Where should operators expect to see growth in the next five years?
According to one UK-based CEO, you shouldn’t look to the state, NHS or statutory insurers. Yes, you can get high volumes, and a payor mix is vital to any hospital unable to attract enough private work.
And no, it isn’t because there is huge political risk. Even in the UK our source reckons that even Jeremy Corbyn and a hard left government wouldn’t have the resources to disengage with the private sector. Equally, state payors are not going to see much growth.
What of private medical insurers (PMI)? Apparently not. First, we’re told there’s no indication that PMI is on the rise. In the UK at least the market is static. And second, because insurers are putting ever more steps in the way before allowing patients to access hospitals.
There’s no suggestion this isn’t legitimate and that patients are suffering as a result of being referred to, say, physiotherapy or alternative treatments – perhaps on the NHS. But we’re told that this is hitting margins – while insurers are pushing up their own profits at the expense of operators.
Where then, with a shift to day surgery affecting profits too, is the growth going to come from?
Perhaps surprisingly, it’s self-pay. We’re told that it’s markedly noticeable that people are now more willing than ever to put their hands in their pockets to pay for their, and their family’s, treatment.
Many even go so far as to set up a rainy day fund for just such an eventuality, despite not being willing, or feeling that they are not able, to pay regularly for PMI.
Already 13% of revenue for some big hospital groups is out-of-pocket and this will only grow. We are seeing similar trends in Italy, particularly in diagnostics/primary care, in the Netherlands and across Eastern Europe where out-of-pocket is already massive. But is less clear-cut in other countries with better state payors and/or better and less mean PMI players.
We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.