The UK’s best-known medical accountant and founding partner of Stanbridge Associates
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What do you see as the major challenges in the private healthcare sector today?
Ray Stanbridge: ‘Well, the major challenge at the moment is to stimulate the market, which is under extraordinary pressure from a whole number of features. What we’re actually seeing in the market is a decline in the number of individual patients who are actually insured with insurers for a number of reasons and a growth in self-pay and a growth in embassy traffic.
‘Perhaps the most worrying aspect is the decline in the number of insured patients and this is for a number of reasons.
‘Firstly, we’ve obviously seen big increases in – tax increases – in insurance premium tax, which has pushed up the cost of insurance relative to, say, people putting their money into ISAs or whatever.
‘We’re also seeing continuing problems of there being no tax relief on insurance products, and here we are quite unique in the world because most other countries have either a system of co-payment with their NHS. If you want to pay for a private service you can. Or they have tax relief to encourage people to invest in their own personal healthcare.
‘One of the classic examples is Australia, where if you take an insurance premium product, you get tax relief. If you decide not to, and have the state system, then you pay extra taxes to use the state system and this, to my mind, seems an entirely logical aspect.
‘We’re seeing a breakdown in the traditional role of the GP, who was the traditional referrer. Many hospital referrals are now “Dear Doctor” rather than “Dear Mr X, Mr Y, Mr Z”.
‘Major changes going on in the GP sector, big growth in the private GP sector and we’re also seeing the effect of advertising – having enormous effects on the growth of patients or otherwise, for people who are in groups, who have a group brand, seems to actually attract patients.
‘But the big problem is still how to actually stimulate the market because there are a number of positive factors and quite a substantial number of negative ones as we stand here today.’
So how can the market grow?
‘Well, the market can grow. First of all there is a political reason. If the government were to give tax relief on insurance premiums, the market would grow. That’s the economic evidence from around the world.
‘The problem is we’re facing a real political situation in that, post-Brexit, we’re supposed to be getting £350 million into the NHS, which, in my opinion, will never happen.
‘People are not having a longer time to see their GPs. The problem with the NHS is that it has unlimited demand because it’s free, the population is growing, we’re all ageing and therefore whatever you do – whichever party’s in power – there’s going to be a huge growth in the demand on the NHS. So we have to get people away from the NHS and giving insurance tax relief is a good way of doing this.
‘Secondly, we have to encourage people through advertising, promotion, information to the value of the private sector. It’s generally well known that they can see people quicker, but also we have to do a lot more training in terms of the fact that prevention is better than cure and, again, there are a large number of studies, particularly in the cancer area, where they pick up cancers early. They can pick it up and deal with it, the costs of treatment are so much lower than perhaps in the NHS, where people are referred very late to the NHS and therefore the costs in late-stage cancers or even terminal cancers are much higher.
‘The third thing we need to do is develop much closer relationships between the insurance companies and the doctors, which, to date over the last five, ten years, have been highly confrontational and, in certain instances, are getting worse. In fact, both insurance companies and doctors have the same interest in the market and need to work much closer together to do this. And we are luckily perhaps seeing one or two signs that this is starting to happen.’
And what do you see happening in the next ten years? Where will we be in ten years’ time?
‘My personal opinion is that the current system of individual consultants in private practice will be gone. It’s very expensive to register, control and manage individual consultants from a hospital point of view and an insurance point of view.
‘What we’re seeing – and it’s starting to happen already – is, firstly, a large number of groups which are starting to negotiate their own contractual arrangements for partial or full control of healthcare.
‘We’re seeing the growth of some locum agencies, which are actually contracting doctors out and we’re also seeing quite a big growth in the interest in employment of consultants. Particularly from the new entrants in the marketplace who are following this model.
‘So my personal view is that the current system will be gone in ten years’ time; it will be large groups, like large medical groups or doctors working through locum agencies or they’ll be employed by the local hospitals.
‘I also think we’ll see quite a large rationalisation in terms of the structure of the hospital providers. We are seeing a huge growth of day case stuff that’s coming into the United Kingdom from the United States, where there is an enormous amount of evidence that day case surgery – even on things that traditionally had two or three days in hospital here – is changing the market and this is starting to happen and this will happen in ten years’ time.
‘And the third thing we will see a lot of is new clinics opening along the American models like dermatology clinics on the shopping malls, or minor urology, minor gynaecology clinics jumbled up with shops which are owned and run by doctors, or groups of doctors, who actually do their own diagnostic tests. It’s a much more efficient, much cheaper, much faster way of doing things than going to traditional hospitals.’