Some words of caution about self-pay growth


Richard Gregory

Are independent practitioners facing a surge of self-pay patients as a result of Covid-19 causing NHS waiting lists to soar? Richard Gregory says the private sector has a lot of work to do to cash in on any boom

All private operators will tell you that the number-one driver of self-pay growth is the collective market forces at play in the NHS – politics, capacity, commissioning and demand management. 

But, first and foremost, it is the size and nature of the waiting lists for elective surgery.

It therefore stands to reason, post-Covid and as the country gets back on its feet, that there will be huge pent-up demand for self-pay, leading to a healthy revenue growth for hospitals and consultants, doesn’t it? 

I don’t think it is as simple as that. True, there is pent-up demand for ‘healthcare’, but how much of this is demand for self-pay? I am not sure. Nor is Laing­Buisson. At its last Private Acute Healthcare Conference in October 2020, it predicted that self-pay would not recover to 2019 levels before 2022. 

Let’s explore the market dynamics at play currently and see what consultants and private operators can do to encourage more people, willing and able, into paying for their own healthcare. 

Firstly, what external factors are at play, which are influencing my caution? 

1 Although the correlation between growth in self-pay and waiting lists is fairly strong statistically – self-pay grows as waiting lists grow – it doesn’t feel that actual self-pay penetration into waiting lists is that high.

Since 2016, one million people have been added to the waiting list, representing growth of almost 30%. The number of people waiting more than 18 weeks has risen from 300,000 to 1.4m, which is growth of over 460%. 

According to LaingBuisson, in the same period self-pay has risen from £943m to £1.16bn, a growth rate of 23%. This 23% increase represents approximately 72,000 more patients for self-pay in a period of time where one million have joined the waiting list and over one million more are waiting over 18 weeks. Unspectacular.

2 Doctors will be flat-out trying to clear the NHS backlog, but it is the same doctors who will be needed to do likewise for patients with medical insurance and who will be called upon to carry out self-pay work. A huge capacity dilemma and juggling act.  

3 Will more trusts push back against doctors trying to see patients privately while the NHS remains in such a challenging situation, as NHSE and senior clinical leaders did in London in January? The political situation is on a knife-edge of sensitivity.

4 People are fearful of their jobs going forward, not to mention the many who already find themselves out of work. The unemployment rate sits at 5.1%, the highest since 2015, and 2021 shows the biggest annual rise since the financial crash

There are, however, some other more favourable factors, which could offset these to some extent:

 Rising consumer confidence among the higher earners and those with savings, who collectively dominate self-pay customer demographics;

 House prices are expected to rise by around 4% this year now that the stamp duty holiday has been extended;

 The NHS will struggle to get any sort of hold on the waiting lists within the next five years. Government is not yet pledging the level of investment, which would be needed.

Covid imposes severe restrictions on the way healthcare is delivered; the extra resources needed are not there to deliver the work and the existing workforce is exhausted. 

This is the complex and unpredictable landscape ahead, much of which is out of hospital and consultants’ control. 

But I will go back to the performance of self-pay over the last five years, which has not been as stellar as many commentators have been predicting or expecting each year.

Growth slowed 

Indeed, self-pay growth has slowed over the last three years and LaingBuisson has consistently revised downwards its forecasts despite the growing and ageing waiting list. 

My belief is that this is a direct result of the industry’s relative failure to adapt its offering quickly enough to respond to retail consumers. In short, it is a supply-side weakness. 

Private operators have enjoyed double-digit growth in inquiries, which has not translated into similar growth rates in revenue and activity. 

Much work is still needed to be done in the key areas of pricing transparency and simplicity; of the promotion of payment options; of proposition clarity; of onboarding from initial inquiry; and of meeting customer expectations around service levels. 

If you are a consultant or consultant group who gets most of their self-pay work from private operators or directly through your own marketing, the message is the same.

Work on these critical supply-side factors, which are totally within your control, to convert more of the excess pent-up demand into real self-pay growth.