PPUs grow, but still below potential
Figure 1
Further growth and record revenues from private patient units (PPUs) have been received by NHS trusts in England. Philip Housden reports.
England NHS trusts achieved significant growth with record incomes from private patients, but are still not operating at pre-Covid levels, finds Housden Group analysis of the 2022-23 Annual Accounts.
Total revenues were up £102.2m to £645.7m for NHS trusts in England (£543.5m in 2021-22), which is an increase of 18.8%.
Revenue growth was much higher at 70.8% and £267.6m, but this was the first year of the ‘Covid bounce-back’. The 2022-23 total represents a marginal increase from 0.66% to 0.73% of total trust revenues.
While this is a further increase from the Covid low of 0.52% reported in trust accounts in 2020-21, it remains well below the high of 1.10% achieved in 2018-19 financial year (Figure 1, above).
The trend for the capital to be the main engine of growth for the NHS continued, with revenues for the 22 trusts within London climbing to £427.2m, up £78m (22.3%) from £349.2m the previous year.
Out-of-London trusts also grew significantly, but not at the same rate, from £194.3m to £218.5m (12.5%) (Figures 2 and 3, below).
Figure 2
Figure 3
Again, all the top six trusts by revenue were in the capital, with Royal Marsden (at £162.2m), Guy’s and St Thomas’ (£62.6m) and Great Ormond Street Hospitals (£54.7m) earning 43.4% of all England NHS trust incomes between them, a rise from 42.4% the year before.
Indeed, the top 20 trusts increased their market share from 76.9% to 78.3% of all private patient earnings. Growth inside the top 20 was 21%, while outside was only 11.5%.
This shows that investment in private patient services capability will drive increased growth.
When revenues are illustrated by region, this shows the dominance of London and to a lesser extent that of the Home Counties in the South-east surrounding the capital (Figure 4).
Figure 4
A review of the top ten fastest growing trusts outside of London – those increasing by >£1m revenues – shines a light on good practice and some of the innovative steps some trusts have taken to develop private patient revenues in support of core NHS services.
This has been achieved through own PPU branding, joint ventures and, in the case of Royal United Hospital Bath, the taking over control of the local independent hospital competitor.
By contrast, several trusts declined by over £0.5m private patient revenues in 2022-23. Of the five highest revenue fallers, three are regional teaching trusts: Leeds, Southampton and Manchester.
It is expected that the Royal Surrey Hospital, Guildford, should recover private patient incomes in 2024-25 once the new Genesis cancer centre opens in a few months time.
England NHS trusts’ private patient incomes have now effectively recovered in cash terms to the pre-Covid levels.
However, when reviewed by overall proportion of income, there is still some way to go.
Pre-pandemic private patient revenues were 1.10% of total NHS England trusts’ income, falling to less than half that at 0.52% of revenues in 2020-21.
Subsequent growth achieved 0.66% in 2021-22 and a further rise to 0.73% last year.
But this is still a significant under-achievement in that a return to just 1.0% of NHS revenues would represent total revenues of £889m: an increase o£ 243m on present performance.
This potentially available ‘gap’ may effectively be lost market share by the NHS PPU sector and is perhaps a contributor to the increasing demand for insured and self-pay services reported by independent sector providers since the pandemic.
Philip Housden (right) is managing director at Housden Group. See his website at www.housdengroup.co.uk