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Private Healthcare - UK - July 2015

“With the NHS under increasingly intense budgetary pressure, NHS hospitals may increase their private patient capacity over the coming years to balance the books, unless necessary government funding is provided. Public concerns over the increased privatisation of the NHS, following the implementation of the ‘private sector-friendly’ Health and Social Care Act and the slight increase in NHS funds directed to private providers, has to be carefully managed by the government.”
– Lewis Cone, B2B Analyst

This report will explore the following key questions regarding the private healthcare market in the UK:

  • What are the key determinants driving the industry?
  • Was the industry affected by the financial crisis and the slow recovery? If so, how has it developed and changed since?
  • How have government schemes influenced market demand and supply?
  • How has the provision of healthcare services changed over recent times? Has it helped private sector provision?
  • What does the future hold for private healthcare services?

This report covers the private healthcare sector, and includes the provision of healthcare services through private hospitals and clinics, and the private medical insurance sector that is so important to the financing of private medical care. It is estimated that over half of private medical sector expenditure is met through private medical insurance.

Private residential care and nursing care for the elderly is covered in a separate report published annually by MBD. Other related reports published by MBD include the UK occupational healthcare market.

The private healthcare sector operates alongside the publicly available NHS. There is significant inter-relationship between the two systems, with the private sector relying on NHS consultants for a large segment of its medical manpower. The development of the private sector is largely reliant on NHS consultants being available to undertake private work.

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Table of contents

  1. Executive Summary

      • Market size
        • Figure 1: UK Expenditure on Private Acute Healthcare, 2010-14, (£ Million)
        • Figure 2: The UK PMI Market, 2010-2014, by Number of Policyholders and People Covered, (000s)
      • Market trends
        • Market factors
          • Open referrals have improved customer choice and changed cost structures
            • The Health and Social Care act has led to favourable conditions for private healthcare
              • The launch of Fit for Work could increase medical insurance within the workplace
                • The NHS funding crisis and its potential restructuring will indirectly affect the industry
                  • Industry structure
                    • Consumer
                      • Forecast
                        • Figure 3: Forecast UK Expenditure on Private Acute Healthcare, 2015-2019, (£ Million at 2014 prices)
                      • The PMI market is expected to develop at a constant rate over the next five years
                        • Figure 4: UK Market Forecast for Private Medical Insurance Subscription Income, 2015-2019, (£ Million at 2014 prices)
                      • What we think
                      • Key Insights

                          • How has the latest Health and Social Care act impacted the provision of healthcare?
                            • How has the industry reacted to the CMA’s review on the market and its subsequent recommendations?
                              • What are the key drivers for market development?
                                • What has been the impact of consolidation in the industry?
                                  • How will the private sector’s role in healthcare provision change over the coming years?
                                    • How are companies innovating to drive growth?
                                    • Introduction

                                        • Definitions
                                          • Methodology
                                            • Abbreviations
                                              • Market positioning
                                              • UK Economy

                                                • Key points
                                                  • Overview
                                                    • Figure 5: UK GDP, 2004-2015 Q1, (% Quarterly Growth and GDP in £ Billion)
                                                    • Figure 6: Quarters after GDP Peak, 1979, 1990 and 2008, (Number of Quarters and GDP as % of Pre-Downturn Peak)
                                                  • Inflation
                                                    • Interest rates
                                                      • House prices
                                                        • Consumer spending
                                                          • Manufacturing
                                                            • Business investment
                                                              • Imports
                                                                • Exports
                                                                • Market Factors

                                                                  • Key points
                                                                    • The economy
                                                                      • Corporate expenditure
                                                                        • Fiscal incentives
                                                                          • Employment trends
                                                                            • Healthcare environment
                                                                            • Independent Hospital and Clinics

                                                                              • Key points
                                                                              • Market Size

                                                                                • Key points
                                                                                    • Figure 7: UK Expenditure on Private Acute Healthcare, 2010-14, (£ Million)
                                                                                    • Figure 8: UK Expenditure on Private Acute Healthcare, 2010-14, (£ Million)
                                                                                    • Figure 9: Analysis of the Development of Private Acute Hospitals in the UK, 2010-14, (Number of Hospitals)
                                                                                    • Figure 10: Analysis of the Development of the Number of Beds in Private Acute Hospitals in the UK, 2010-14, (Number of Beds)
                                                                                    • Figure 11: Development of the Number of Beds in Private Acute Hospitals in the UK, 2010-14, (Number of Beds)
                                                                                • Market Segmentation

                                                                                  • Key points
                                                                                    • Expenditure
                                                                                        • Figure 12: Segmentation of Private Healthcare Expenditure, by Type, 20102014, (£ Million)
                                                                                        • Figure 13: Segmentation of Private Healthcare Expenditure, by Type of Service, 2010-2014, (£ Million)
                                                                                        • Figure 14: Funding Source Segmentation for Acute Hospitals and Clinics, by Source, 2013 and 2014, (£ Million and % Share)
                                                                                        • Figure 15: Funding Source Segmentation for Acute Hospitals and Clinics, by Source, 2014, (% of Total Value)
                                                                                      • Analysis by type of operator
                                                                                          • Figure 16: Analysis of Private Acute Hospitals in the UK, by Type of Operator, 2014/15, (Number of Hospitals and Beds, % of Total)
                                                                                          • Figure 17: Analysis of Private Acute Hospitals in the UK, by Type of Operator, 2014/15, (% of All Acute Hospitals and % of All Acute Beds)
                                                                                        • Regional analysis
                                                                                          • Figure 18: Regional Analysis of UK Independent Acute Hospitals, 2014/15, (Number of Hospitals and Beds)
                                                                                          • Figure 19: Regional Analysis of UK Independent Acute Hospitals, 2014/15, (% of Hospitals and % of Beds)
                                                                                        • Market share
                                                                                            • Figure 20: Major Private Acute Hospital Operators, 2014/2015, (Number of Hospitals, Beds and Average Number of Beds)
                                                                                            • Figure 21: Major Private Acute Hospital Operators, 2014/15, (Number of Hospitals and Average Number of Beds)
                                                                                        • Independent Hospitals and Clinics Forecast

                                                                                          • Key points
                                                                                              • Figure 22: Forecast UK Expenditure on Private Acute Healthcare, 20152019, (£ Million at 2014 prices)
                                                                                              • Figure 23: Forecast UK Expenditure on Private Acute Healthcare, 2015-2019, (£ Million at 2014 prices)
                                                                                          • Company Profiles – Private Healthcare Industry

                                                                                            • BMI Healthcare

                                                                                                  • Figure 24: Financial Analysis of BMI Healthcare, 2009-13, (£ 000)
                                                                                                • Company outlook
                                                                                                • Care UK

                                                                                                      • Figure 25: Financial Analysis of Care UK, 2010-14, (£ Million)
                                                                                                      • Figure 26: Revenue breakdown of Care UK, by division, 2013-14, (£ Million)
                                                                                                    • Company outlook
                                                                                                    • HCA International

                                                                                                          • Figure 27: Financial Analysis of HCA International, 2009-2013, (£ 000)
                                                                                                        • Company outlook
                                                                                                            • Figure 28: Financial Analysis of Roodlane Medical, 2009-2013, (£ 000)
                                                                                                          • Company outlook
                                                                                                          • Nuffield Health

                                                                                                                • Figure 29: Financial Analysis of Nuffield Health, 2009-13, (£ 000)
                                                                                                              • Company outlook
                                                                                                              • Ramsay Health Care UK Operations

                                                                                                                    • Figure 30: Financial Analysis of Ramsay Health Care UK Operations, 2010-14, (£ 000)
                                                                                                                  • Company outlook
                                                                                                                  • Spire Healthcare

                                                                                                                        • Figure 31: Financial Analysis of Spire Healthcare, 2009-13, (£ 000)
                                                                                                                      • Company outlook
                                                                                                                      • St Martins Healthcare

                                                                                                                            • Figure 32: Financial Analysis of St Martins Healthcare, 2009-2013, (£ 000)
                                                                                                                          • Company outlook
                                                                                                                          • Private Medical Insurance

                                                                                                                            • Key points
                                                                                                                              • PMI Ownership and Availability
                                                                                                                                  • Figure 33: Ownership of PMI and other health and protection products, July 2014, (% of Respondents)
                                                                                                                                  • Figure 34: Proportion of employers offering selected benefits as core, March 2014, (% of Respondents)
                                                                                                                                • Market trends
                                                                                                                                • Market Size

                                                                                                                                      • Figure 35: Average annual PMI premium, by Purchaser Type, 2005-14, (£)
                                                                                                                                      • Figure 36: Average Annual PMI premium, by Purchaser Type, 2005-14, (£)
                                                                                                                                    • Premium and subscription growth
                                                                                                                                      • Figure 37: The UK Market for Private Medical Insurance, 2010-14, (£ Million)
                                                                                                                                      • Figure 38: Claim amounts incurred as a proportion of gross earned premiums, 2010-14, (£ Million and % Gross Margin)
                                                                                                                                      • Figure 39: PMI Gross Earned Premiums, Claims Paid and Gross Margin, 2010-2014, (£ Million and % Gross Margin)
                                                                                                                                      • Figure 40: The UK PMI Market, 2010-2014, by Number of Policyholders and People Covered, (000)
                                                                                                                                      • Figure 41: The UK PMI Market, 2010-2014, by Number of Policyholders and People Covered, (000)
                                                                                                                                    • Market development
                                                                                                                                    • Market Segmentation

                                                                                                                                      • Key points
                                                                                                                                          • Figure 42: Segmentation of Private Medical Insurance, by policyholder type, 2010-14, (000 Subscribers and £ Million)
                                                                                                                                          • Figure 43: Segmentation of Private Medical Insurance Subscribers, 2010-2014, by Policyholder Type, (000 Subscribers)
                                                                                                                                          • Figure 44: Segmentation of Private Medical Insurance Value, 2010-2014, by Market Value, (£ Million)
                                                                                                                                          • Figure 45: Estimated Geographic Penetration of Private Medical Insurance, 2011-13, (% of Households and Average Weekly Spend on PMI)
                                                                                                                                          • Figure 46: Estimated Geographic Penetration of Private Medical Insurance, by Region, 2011-2013, (% of Households)
                                                                                                                                          • Figure 47: Estimated Geographic Penetration of Private Medical Insurance, by Region, 2011-2013, (Average Weekly Spend)
                                                                                                                                          • Figure 48: Average Weekly Household Expenditure on Medical Insurance Premiums, by Age Group, 2011-13, (£)
                                                                                                                                        • Market shares
                                                                                                                                            • Figure 49: Estimated Market Share in the UK PMI Market, by Company, 2014, (% of Total Subscription Revenue)
                                                                                                                                            • Figure 50: Private Medical Insurance Market Share, by Company, 2014 (% of Total Subscription Revenue)
                                                                                                                                        • PMI Forecast

                                                                                                                                          • Key points
                                                                                                                                              • Figure 51: UK Market Forecast for Private Medical Insurance Subscription Income, 2015-2019, (£ Million at 2014 prices)
                                                                                                                                              • Figure 52: UK Market Forecast for Private Medical Insurance Subscription Income, 2015-2019, (£ Million at 2014 prices)
                                                                                                                                              • Figure 53: UK Market Forecast for Private Medical Insurance, by Number of Policy Holders, 2015-2019, (000s of Subscribers)
                                                                                                                                              • Figure 54: UK Market Forecast for Private Medical Insurance, 2015-2019, by Number of Policy Holders, (000s of Subscribers)
                                                                                                                                          • Company Profiles – Private Medical Insurance Industry

                                                                                                                                            • Aviva Healthcare UK

                                                                                                                                                  • Figure 55: Financial Analysis of Aviva Plc, 2010-14, (£ Million)
                                                                                                                                                • Company outlook
                                                                                                                                                • AXA PPP Healthcare

                                                                                                                                                      • Figure 56: Financial Analysis of AXA PPP Healthcare, 2010-14, (£ Million)
                                                                                                                                                    • Company outlook
                                                                                                                                                    • Bupa

                                                                                                                                                          • Figure 57: Financial Analysis of Bupa, 2010-14, (£ Million)
                                                                                                                                                          • Figure 58: Divisional Analysis of Bupa, 2011-14, (£ Million)
                                                                                                                                                        • Company outlook
                                                                                                                                                        • PruHealth

                                                                                                                                                              • Figure 59: Financial Analysis of VitalityHealth (formerly PruHealth), 2010-14, (£ Million)
                                                                                                                                                              • Figure 60: Financial Analysis of Vitality Health Insurance Limited (formerly Prudential Health Insurance Limited), 2010-14, (£ Million)
                                                                                                                                                            • Company outlook
                                                                                                                                                            • Simplyhealth

                                                                                                                                                                  • Figure 61: Financial analysis of Simplyhealth Access, 2009-13, (£ Million)
                                                                                                                                                                • Company outlook
                                                                                                                                                                • Western Provident Association

                                                                                                                                                                      • Figure 62: Financial analysis of Western Provident Association, 2009-13, (£ 000)
                                                                                                                                                                    • Company outlook
                                                                                                                                                                    • The Consumer – Last Private Healthcare Visit

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Nearly 70% of consumers have never used a private healthcare service
                                                                                                                                                                            • Figure 63: Private Healthcare Use, by Time Passed since Last Visit, April 2015, (% of Respondents)
                                                                                                                                                                            • Figure 64: Private Healthcare Use, by Time Passed since Last Visit, April 2015, (% of Respondents)
                                                                                                                                                                          • The middle aged are least likely to have used a private healthcare service
                                                                                                                                                                            • Figure 65: Private Healthcare Use, by Time of Last Visit and by Age and Gender, April 2015, (% of Respondents)
                                                                                                                                                                            • Figure 66: Private Healthcare Use by Males, by Time of Last Visit and by Age, April 2015, (% of Respondents)
                                                                                                                                                                            • Figure 67: Private Healthcare Use by Females, by Time of Last Visit and by Age, April 2015, (% of Respondents)
                                                                                                                                                                        • The Consumer – Usage Factors

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Private services are first in queue
                                                                                                                                                                                • Figure 68: Private Healthcare Usage Factors, April 2015, (% of Respondents)
                                                                                                                                                                                • Figure 69: Private Healthcare Usage Factors, by Most Important Factor, April 2015, (% of Respondents)
                                                                                                                                                                              • Consumers willing to pay for quicker treatment
                                                                                                                                                                                • Figure 70: Private Healthcare Usage Factors, by Age, April 2015, (% of Respondents)
                                                                                                                                                                                • Figure 71: Private Healthcare Usage Factors, by Most Important Factor and by Age, April 2015, (% of Respondents)
                                                                                                                                                                            • The Consumer – Usage Barriers

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Initial treatment costs provide main barrier to demand
                                                                                                                                                                                    • Figure 72: Private Healthcare Service Barriers, April 2015, (% of Respondents)
                                                                                                                                                                                    • Figure 73: Private Healthcare Service Barriers, by Most Significant Barrier, April 2015, (% of Respondents)
                                                                                                                                                                                  • Consumers satisfied with NHS care and cost
                                                                                                                                                                                    • Figure 74: Private Healthcare Deterrents, by Age, April 2015, (% of Respondents)
                                                                                                                                                                                    • Figure 75: Private Healthcare Deterrents, by Most Significant Barrier and by Age, April 2015, (% of Respondents)
                                                                                                                                                                                • The Consumer – Health Insurance Cover

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Market in need of an injection
                                                                                                                                                                                        • Figure 76: Private Health Insurance Coverage, April 2015, (% of Respondents)
                                                                                                                                                                                        • Figure 77: Private Health Insurance Coverage, April 2015, (% of Respondents)
                                                                                                                                                                                      • Live fast, insure young
                                                                                                                                                                                        • Figure 78: Private Health Insurance Coverage, by Age and Gender, April 2015, (% of Respondents)
                                                                                                                                                                                        • Figure 79: Private Insurance Coverage of Males, by Age, April 2015, (% of Respondents)
                                                                                                                                                                                        • Figure 80: Private Insurance Coverage of Females, by Age, April 2015, (% of Respondents)
                                                                                                                                                                                    • The Consumer – Health Insurance Purchase Factors

                                                                                                                                                                                      • Key points
                                                                                                                                                                                        • Access to additional services drives demand
                                                                                                                                                                                            • Figure 81: Private Health Insurance Purchase Factors, April 2015, (% of Respondents)
                                                                                                                                                                                            • Figure 82: Private Health Insurance Purchase Factors, April 2015, (% of Respondents)
                                                                                                                                                                                          • Purchase factors change according to payment method
                                                                                                                                                                                            • Figure 83: Private Health Insurance Purchase Factors, by PMI payment method, April 2015, (% of Respondents)
                                                                                                                                                                                            • Figure 84: Private Health Insurance Purchase Factors, by PMI payment method, April 2015, (% of Respondents)
                                                                                                                                                                                        • Further Sources and Contacts

                                                                                                                                                                                          • Trade associations
                                                                                                                                                                                            • Association of British Insurers
                                                                                                                                                                                              • Association of Independent Healthcare Organisations (AIHO)
                                                                                                                                                                                                • Association of Medical Insurers and Intermediaries (AMII)
                                                                                                                                                                                                  • British Healthcare Trades Association (BHTA)
                                                                                                                                                                                                    • English Community Care Association
                                                                                                                                                                                                      • Trade magazines
                                                                                                                                                                                                        • Caring UK
                                                                                                                                                                                                          • Community Care
                                                                                                                                                                                                            • Cover
                                                                                                                                                                                                              • Health Business
                                                                                                                                                                                                                • Health Insurance & Protection
                                                                                                                                                                                                                  • Health Service Journal
                                                                                                                                                                                                                    • Hospital Bulletin
                                                                                                                                                                                                                      • Hospital Management/Hospital Services/Infection Control
                                                                                                                                                                                                                        • Inside Private Health
                                                                                                                                                                                                                          • Trade exhibitions
                                                                                                                                                                                                                            • Health and Care Innovation Expo 2015
                                                                                                                                                                                                                              • Healthcare Efficiency Through Technology (HETT) Expo
                                                                                                                                                                                                                                • HEI Birmingham/Bristol/Dublin/London/Manchester 2015
                                                                                                                                                                                                                                  • The International Exhibition for European Medical Device Manufacturers
                                                                                                                                                                                                                                    • Safety & Health Expo
                                                                                                                                                                                                                                      • The Procurement Event for Health

                                                                                                                                                                                                                                      Companies Covered

                                                                                                                                                                                                                                      To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                      Private Healthcare - UK - July 2015

                                                                                                                                                                                                                                      £1,495.00 (Excl.Tax)