NHS to spend £1bn going private

Worth A Look, Healthcare & Welfare, Frontier Centre

The health service will treble spending on private treatment to £1 billion in two years as the drive to cut waiting gathers pace, independent health analysts predicted yesterday.

Treatment and diagnoses for health service patients will account for nearly a third of the value of the private health sector in 2007-08.

NHS work currently accounts for about 10 per cent of the private market and last year the NHS spent £235 million in private hospitals and treatment centres. The figures from Laing & Buisson underline Labour’s new direction for a health service that pays the bills but does not provide all the treatment.

Demand for traditional health insurance is expected to fall as the impact of shorter waits and better facilities takes hold and rises in premiums may be held back by increased competition in the new NHS/private health market.

Hospital consultants with private practices are considering grouping together in “chambers” to offer enhanced packages to private hospitals if the number of private patients falls.

“It is clear that the NHS is becoming a much larger benefactor of the independent acute, medical, surgical hospital sector,” said Philip Blackburn, a senior economist at Laing & Buisson.

“It has energised a major restructuring of independent hospital groups to deliver care at a price the NHS is willing to pay. Less clear is the long-term impact that an improved NHS will have on private medical insurance.”

The review says that the new independent sector treatment centres, controversially introduced by the Government to reduce waiting lists, will have a major impact on the private health market.

More than 30 have been commissioned and more will be next year. The review says that last year total revenues to private hospitals and clinics reached an estimated £2.4 billion, a six per cent growth over 2003.

Mr Blackburn said that private health insurance had probably peaked and that insurers would not be able to continue to increase premiums.

Karen Jennings, the head of health at Unison, said: “Independent sector treatment centres are providing rich pickings for the private sector. This is hardly surprising because they are not bound by national tariffs and NHS hospitals are barred from bidding against them.”

Private health insurance has risen by three times the rate of inflation in six years, the insurer PruHealth said.