out 3.2m procedures in the previous year for NHS patients, including more than 160,000 for cancer and cardiology.
This was a lifeline for the private sector, which would have struggled to continue running with its NHS-based clinicians fully occupied in NHS hospitals tackling Covid. The company Totally has just reported record results, with revenues up 7.4% to £114m, as the impact of the pandemic on revenue from private patients was mitigated by a substantial rise in NHS work.
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Most private providers have now signed a four-year deal with NHS England worth up to £10bn to help clear the NHS backlog. The final cost will depend on how many procedures are carried out.
What has been noticeable in recent months is that cooperation during the pandemic, alongside the need to clear the operations backlog, has made NHS trusts a lot less squeamish about working with the private sector. Companies such as Spire are hoping for a new culture of collaboration, while Chris Hopson, the chief executive of NHS Providers, has talked about “an opportunity for new ways of doing things that could involve the private sector more”.
Meanwhile 5.1 million people are waiting for NHS operations in England, 385,000 of whom have been waiting more than a year. The pandemic didn’t cause the problem: waiting lists have been growing since around 2013, driven by funding shortfalls, chronic workforce shortages and serious underinvestment in equipment such as scanners. Patients enduring chronic and debilitating pain, such as those waiting for hip and knee surgery, can be left for months with low quality of life, so the incentive to go private is high.
The cost of a routine operation – perhaps £13,000 for hip surgery or £2,500 for cataract surgery on one eye – is within the reach of many older middle-class patients. The operation may be carried out by the same surgeon they would have had in the NHS; and they will often have a better experience, such as having a single room and seeing the same doctor.
In October, as the pandemic began to surge again, HCA Healthcare reported a jump of 25-35% in self-pay patients coming from the south and south-west to its London hospitals. According to the health intelligence company LaingBuisson, self-pay healthcare is showing significant growth and is predicted to expand by another 10-15% over the next three years.
Last autumn, Compare the Market said there had been an average 40% increase in year-on-year private health insurance sales over the previous seven months. About 4 million people in the UK have private medical insurance, mainly through their employer.
The impact of the pandemic on NHS waiting lists worsened health inequalities, with a 31% fall in completed treatments in the most deprived areas of England compared with 26% in the least deprived. The flight to private healthcare means the poorest communities are hit three times: people are more likely to be chronically ill, more likely to be waiting for an operation and have no chance of buying their way out.
The growth of a more mixed healthcare economy, in terms of both NHS treatment carried out in private sector and self-payers, is starting to normalise the idea of private healthcare. The numbers are still relatively small, and even people with comprehensive insurance are likely to need the NHS, but a waiting list with more than 5 million people on it undermines the idea of being free at the point of need. There is not much virtue in being free if the need cannot be met.
If wealthier people start to buy their way out of trouble in significant numbers they will be less willing to pay taxes to improve the NHS. With public spending under intense pressure, and key figures such as Boris Johnson and Michael Gove having strongly criticised the NHS in the past, there is a danger that we will look back on the pandemic as the moment that the seeds of a two-tier healthcare system were really sown.
Richard Vize is a public policy commentator and analyst.
