How the private healthcare system is growing in the wake of NHS struggles

As the health service buckles under lengthy waiting lists exacerbated by the Covid pandemic, patients are increasingly turning to private providers for their healthcare.

The surge in demand has meant the value of the private healthcare market balloned to a record £12.4 billion in 2023, with the NHS splashing out more than £2bn over the year in a bid to ease the patient backlog, new research shows.

Last year’s NHS annual spend was a record outside of the pandemic when emergency funding was given, according to the new report by market research company LaingBuisson.

The report authors are warning that NHS’s use of the private sector is unlikely to reduce due to “contrained funding”. This is despite Wes Streeting reportedly planning an inflation-busting funding deal for the NHS worth between £7bn and £8bn.

The publication reveals that private hospitals were valued at £6.8bn, up from £1.9bn in 2003, and 75 per cent of revenue went to the five of the biggest providers.

The largest private providers are Spire Healthcare and Circle Healthcare Group, estimated to have a turnover of £1.3bn and £1.18bn respectively in 2023, while HCA Healthcare was just behind on £1.01bn. Nuffield Health had a turnover of £976 million and Ramsey Health Care UK had £610 million.

Meanwhile, individual private clinics and doctors accounted for £4.92bn of the private sector’s gains in 2023.

According to the analysis, the proportion of funding for the private sector coming from the NHS grew from 10 per cent in 2003 to an estimated 31 per cent in 2023.

It predicts that the growth in the UK private healthcare market will outstrip inflation over the next year and its market value is likely to surpass £13 billion by the end of the 2024-25 financial year and reach more than £14 billion by 2025.

The report comes following repeated promises by the Labour government to increase the use of the private sector to tackle NHS waiting lists. It noted that the increased use of the private sector by the NHS was driven by policies created under the 2004 Labour government.

Report author Tim Read said: “LaingBuisson’s analysis suggests that the private acute healthcare market is continuing to benefit from the challenges impacting the NHS.

“Hospital providers are benefitting from the continuing boom in private health insurance and this has offset a slight softening in demand from those paying out of their own pocket for care.

“For those providers that are more focused on providing additional capacity to the NHS, there remains little sign that there is a lessening of need of independent sector support and revenue from this segment has remained robust.”

The report found hospital groups are now also goinginto new areas such as private GP services. However, the largest area of NHS-funded care done in the private sector was ophthalmology in which around 50 per cent of procedures are done by independent providers.

There are believed to be around 207 ophthalmology clinics in England which mainly provide cataract surgery. Cataract surgery was worth £730 million to the private market in 2023-24 – up from 190 million in 2022-23.

Cosmetic surgery clinics make up the largest proportion of private sector small clinics with 599 operating throughout the country. However, figures show the number of procedures done in these clinics in the UK was down in 2023, at 28,000, a fall it suggests has been partly driven by medical tourism.

The report said: “Medium-term prospects for NHS purchasing of independent sector healthcare services are positive and are likely to remain so if the NHS is unable to deliver adequate and timely diagnostic and elective surgery services in-house.

“While there is a rollout of community diagnostic centres that are increasing throughput, this is marginally against the backdrop of the demand on the NHS and the pressure to reduce the waiting lists.”

The Independent has contacted the Department for Health and Social Care for comment.