12 October 2007
Private sector expectations for lucrative NHS contracts have 'come down with a bump' after government projections for their involvement proved to be 'over-egged', leading market analysts have said.
Laing & Buisson's October 10 Healthcare market review found that revenue growth for private health care providers in the UK fell 'sharply' between 2005 and 2006, after previous growth fuelled by the independent sector treatment sector programme dissipated. NHS waiting list reductions have further reduced demand from private self-pay and insured patients, the report found.
Laing & Buisson senior economist Philip Blackburn said: 'While 2005 for the private acute health care market was dominated by spectacular growth in NHS commissioning, by comparison in 2006 unspectacular NHS growth… saw overall market growth come down with a bump.'
He added: 'While the NHS has become a much larger benefactor of the independent acute medical/surgical hospital sector, the government's estimates for additional capacity were “over egged”, [as] recently illustrated by the government's current reassessment of all outstanding second-wave ISTCs.'
Revenues for private providers grew by just 2% above inflation in 2007 compared with 9.5% in 2005. Following the cancellation of some of the planned second-wave ISTCs and the announcement that there will be no third wave, Laing & Buisson now estimates that by 2008 NHS activity will generate £750m–£900m revenue for the private providers, compared with previous estimates of £1.2bn.
But this news came as the Department of Health accredited 14 organisations to offer health care commissioning services to NHS primary care trusts. They include health care providers, such as Bupa and United Health Europe, and consultancies, such as McKinsey and Dr Foster Intelligence.
Health minister Ivan Lewis said: 'Of course, it will be up to PCTs to decide if they want to use [these] suppliers, and if they choose to do so PCTs will remain fully responsible and accountable for managing the services provided.'
Private contractors, meanwhile, are thought to be disappointed that their involvement, at least in the short term, is likely to involve only a discrete portfolio of services, such as data analysis, rather than the entire commissioning responsibility.
PFoct2007
