Following the latest LaingBuisson report on self-pay, author Liz Heath reflects on the private acute self-pay market and whether the optimism expressed by so many in the sector is founded on evidence of sustainable growth.
The ever-growing scale of NHS waits has been cited by many as a reason for the surge in demand for private consultation and diagnostics.
In imaging, for example, some providers report increases of more than 50% in demand for self-pay MRI scanning.
And Spire Healthcare, in its half-year statement for the period up to June 2021, reported 46.7% self-pay revenue growth compared with the same period in 2019.
It could be argued that we are in the beginning of what should be a boom time for private acute and diagnostic providers – but what might be holding sustainable growth back?
The most commonly cited constraint on growth is capacity and resource, specifically staffing. This is an issue across the whole public and private health sector and one that does not have an easy solution.
Reluctance to enter
A newer factor, and possible barrier to growth, is for many consumers a reluctance to enter a world that, for some, has never been a part of their personal healthcare landscape.
This is something providers are aware of and messages of reassurance around quality of care, approachability and affordability are now frequently seen in multi-channel promotion and consumer engagement.
LaingBuisson’s estimates of the self-pay market value in 2019 were around £1.1bn.
As yet, full data on activity and revenues is not available for 2020-21, but estimates suggest a UK self-pay market value of between £780m to £850m.
As evidenced by Spire’s recent full year results for 2021, we should anticipate significant bounce-back through 2021and 2022.
This is not the case with cosmetic surgery. Despite some pent-up demand for cosmetic surgery in mid to late 2020 and into early 2021, there has not been a sustained surge in the same way as elective self-pay.
While people seem more willing and able to seek self-pay options for elective treatment, they are not any more willing to pay for cosmetic surgery than they were pre-pandemic.
But we should also note that at the same time, demand for non-surgical cosmetic treatments continues to grow.
Increase in interest
We are seeing definite signs that some areas of the UK not traditionally self-pay ‘hotspots’ are starting to change.
There has been an increase in interest and activity in areas across northern and eastern England, Wales and Scotland as well as increased activity everywhere else, including the London and the South-east.
This suggests that either through choice – or a perceived lack of NHS choice – patients are actively seeking out self-pay options. These areas of recent growth also correspond with areas of lower private medical insurance (PMI) penetration.
We suggest that this lower PMI uptake may mean when a decision is made to opt for private treatment, it is less likely to be covered by insurance and thus self-pay becomes the only option.
In terms of specialty mix, those specialties and procedures driven by age-related conditions such as arthritis and cataracts continue to comprise the bulk of self-pay activity.
While the picture is complex, it is suggested that, for many older people, using disposable income or savings is a preferred option to preserve quality of life, particularly for those who have not been able to enjoy the type of lifestyle such as frequent holidays during the pandemic.
Cataract and joint replacement surgery also account for some of the largest volume waits for NHS treatment.
Connecting with consumers
We know from research carried out by YouGov for the Private Healthcare Information Network (PHIN) that more people are considering private healthcare and that in the key self-pay demographic, the over 55s, this is much more pronounced.
But through the same research, costs of treatment were cited as a concern, as were provider reputation, outcomes and, for some, suspicions about the private sector.
However, common to this research and LaingBuisson’s own survey, the main factors influencing growth in demand for self-pay are access and waiting times for NHS diagnostics and treatment.
How patients search for private information
It is also interesting to note that in our own research and that for PHIN, the way consumers are searching for information on private healthcare does appear to have permanently shifted.
As well as seeking information from peer groups and medical professionals, consumers are much more inclined to seek out online reviews, use Google or other review providers as well as the Care Quality Commission.
This presents a challenge for consultants and providers in ensuring their messages about safe care and affordability are visible and that they can evidence quality of care and outcomes in a way that supports informed consumer decision-making.
We cannot ignore the affordability of self-pay treatment either. Finance options have been offered by providers for many years, but the prominence of payment plans is much greater now.
The ability to spread the cost of treatment, often interest-free, is a key message for consumers that the sector should not be shy about.
It feels as though the whole sector is keen to embrace these new potential self-pay patients. But engaging proactively, ‘speaking the same language’ and connecting with consumers with simple, clear messages is going to be key to creating a thriving and sustainable self-pay market.
There are signs that this is beginning to happen, but undoubtedly more needs to be done to promote the benefits not just of self-pay but of the whole private acute sector.
PHIN research, published in March 2022, suggested that most, if not all, consultants had returned to private practice by the end of 2021.
Some specialties like orthopaedics were almost at pre-pandemic levels. All facets of the private healthcare landscape, including consultant availability, are vital to ensure that demand can be managed effectively and that access to treatment is swift and straightforward.
On that note, it is really important to ensure that patients are able to quickly and easily engage with consultants, their secretaries or admin teams.
For many patients, their first touch-point in the private healthcare sector may be a call or email exchange and we need to ensure that not only are they given a swift and friendly welcome, but that we support them through a process that may be entirely new to them.
Are we right to be optimistic?
55.3% of respondents to a survey carried out by LaingBuisson felt the self-pay market would increase by 10-15% over the next three years.
This was up from 52% in 2020 and 45% in 2019. 29% believed the market would increase by 5-10% and just 7.9% believed it would remain static.
In the same survey, NHS waiting times and access to NHS services were overwhelming viewed as the main drivers for interest in self-pay.
As we have already seen, providers, analysts and other commentators are equally optimistic about the market. LaingBuisson is too.
We believe that the sector has the ability to harness the opportunity of growing demand for self-pay over the next three to five years when the prospects of NHS waiting times reducing significantly remain limited.
Many more people are also turning to paid-for healthcare as evidenced by the growth in demand for virtual GP services and diagnostics, for example.
But what the whole sector needs is to ensure its messages about private healthcare in general and self-pay in particular emphasise a welcoming approach, with reassurance about costs and affordability.
And not least, clear and transparent information about the safety of care.
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