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Private Healthcare - UK - June 2016

“The financial struggles of NHS Trusts provide an even greater opportunity for private providers to take on more NHS work and could see more people turning to private healthcare to guarantee access to healthcare services. An efficient and cost-effective private healthcare sector could lead to greater benefits for patients, providers, health professionals and insurers, while also easing the burden on the NHS and the wider UK health sector.”
– Lewis Cone, Research 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.

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, 2011-15
        • Figure 2: The UK PMI Market, 2010-2014, by Number of Policyholders and People Covered
        • Figure 3: Estimated Weekly Spend on PMI Premiums, by Region, 2012-14
      • Market trends
        • Rising demand for health cash plans denting PMI growth...
          • ... as self-pay healthcare sector growth also potentially dampens PMI development prospects
            • Private provider income set to be faced with additional cost pressures
              • Government action has sent mixed signals to the PMI market
                • Market factors
                  • NHS budgetary issues affecting industry performance...
                    • ...but outsourcing to private sector remains strong
                      • Doubts still surround level of competition in the market
                        • Rise in insurance premium tax could dampen PMI market growth
                          • Industry structure
                            • Private Acute Medical Care
                              • PMI
                                • The consumer
                                  • Forecast
                                    • Strong, but stable, growth expected in private acute healthcare to 2020
                                      • Figure 4: Forecast UK Expenditure on Private Acute Healthcare, 2016-2020
                                    • Slow growth expected in the PMI market
                                      • Figure 5: UK Market Forecast for Private Medical Insurance Subscription Income, 2016-2020
                                    • What we think
                                    • Key Insights

                                        • What impact will NHS performance have on the industry’s own development?
                                          • Has government-led action helped restore growth potential in the PMI market?
                                            • Are there regional and demographic differences in PMI coverage and spending? Can providers benefit from these?
                                              • How are overseas patients influencing the private acute market?
                                                • What will affect future market development?
                                                • Introduction

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

                                                              • Key points
                                                                • Overview
                                                                  • Figure 6: UK GDP Quarterly Development, 2005-2015
                                                                  • Figure 7: Quarters after GDP Peak, 1979, 1990 and 2008
                                                                • Inflation
                                                                  • Interest rates
                                                                    • House prices
                                                                      • Consumer spending
                                                                        • Manufacturing
                                                                          • Figure 8: UK Output, by Industry, 2008-2015
                                                                        • Business investment
                                                                          • Figure 9: UK GFCF 2005-2015
                                                                        • Imports
                                                                          • Exports
                                                                          • Market Factors

                                                                            • Key points
                                                                              • NHS budgetary issues affecting industry performance...
                                                                                  • Figure 10: Total Departmental Expenditure Limits, in Real Terms, 2010/112015/16
                                                                                  • Figure 11: Total Departmental Expenditure Limits, in Real Terms, 2010/11-2015/16
                                                                                • ...but outsourcing to private sector remains strong
                                                                                  • Doubts still surround level of competition in the market
                                                                                    • Slight improvement in disposable income in 2015 partially offsets impact of PMI premium growth
                                                                                      • Figure 12: GDP per Head at Current Market Prices and Real Household Disposable Income per Head, Q1 2011 Q4 2015
                                                                                      • Figure 13: GDP per Head at Current Market Prices and Real Household Disposable Income per Head, Q1 2011 - Q4 2015
                                                                                    • Rise in insurance premium tax could dampen PMI market growth
                                                                                      • The falling unemployment rate could boost corporate PMI demand
                                                                                        • Figure 14: Total UK Unemployment Rate Among People Aged 16+, Q1 2011 Q4 2015
                                                                                    • Independent Hospital and Clinics

                                                                                      • Key points
                                                                                      • Market Size

                                                                                        • Key points
                                                                                            • Figure 15: UK Expenditure on Private Acute Healthcare, 2011-15
                                                                                            • Figure 16: UK Expenditure on Private Acute Healthcare, 2011-15
                                                                                            • Figure 17: Analysis of the Development of Private Acute Hospitals in the UK, 2011-2015
                                                                                            • Figure 18: Analysis of the Development of the Number of Beds in Private Acute Hospitals in the UK, 2011-15
                                                                                            • Figure 19: Development of the Number of Beds in Private Acute Hospitals in the UK, 2011-15
                                                                                        • Market Segmentation

                                                                                          • Key points
                                                                                            • Expenditure
                                                                                              • Private healthcare expenditure can be segmented into a number of activities.
                                                                                                  • Figure 20: Segmentation of Private Healthcare Expenditure, by Type, 20112015
                                                                                                  • Figure 21: Segmentation of Private Healthcare Expenditure, by Type of Service, 2011-2015
                                                                                                  • Figure 22: Funding Source Segmentation for Acute Hospitals and Clinics, by Source, 2014 and 2015
                                                                                                  • Figure 23: Funding Source Segmentation for Acute Hospitals and Clinics, by Source, 2015
                                                                                                • Analysis by Type of Operator
                                                                                                    • Figure 24: Analysis of Private Acute Hospitals in the UK, by Type of Operator, 2015/16
                                                                                                    • Figure 25: Analysis of Private Acute Hospitals in the UK, by Type of Operator, 2015/16
                                                                                                  • Regional Analysis
                                                                                                    • Figure 26: Regional Analysis of UK Independent Acute Hospitals, 2015/16
                                                                                                    • Figure 27: Regional Analysis of UK Independent Acute Hospitals, 2015/16
                                                                                                • Market Share

                                                                                                  • Key points
                                                                                                      • Figure 28: Major Private Acute Hospital Operators, 2015/2016
                                                                                                      • Figure 29: Major Private Acute Hospital Operators, 2015/16
                                                                                                  • Company Profiles – Private Healthcare Industry

                                                                                                    • BMI Healthcare

                                                                                                          • Figure 30: Financial Analysis of BMI Healthcare, 2010-14
                                                                                                        • Company strategy
                                                                                                        • Care UK

                                                                                                              • Figure 31: Financial Analysis of Care UK, 2011-15
                                                                                                              • Figure 32: Revenue Breakdown of Care UK, by Division, 2013-15
                                                                                                            • Company strategy
                                                                                                            • HCA International

                                                                                                                  • Figure 33: Financial Analysis of HCA International, 2010-2014
                                                                                                                • Company strategy
                                                                                                                • Roodlane Medical

                                                                                                                      • Figure 34: Financial Analysis of Roodlane Medical, 2010-2014
                                                                                                                    • Company strategy
                                                                                                                    • Nuffield Health

                                                                                                                          • Figure 35: Financial Analysis of Nuffield Health, 2010-14
                                                                                                                        • Company strategy
                                                                                                                        • Ramsay Health Care UK Operations

                                                                                                                              • Figure 36: Financial Analysis of Ramsay Health Care UK Operations, 2011-15
                                                                                                                            • Company strategy
                                                                                                                            • Spire Healthcare

                                                                                                                                  • Figure 37: Financial Analysis of Spire Healthcare Group, 2010-14
                                                                                                                                • Company strategy
                                                                                                                                • St Martins Healthcare

                                                                                                                                      • Figure 38: Financial Analysis of St Martins Healthcare, 2010-2014
                                                                                                                                    • Company strategy
                                                                                                                                    • Independent Hospitals and Clinics Forecast

                                                                                                                                      • Key points
                                                                                                                                        • Healthcare challenges that can be helped by private provision
                                                                                                                                          • Private provider income set to be faced with additional cost pressures
                                                                                                                                            • Technology could be used to improve service delivery and attract new patients
                                                                                                                                              • Strong, but stable, growth expected in private acute healthcare to 2020
                                                                                                                                                  • Figure 39: Forecast UK Expenditure on Private Acute Healthcare, 20162020
                                                                                                                                                  • Figure 40: Forecast UK Expenditure on Private Acute Healthcare, 2016-2020
                                                                                                                                              • Private Medical Insurance

                                                                                                                                                • Key points
                                                                                                                                                  • PMI Ownership and Availability
                                                                                                                                                      • Figure 41: Ownership of Insurance or Savings Products for Health Needs, July 2015
                                                                                                                                                      • Figure 42: Proportion of Employers Offering Selected Benefits as Core, March 2014
                                                                                                                                                  • Market Trends

                                                                                                                                                    • Key points
                                                                                                                                                      • Rising demand for health cash plans denting PMI growth...
                                                                                                                                                        • ... as self-pay healthcare sector growth also potentially dampens PMI development prospects
                                                                                                                                                        • Market Size

                                                                                                                                                          • Key points
                                                                                                                                                              • Figure 43: Annual Average PMI Premium, by Purchaser Type, 2005-15
                                                                                                                                                              • Figure 44: Average Annual PMI premium, by Purchaser Type, 2005-15
                                                                                                                                                            • Premium and subscription growth
                                                                                                                                                              • Figure 45: The UK Market for Private Medical Insurance, 2011-15
                                                                                                                                                              • Figure 46: Claim Amounts Incurred as a Proportion of Gross Earned Premiums, 2011-15
                                                                                                                                                              • Figure 47: PMI Gross Earned Premiums, Claims Paid and Gross Margin, 2011-2015
                                                                                                                                                              • Figure 48: The UK PMI Market, 2011-2015, by Number of Policyholders and People Covered
                                                                                                                                                              • Figure 49: The UK PMI Market, 2011-2015, by Number of Policyholders and People Covered
                                                                                                                                                            • Market development
                                                                                                                                                              • Ongoing private healthcare market investigation
                                                                                                                                                              • Market Segmentation

                                                                                                                                                                • Key points
                                                                                                                                                                  • Corporate and group PMI
                                                                                                                                                                    • Individual PMI
                                                                                                                                                                      • Overall PMI market
                                                                                                                                                                        • Figure 50: Segmentation of Private Medical Insurance, by Policyholder Type, 2011-15
                                                                                                                                                                        • Figure 51: Segmentation of Private Medical Insurance Subscribers, 2011-2015, by Policyholder Type
                                                                                                                                                                        • Figure 52: Segmentation of Private Medical Insurance Value, 2011-2015, by Market Value
                                                                                                                                                                        • Figure 53: Estimated Regional PMI Penetration and Weekly Spend on Private Medical Insurance Premiums
                                                                                                                                                                        • Figure 54: Estimated Regional PMI Penetration, 2014
                                                                                                                                                                        • Figure 55: Estimated Weekly Spend on PMI Premiums, by Region, 2012-14
                                                                                                                                                                        • Figure 56: Average Weekly Household Expenditure on Medical Insurance Premiums, by Age Group, 2010-14
                                                                                                                                                                      • Health cash plans
                                                                                                                                                                      • Industry Development

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Market share
                                                                                                                                                                            • Figure 57: Estimated Market Share in the UK PMI Market, by Company, 2015
                                                                                                                                                                            • Figure 58: Private Medical Insurance Market Share, by Company, 2015
                                                                                                                                                                        • Company Profiles – Private Medical Insurance Industry

                                                                                                                                                                          • Aviva Healthcare UK

                                                                                                                                                                                • Figure 59: Financial Analysis of Aviva Plc, 2011-15
                                                                                                                                                                              • Company strategy
                                                                                                                                                                              • AXA PPP Healthcare

                                                                                                                                                                                    • Figure 60: Financial Analysis of AXA PPP Healthcare, 2010-14
                                                                                                                                                                                  • Company strategy
                                                                                                                                                                                  • Bupa

                                                                                                                                                                                        • Figure 61: Financial Analysis of Bupa, 2011-15
                                                                                                                                                                                        • Figure 62: Divisional Analysis of Bupa, 2011-15
                                                                                                                                                                                      • Company strategy
                                                                                                                                                                                      • VitalityHealth (formerly PruHealth)

                                                                                                                                                                                            • Figure 63: Financial Analysis of VitalityHealth (formerly PruHealth), 2011-15
                                                                                                                                                                                            • Figure 64: Financial Analysis of Vitality Health Insurance Limited (formerly Prudential Health Insurance Limited), 2011-15
                                                                                                                                                                                          • Company strategy
                                                                                                                                                                                          • Western Provident Association

                                                                                                                                                                                                • Figure 65: Financial Analysis of Western Provident Association, 2010-14
                                                                                                                                                                                              • Company strategy
                                                                                                                                                                                              • PMI Forecast

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                  • PMI could reduce the burden on the NHS
                                                                                                                                                                                                    • Demographic changes and the impact of the pensions reform could influence direction of PMI market
                                                                                                                                                                                                      • Further rise in IPT from October 2016 is likely to offset attempts to reduce premiums for customers
                                                                                                                                                                                                        • New product offerings used to improve market accessibility and efficiency
                                                                                                                                                                                                          • It may prove difficult for insurers to improve relative to competitors, given that many
                                                                                                                                                                                                            • Slow growth expected in the PMI market
                                                                                                                                                                                                              • Figure 66: UK Market Forecast for Private Medical Insurance Subscription Income, 2016-2020
                                                                                                                                                                                                              • Figure 67: UK Market Forecast for Private Medical Insurance Subscription Income, 2016-2020
                                                                                                                                                                                                              • Figure 68: UK Market Forecast for Private Medical Insurance, by Number of Policy Holders, 2016-2020
                                                                                                                                                                                                              • Figure 69: UK Market Forecast for Private Medical Insurance, 2016-2020, by Number of Policy Holders
                                                                                                                                                                                                            • The growing emergence of the ‘self-pay’ market could restrict PMI development
                                                                                                                                                                                                            • The Consumer – Last Private Healthcare Visit

                                                                                                                                                                                                              • Key points
                                                                                                                                                                                                                • Nearly two-thirds of consumers have never used a private healthcare service
                                                                                                                                                                                                                    • Figure 70: Private Healthcare Use, by Time Passed Since Last Visit, April 2016
                                                                                                                                                                                                                    • Figure 71: Private Healthcare Use, by Time Passed Since Last Visit, April 2016
                                                                                                                                                                                                                  • Private healthcare service use declines with age
                                                                                                                                                                                                                    • Figure 72: Private Healthcare Use, by Time Passed Since Last Visit and by Age and Gender, April 2016
                                                                                                                                                                                                                    • Figure 73: Private Healthcare Use by Males, by Time Passed Since Last Visit and by Age, April 2016
                                                                                                                                                                                                                    • Figure 74: Private Healthcare Use by Females, by Time Passed Since Last Visit and by Age, April 2016
                                                                                                                                                                                                                • The Consumer – Method of Payment

                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                    • Self-pay patients lead private healthcare payments
                                                                                                                                                                                                                        • Figure 75: Private Healthcare Payment Method, April 2016
                                                                                                                                                                                                                        • Figure 76: Private Healthcare Payment Method, April 2016
                                                                                                                                                                                                                      • Women most likely to self-fund private healthcare treatment
                                                                                                                                                                                                                        • Figure 77: Private Healthcare Payment Method, by Gender, April 2016
                                                                                                                                                                                                                        • Figure 78: Private Healthcare Payment Method, by Gender, April 2016
                                                                                                                                                                                                                      • Recent surge in use of employer-provider PMI
                                                                                                                                                                                                                        • Figure 79: Private Healthcare Use, by Time of Last Visit and by Payment Method, April 2016
                                                                                                                                                                                                                        • Figure 80: Private Healthcare Use, by Time Passed Since Last Visit and by Payment Method, April 2016
                                                                                                                                                                                                                    • The Consumer – Health Insurance Provider

                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                        • Bupa dominates health insurance coverage
                                                                                                                                                                                                                            • Figure 81: Private Healthcare Insurance Provider, April 2016
                                                                                                                                                                                                                            • Figure 82: Private Healthcare Insurance Provider, April 2016
                                                                                                                                                                                                                            • Figure 83: Private Healthcare Insurance Provider, by Cover Payment Method, April 2016
                                                                                                                                                                                                                            • Figure 84: Private Healthcare Insurance Provider, by Cover Payment Method, April 2016
                                                                                                                                                                                                                        • The Consumer – Health Insurance Purchase Factors

                                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                                            • Brand awareness and trust drives medical cover purchase
                                                                                                                                                                                                                                • Figure 85: Private Health Insurance Purchase Factors, April 2016
                                                                                                                                                                                                                                • Figure 86: Private Health Insurance Purchase Factors, April 2016
                                                                                                                                                                                                                              • Local medical cover important to PMI holders
                                                                                                                                                                                                                                • Figure 87: Private Health Insurance Purchase Factors, by PMI payment method, April 2016
                                                                                                                                                                                                                                • Figure 88: Bupa Health Insurance Purchase Factors, April 2016
                                                                                                                                                                                                                            • Further Sources and Contacts

                                                                                                                                                                                                                              • Trade associations
                                                                                                                                                                                                                                • Trade exhibitions

                                                                                                                                                                                                                                Companies Covered

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

                                                                                                                                                                                                                                Private Healthcare - UK - June 2016

                                                                                                                                                                                                                                £1,495.00 (Excl.Tax)