Warning of tough era for private practice
By Robin Stride
2023 has dawned with chilling warnings from a consultants’ leader – and others – about a tougher road ahead for doctors in private practice.
According to the new chair of the London Consultants’ Association (LCA), they now face some of the most challenging times he has seen in two decades of independent practice.
Mr Ellis Downes warns in this digital issue of Independent Practitioner Today of a wind of change ‘blowing hard in the independent sector’.
He observes: ‘The future of private healthcare is unclear. There is clear evidence that recently appointed consultants are less attracted to private medicine.
‘This may be because of start-up costs, lower remuneration rates from insurance companies compared to more established colleagues, increasing administrative overheads and their ability to boost incomes without significant expenses by doing additional paid NHS work.
‘With colleagues retiring, this will, in the near future, lead to a significant shortage of doctors in the independent sector, with severe consequences for patient care and indeed the healthcare system in this country as a whole.’
Mr Downes, a consultant obstetrician and gynaecologist in Harley Street, calls for disincentives to independent practice to be acknowledged and challenged in order to maintain the sector’s long-term health.
His comments come as many independent practitioners’ businesses face their highest inflation ever and are about to be squeezed financially in all directions from the Chancellor’s tax hikes announced in the autumn.
Lack of action
Hospital Consultants and Specialists Association (HCSA) president Dr Naru Narayanan criticised lack of action on the pensions tax trap ‘driving senior hospital doctors into early retirement’ and said they would be discouraged from taking NHS overtime by a lower 45% income tax threshold.
Specialist medical accountants are encouraging doctors to book a review of their affairs to ensure they are working in the most tax-efficient way.
Financial advisers Cavendish Medical stress it is important for advisers and accountants to have the same objectives and work together to ensure no opportunities are missed.
Simon Brignall, director of business development at Civica Medical Billing and Collection, fears possible turbulence ahead for independent practitioners’ finances.
He said more than 90% of his company’s clients had been billing above their 2019 levels with many seeing a 50% increase in self-pay activity.
But the UK was yet to see the full impact of inflation.
Reductions in disposable income were more likely to impact younger and middle-aged consumers and so firms’ discretionary decisions about employee-contracted healthcare might face difficult choices when budgets were tight.
‘This is not to say that the medium- to long-term outlook for the private sector is not positive, but to highlight that the short-term could prove to be a little choppy,’ Mr Brignall said.
He gives some useful tips to ensure practices are best prepared for rougher times (see ‘How to avoid a bumpy cash landing’).
Extra expense
Jane Braithwaite, managing director of Designated Medical, forecasts some private healthcare growth as patients try to dodge long NHS waiting lists, but she warned that many would be incredibly cost-sensitive and unable to afford the extra expense.
She said: ‘Costs in every area are increasing, most significantly in terms of salary expectations.
‘It is still hard to recruit good staff and our current employees are hoping for significant pay increases so they feel they are at least standing still in terms of their financial well-being.
‘Higher costs will put pressure on profits, and for businesses with small profit margins, the next 12 months may be hard to survive without borrowing. And many are still paying off money borrowed to survive the pandemic.’
Her greatest concern is for employee well-being and morale. ‘The current economy is bad news for almost everyone and people are dealing with increased pressure at a time when they are already pretty exhausted. Businesses will need to work hard to keep their teams feeling secure and motivated.’
But self-pay expert Liz Heath, author of market analyst LaingBuisson’s annual self-pay reports, told the BMA’s annual private practice conference before Christmas that it did not appear economic factors were having a significant impact on self-pay – so far.
The meeting heard nine in ten private hospital operators and hospital groups are easing the financial burden on consumers by offering ways to assist them to spread the cost of their self-pay treatments.