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Starmer’s NHS-private deal could drive investment in UK healthcare

In September 2024, Lord Ara Darzi’s review described the UK’s National Health Service (NHS) as being in “critical condition.” By November 2024, the waiting list had reached 7.5 million, with 3.1 million patients waiting over 18 weeks.

On January 6, 2025, Prime Minister Keir Starmer announced a partnership between the NHS and the independent sector to address waiting lists, with a focus on gynaecology, orthopaedics, and improving access in deprived areas. The deal involves over 650 private hospitals and 12,000 consultants, enabling up to one million additional consultations, diagnostics, and surgeries annually, maintaining them free at the point of use.

Annual funding for the independent sector will rise from £12 billion to nearly £16 billion, providing better access and digital improvements via the NHS App, and plans for long-term collaboration. The partnership aims to attract private investment, expand the workforce, and ensure consistent care standards across the sector.

Speaking to HBI, Dr Ian Gargan, Chief Executive, Private Healthcare Information Network (PHIN), an independent, government-mandated organisation publishing performance and fees information about private consultants and hospitals, said, “The NHS and private sector have long worked together, so this is not a new initiative. However, we welcome this strengthening of the partnership so that patients can be seen sooner and receive the treatment they need.

“We already work closely with our colleagues in the private sector and NHS to collect and share data appropriately to ensure healthcare is as transparent as it can be, to improve patient choice and safety. This strengthening of the partnership should mean better data between, and for, the NHS and private sector.” 

A YouGov survey found that 71% of Britons support using private sector providers to reduce NHS waiting times. In line with this, data from PHIN showed record-high private hospital admissions in Q2 2024, reaching 232,000 cases, the second-highest ever.

Most of these admissions were funded by private medical insurance, which rose by 9% from Q2 2023. Self-pay admissions remained above pre-pandemic levels despite a slight decline. The private insurance market grew by 7%, reaching 6.2 million people, primarily through employer plans, while self-pay care has increased by over 60% since 2017.

Positive outlook for private healthcare providers in the UK

The UK’s private healthcare market reached a record £12.4 billion in 2023, with top providers like Spire Healthcare, Circle Health Group, HCA Healthcare UK, Nuffield Health, and Ramsay Health Care UK accounting for three-quarters of the revenue. Ophthalmology and orthopaedics saw the largest growth, particularly as the NHS outsourced more cataract surgeries to private clinics than it performed itself.

Here’s an HBI infographic on NHS outsourcing compared in UK’s top 5 private hospitals.

Spire Healthcare CEO Justin Ash shared that the company cared for nearly 200,000 NHS patients in 2023, helping to reduce waiting lists. Their acquisition of Vita Health Group, a UK-based provider of physical and mental health solutions, further expanded NHS services, supporting over 165,000 patients in musculoskeletal and dermatology care.

Circle Health Group CEO Paolo Pieri also commented on the growing partnership between the NHS and private providers, emphasising the importance of patients being informed about their right to choose NHS care at any hospital, whether independent or NHS. He welcomed the Government’s efforts to enhance patient choice and encouraged patients to ask their GP about available hospital options.

In October 2024, HCRG Care Group, UK-based private provider of community health and social services, was appointed to lead a community-based care partnership with the NHS, securing a £300 million contract for children’s community health services. Meanwhile, healthcare property group Assura made a strategic move by acquiring a £500 million UK private hospital portfolio from Northwest Healthcare Properties in August 2024, strengthening ties with NHS providers.

Assura CEO Jonathan Murphy expressed support for Labour’s NHS–private sector collaborative policy, noting that a joint approach with private hospital operators could be key to solving the sector’s challenges. In a LinkedIn post, he stated: ““This is why Assura’s strategy is to be a diversified healthcare REIT and why we invested £500 million in a UK hospital portfolio in 2024. Labour’s policy announcement today of closer working between private hospitals and the NHS is fully in line with this approach.”

Could cancer care in the UK finally see improvements?

Cancer care in the United Kingdom is struggling, as HBI has previously reported on. 

The aging population and rising cancer care needs have led to a workforce crisis and a growing demand for private healthcare. Between 2018 and 2023, 282,560 individuals used insurance for chemotherapy, and 13,900 self-funded. By 2019, cancer treatments became London private hospitals’ top revenue source. Private chemotherapy sessions peaked at 13,200 per month in 2021. 

Dr. Gargan told HBI that therapeutic chemotherapy saw a 17% increase in Q1 2024. 

“Our data shows that therapeutic chemotherapy is regularly in the top 10 most common procedures for private patients using private medical insurance or ‘self- pay’ to fund their treatment (…) A large percentage of patients on the waiting list are yet to be diagnosed, so any action to reduce the waiting list will mean people find out if they need treatment sooner and can be moved more quickly onto the appropriate treatment pathway.” 

Will the NHS-private partnership drive private equity into UK healthcare?

As per a PwC report, healthcare transactions in the UK saw a significant growth, rising from £8.6 billion in 2022 to £15.4 billion in 2023. Investor interest in UK healthcare has increased, with bolt-on acquisitions fuelling a strong and growing M&A market.

The question is, could this deepening engagement between the NHS and the independent sector increase private equity interest in UK healthcare?

Dr Gargan told us this plan would give more certainty to private providers about the amount of NHS work they will carry out in the coming years and that certainty will be of interest to investors and may lead to increased investment in providing services for NHS patients in the long term.

Use of technology to address waiting lists

Robot-assisted surgeries saw a significant increase in both the NHS and private sector in Q1 2024, with 22,700 procedures performed—a 45% rise compared to Q1 2023 and a 12% increase from Q4 2023. Since 2016, robot-assisted surgeries have grown by 524% across both sectors, with private healthcare experiencing a 1,370% rise.

Dr. Gargan explained that robots are most commonly used for high-volume procedures like hip and knee replacements, which are in demand. “Having this support can aid accuracy with less invasive surgical approaches possible, and the data shows improved recovery rates, fewer complications and shorter lengths of stay in hospital. The use of robot-assistance would therefore appear to offer opportunities increase the number of patients treated and to reduce waiting lists,” he further explained. 

We would welcome your thoughts on this story. Email your views to Rakshitha Narasimhan or call 0207 183 3779.