The fifth annual Health Investor Summit took place in London this week, and we were delighted to be a part of what is arguably one of the most important events of its kind in the conference calendar.
In addition to being a main sponsor and taking a lead in the ‘Are today’s emerging talent really tomorrow leaders?’ breakout session, we also took time out to sit in on many of the other seminars taking place – one of which raised the issue of self-paying hospitals.
The NHS certainly dominates the health care sector in Britain, but there remains a significant private sector. The number of so-called ‘self-pay’ patients – those who pay for treatment out of their own pockets – currently accounts for just under 15% of all revenues, according to The King’s Fund.
In 2007, self-pay spending was estimated to be £515m, equating to approximately 16% of revenues for private medical/surgical hospitals – slightly higher than it is today. However, don’t let that mislead you into thinking that this is a market that has been decline.
Rather, double digit growth in the self-pay healthcare sector over the last 12 months at the expense of private medical insurance has led some analysts to predict a 15-20% market growth within the next three years, with the London self pay market estimated to grow at 20% annually – driven largely by inbound international business.
Indeed, a report published in June found that “Rising PMI premiums, reduced confidence in and access to NHS services and changing demographics” are driving this growth with the suggestion that “the traditional models of Private Medical Insurance are simply not going to be sustainable in the future – either for corporate or personally paid policies.” Take Nuffield as a case in point.
In June, Nuffield, one of the UK’s largest private hospital groups, published it’s annual figures and revealed that it saw its own revenues increase by 9% in 2014, thanks largely to “double-digit” growth in self-pay business.
Russell Hardy, Nuffield Health chairman, said: “In our hospitals business the PMI market is proving slow to recover and NHS price tariffs are under continued pressure. Only the self-pay market is looking strong but with the uncertainty of the economic outlook we have to be cautious.”
He added that the PMI sector is proving to be “slow” to recover. Slow yes, but just how much ground can the self-pay market gain on the PMI sector and what, if anything, can the latter do to stave off the threat from the former?
The private medical insurance market has lost a lot of ground to company-paid schemes where they cam enjoy lower premiums that in an individual one. As the recent LaingBuisson report also found, the market has long been contracting with a market share falling from 12.5% in 2010 to just 10% today – the equivalent 30,000 fewer policies sold. But there is still room for manoeuvre.
One suggestion is that insurers need to demonstrate real innovation in a way that delivers better value for its consumers. Customers want choice but more important, they expect products that are more flexible and tailored to meet their specific needs and budget…much like their recruitment!
 Laing’s Healthcare Market Review, 2008-2009
 The Private Healthcare UK Self Pay Market Study 2015