NHS set to be biggest private care provider

The National Health Service has become Britain's third largest private hospital group - and will soon become the biggest, according to an annual review of independent health care.

A dramatic turn-round in the use of NHS pay beds and the construction of ever growing numbers of private patient wings - some using the Government's private finance initiative - saw the NHS take 16 per cent of the acute private health care market last year. The figure represents a rise of almost 50 per cent on 1988, the year an historic decline in NHS private patient activity saw it take a mere 11 per cent of private patient business.

By the likely time of the next election in 1997, the NHS will have 20 per cent of the market, according to The Fitzhugh Directory. It is already the third largest private care provider after BUPA Hospitals and the French-owned group which includes BMI. The decision of the French group to hive off its central London hospitals means the NHS is likely to be the biggest provider of private care in revenue terms in the current financial year.

"The increase in market share is being brought about not only by the increasing number of private units being commissioned by the trusts, but also by the increasing revenues which these units are generating as their familiarisation with the market increases," according to William Fitzhugh, the directory's author.

The top ten NHS earners all generated revenue of more than pounds 2m with the London hospitals, Guys, St Thomas's and the Royal Free, all raising more than pounds 8m. In all, the NHS brought in more than pounds 115m from treating private patients.

Private work now accounts for more than 10 per cent of income at the heart transplant centre at Harefield Hospital, Hampshire, the Nuffield Orthopaedic Centre, Oxford, and Wrightington Hospital, Wigan, which also specialises in orthopaedics, including hip replacements.

Another seven hospitals earned more than 5 per cent of their income privately including Oxford's Radcliffe Infirmary (5.6 per cent), St Mary's in London (5.8), the Christie in Manchester (7.3), Liverpool's Cardiothoracic Centre (7.6), the heart transplant centre at Papworth, Cambridgeshire (7.6), the Royal National Orthopaedic, London, (8.8) and the Royal Free (8.9). All saw increases of between 10 and 20 per cent in private patient revenues last year.

Less specialist hospitals with significant private patient revenues include the Royal Surrey County in Guildford (4.9 per cent), Epsom Healthcare (4.7 per cent) and the Frimley Park in Surrey (3.6).

Trusts are now marketing their private patient services "aggressively" and "the unspoken fear" among independent private hospitals "is just how far the NHS will succeed in penetrating the market", according Mr Fitzhugh. "Could it really become the dominant force?" he asks.

Labour's policy on private practice remains unclear, he says, and after reaching a 20 per cent share of the market in 1997, the arrival of a Labour government would be likely to limit further capitalisation by the NHS on its "unique facilities and consultant relationships".

Independent hospital groups now appear resigned to slow but steady growth. "Not long ago, independent hospital operators used to talk of a large untapped market which they felt existed just over the horizon ... Increasingly, many are now accepting that this untapped market was a mirage," Mr Fitzhugh says.

8 The Fitzhugh Directory, Tenth Edition 1995-96, 12 Riverview Grove, London W4 3QJ. pounds 240.