Private hospitals are becoming more dependent on providing NHS services as private medical insurance (PMI) activity continues to fall, according to the latest industry survey from Laing and Buisson.
Overall the sector bucked the recession with a 7.5% rise in sales to £3.76bn in 2009 but its reliance on NHS services grew almost four-fold over the previous two years.
Twenty-two per cent of mainstream independent hospital activity was paid by the NHS (212,200 cases, 21.8% of total) in 2009, compared with just 6% in 2007 (55900 cases).
Meanwhile, the market analyst's Healthcare Market Review 2010-11, reveals traditional private healthcare funded by medical insurance and from patients' own pockets remained in the doldrums as the recession bit.
In 2009 private medical insurance contributed 625,000 cases, just 64.1% of the workload for independent hospitals, down from almost three-quarters (73.8%, 655,700 procedures) in 2007.
Self-paying patients suffered a similar fall from 172,300 patients (19.4% of the total) to 127,800 (just 13.1%).
Figures for 2010 are not yet available, but it is believed that medical insurance and self-paid activity has stabilized.
The sub-set of NHS paid activity which is undertaken by independent sector hospitals through the ‘choice' initiative continues to grow rapidly, the report claims.
According to the latest available data in the review, NHS ‘choice' activity in England was running at a rate of 200,000 procedures a year by July 2010, generating £400m of turnover a year for independent hospitals.
And it suggests that senior officials at the Department of Health believe the scale of ‘choice' activity carried out by the independent sector could be set to expand even more, perhaps to triple its current size.
The review itself considers it might ultimately multiply five times to one million procedures at a cost of about £2bn a year, at which point it would still represent less than 20% of all NHS paid activity overall.
William Laing, chief executive of Laing & Buisson, explained that expanding the services provided for the NHS has obvious attractions for independent hospitals as the publicly paid market is massively greater than the traditional private healthcare market.
"But, it has great dangers as well, since too much focus on publicly paid patients could compromise their appeal to traditional, privately paying customers," he said.
"There is a conflict which independent hospital providers have not yet fully resolved. If the independent sector seriously wants to address the potentially massive, choice driven public sector market, it will have to create a lot more capacity.
"This may come from a mix of existing players and new hospital providers entering the market with lower cost business models capable of generating reasonable profits from NHS tariff rates," he added.
