NHS expands private care to help fill £20bn funding gap

Doctors from King’s College Hospital visited Dubai last month, the latest stop on a world tour to show off their skills at treating liver disease.

The south London hospital is owned and run by the state. But as a £20bn funding hole opens up in Britain’s National Health Service, hospitals are boosting their private practices.

King’s is looking for money both overseas, where it sells treatments for cirrhosis, diabetes and other liver conditions through the Middle East, and at home, where it is expanding private wards at its Denmark Hill site.

But the growth of private wards, at a time when NHS waiting lists stretch ever longer, has set off a debate about the health service’s priorities.

“It is still a small proportion of their income overall, although it is growing,” said Ted Townsend, an analyst at LaingBuisson, the healthcare consultancy. “But some hospitals still do not believe that servicing private patients should be part of their remit.”

He added that he was not sure NHS hospitals would be able to make the “quantum leap” of transforming their finances by selling more private care.

Private patient income has grown steadily since 2012, when a change to the Health & Social Care Act allowed hospitals to raise 49 per cent of income from non-NHS work. But it has been steeper at some hospitals than others.

The Royal Marsden, a cancer specialist, is the most commercial, according to LaingBuisson, increasing revenues from private patients 13 per cent over the past two years to £77m — a quarter of total patient income.

London’s specialist hospitals are the most ambitious in targeting private patients. Imperial College and Moorfields, the eye hospital, have also opened clinics in Dubai. Moorfields also runs a small pharmaceuticals manufacturing division in London, making niche ophthalmic medicines.

This specialist expertise in — for example — bone marrow or liver transplants was key to the hospitals’ success in winning private patients, both at home and overseas, said Mr Townsend. “Just adding a wing with private beds and better food does not really cut it,” he added.

Overall the 18 NHS hospitals in London running wards for private patients have increased revenues from them by an average 9 per cent over the past two years, according to LaingBuisson. About a quarter of patients using these services came from overseas.

Although hospital managers argue that profits can be ploughed into frontline services for all patients, campaigners fear it distracts from their core remit of providing free healthcare to the rest of the UK population.

Alan Taman, of the campaign group Keep Our NHS Public, said the trend was “alarming”.

“The setting up of the market is completely wasteful and at odds with the principles with which the NHS was founded,” he added. “The fact that the law has paved the way for an increase in private provision, which could provide a distraction, is very, very worrying.”

Others questioned whether the prices charged in NHS hospitals are sufficient to cover the full cost of treatment, raising concerns that taxpayer money is helping to subsidise private patients, according to one expert, who declined to be named.

King’s College Hospital said it was expanding its commercial activities “simply to improve the services we provide for NHS patients”.

“For the avoidance of doubt, private patient services at King’s are provided in a separate part of the hospital, so NHS patients are not affected or disadvantaged,” it said.

NHS hospitals have also grown their ties with independent operators, and central London hospitals process a quarter of the capital’s £1.4bn private healthcare market.

For example, HCA Healthcare — which is listed on the New York Stock Exchange — has been running a specialist cancer unit in partnership with the Christie NHS Trust in Manchester since 2010. It is also opening a £100m integrated cancer centre at Guy’s and St Thomas Foundation Trust near London Bridge in the capital within the next two years.

Meanwhile, independent healthcare providers are also winning business from the NHS. Hospitals run by companies including Ramsay Healthcare, Spire Healthcare, BMI and Nuffield now earn a quarter of their revenues from treating NHS patients, according to LaingBuisson.

Fiona Booth, chief executive of the Association of Independent Healthcare Organisations, said all hospital providers, including private patient units at NHS hospitals, were benefiting from an increase in demand from people “who want more choice over their healthcare and are willing to pay for it”.

“For NHS hospitals, this additional revenue can be channelled into support for frontline services at a time of growing demand,” she added.