THE vastly improving fortunes of Britain's two largest private health companies say much about the sector's growing importance in the provision of healthcare and its consequent demands on limited clinical expertise.
spire.jpg Spire Healthcare, which operates 39 hospitals across Britain, has just reported results for the first half of 2022 that show how a combination of the pandemic and lack of investment in the NHS have transformed its business.
"Fundamental changes are underway in UK healthcare," declared chief executive Justin Ash, "leading to strong growth in Spire Healthcare's private revenues." He could unveil a 22 percent growth in income from the equivalent pre-pandemic period, despite disruption from cancellations caused by the Omicron wave. The healthy returns included, more importantly, a near doubling of income to £174m (up 96.5 percent) from people electing to pay for themselves.
The future looks rosy indeed
Behind this lay "approximately 6.7m people awaiting treatment through the NHS", prompting many to opt for private treatment. With a new NHS framework agreement worth around £10bn for private hospital companies such as Spire to help with a fraction of the problem, which will provide plenty of cash without diminishing demand for paid treatment, the future looks rosy indeed. The company's chief commercial officer notes gleefully that "58 percent of Spire's target audience are now more likely to consider using a private hospital than they were before as a result of growing NHS waiting lists".
Companies like Spire are well placed to cash in on the good times ahead (for them), having been protected from the pandemic by taxpayer cash. As Eye 1561 revealed, Spire received £430m under contracts to provide availability to the NHS in the 13 months to March 2021, although far less was used than expected. Its share price more than doubled during the pandemic as Covid's beneficial financial side effects became clear.
All this expansion requires staff, of course, with consultants and nurses leeching from NHS services. While Spire does run its own nurse apprentice scheme, the NHS naturally steps in to provide its future recruits with placements in the publicly owned health service.
Dissatisfaction and frustration
The next frontier is GP services. "Our research amongst consumers and GPs reveals a growing dissatisfaction and frustration with the current state of GP services, echoing many of the headlines we are seeing in the media," reports Spire. The answer is its own GP service, for which demand grew 69 percent on last year and 169 percent on pre-pandemic levels. So where are all the GPs coming from to perform this work, currently over 30,000 annual appointments? The NHS, of course. "The recruitment of additional GPs is ongoing," it reports.
At the same time, Spire has negotiated a deal to access NHS GP records in what is the latest variation on health service cherrypicking. Those turning to Spire for that quick check-up on something that might or might not turn out nasty are nevertheless advised to "remain registered with your local NHS practice to ensure assistance in the event of a medical emergency". The NHS can pick up the messy stuff, in other words.
Small wonder those who can afford around £100 for an appointment (though prices vary depending on market-driven algorithms) can get an appointment within a couple of days while health secretary Thérèse Coffey can only aspire to offer a 14-day system in an NHS short of more than 4,000 GPs in England. Unless far more is done than Coffey gives any indication of, with companies like Spire promising to expand their GP service further (and thus denude the NHS's) a two-tier health system is all but nailed on.
Britain's largest private hospital provider looks in equally good shape. Circle Health has more than 50 hospitals (it acquired the BMI chain just before the onset of the pandemic). It too has reported that in 2021 it "saw a substantial increase in demand for treatment from patients for themselves, alongside increases in activity from [private medical insurance] and NHS funded patients". Cue a 7 percent growth in income to £1.05bn from the heavily taxpayer supported previous year (with a total of £468m in Covid contract payments to March 2021). This translates into handy business profits, up 14 percent to £83m, and double-digit percentage boardroom pay increases.
Circle is not without financial challenges. Its BMI acquisition came with leases on around 30 properties, costing it almost £120m every year and leaving it with losses, before certain exceptional items, of £41m. Such is the outlook for private healthcare, however, that Circle's US owner, Centene Inc, evidently thought this will be covered before long.
Most of the lease costs now end up with another US company, Medical Properties Trust Inc, and are subject to "annual inflation-based escalators" that ensure the chunk of private and NHS-funded health spending heading to overseas landlords is protected. Unlike health services for those who can't afford private healthcare.