Moderate

Healthcare (Private)

The private healthcare sector has risen to the aid of the NHS during the COVID-19 pandemic. However, the sector is facing several pressing issues.

Sector trends & challenges

  • Increasing cost base

    The sector faces a rising cost base. This trend is now becoming visible in private healthcare, where increased scrutiny by regulators is driving increased costs to deliver high quality and safe care.  

  • Change in mix of services

    Referral patterns from the public sector have changed following the impact of COVID-19. For much of 2020, little to no elective work was performed by NHS Acute trusts and waiting lists increased to unsustainable levels.  

  • Global investment

    Globally, there is likely to be increased investment in private and public healthcare, with the healthcare supply chain underpinned by increased demand. 

Sector rating profile

Despite some structural challenges, including increased regulator focus, we have not seen a great deal of restructuring activity in the private healthcare sector in recent years. We have however observed a number of new pressures mounting as a result of the pandemic, not least the private sectors' role in supporting public sector healthcare which has obviously been at the forefront of the national response to COVID-19. The outlook remains uncertain but we see the potential for trending towards insourcing amidst increased political focus on social care provision and anticipate a modest rise in restructuring activity.

Healthcare (Private)

The private healthcare sector has risen to the aid of the NHS during the COVID-19 pandemic. However, the sector is facing several pressing issues. 

The sector is facing a rising cost base. The public healthcare sector has faced increased scrutiny from the Care Quality Commission (CQC) for several years. To address concerns raised by the CQC, in some instances the public sector has increased resource to deliver care. This trend is now becoming visible in private healthcare, where increased scrutiny by regulators is driving increased costs to deliver high quality and safe care. In order to maintain profitability, the sector needs to respond by finding efficiencies in their delivery of care. 

Referral patterns from public sector have changed following the impact of COVID-19. For much of 2020, little to no elective work was performed by NHS Acute trusts and waiting lists increased to unsustainable levels. The public sector enlisted the support of COVID-free private hospitals to perform more elective activity, the mix of which may not be as profitable for the private sector as their typical service delivery.  

Private care homes have lost income since the pandemic began whilst also incurring rising costs. Fortunately, private operators have supported the NHS to help maintain some level of elective activity over this period which has reduced the fall in income. Private health providers may need to understand how to cost base to lower income into the medium-term. Opticians, for example, have witnessed a growth of online selling in the market, which may become a stronger trend following cost cutting requirements alongside the public’s nervousness in returning to physical shops.    

Globally, there is likely to be increased investment in private and public healthcare, with the healthcare supply chain underpinned by increased demand. In the UK, there may be a trend towards insourcing some services amidst increased political focus on social care provision.

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