Twenty years ago a group of doctors could go to a bank manager with a business plan and set up their own private hospital unit.
Today, price rises have made the situation very different. Big groups such as BMI and Nuffield manage up to 45 hospitals each and there is hardly any room for the smaller independent hospital.
These private hospitals are key to the provision of private medical insurance (PMI) care both for in-patients having operations and out-patients visiting consultants.
BMI Healthcare, part of General Healthcare Group, is the largest hospital group in the country, with 44 hospitals. It claims to perform more complex surgery than any other independent healthcare provider in the country.
The second-largest private hospital group is Nuffield Hospitals, which has been around since 1957. It has 43 hospitals in England and Scotland, containing 1,697 beds.
Third on the list is Bupa, which has a nationwide network of 36 hospitals, and then the Community Hospitals Group, with 22. HCA has six hospitals, all in London, while other groups such as Abbey Hospitals have a much smaller market share.
As well as regular independent hospitals, customers also have the opportunity to be treated in a private wing in a regular National Health Service (NHS) hospital.
These wards are increasing in number and donate a percentage of their profits back into the NHS.
The concordat plan, revealed by the government in July 2000, has pushed private hospitals to the forefront of the public attention.
The plan allows patients to be treated at NHS expense in the private sector when no spare room can be found elsewhere. This has created an opportunity for private hospitals to work more closely with the NHS.
All the private hospital groups have pledged to support the concordat. In its promotional literature BMI says it “works with and supports the NHS in a number of ways across the country”. These include the management of NHS private facilities, the leasing of facilities within NHS Trusts, and working with the trusts and health authorities to reduce waiting times.
The Wellington hospital in London, owned by HCA, is one of the largest fully private hospitals in the UK, with 266 beds in two buildings.
Alison Shutt, the director of nursing at The Wellington, says: “We do not compete with the NHS but we work in partnership with it. Our hospital has been working with NHS hospitals for many years. It’s a relationship based on medical excellence, not politics, and has led to some important research projects.”
Private hospitals are known for their hotel-style buildings with high-quality service, catering and other facilities.
But when visiting various private hospitals, the differences between NHS/private and fully independent hospitals are visible.
The private wing in Great Ormond Street is an example of an NHS/private hospital that does not have the luxurious feel of other independent hospitals.
The plaster walls create the same cold atmosphere felt in the rest of the hospital, despite the colourful children’s pictures painted all over them.
But, like many other private hospitals, there is a constant programme of redevelopment and the private wing is to be completely rebuilt by 2004.
The Clementine Churchill hospital in Harrow, part of the BMI group, is also in the process of redevelopment and has started building work on an extension.
The hospital is typical of private hospitals in its comfortable feel and the professional attitude of the staff. The rooms are tastefully decorated, all with en suite bathrooms, and the staff are always smartly dressed and act politely.
But this is apparent in the private wing of the Northwick Park hospital, also in Harrow, showing that private wings in NHS hospitals can feel just like a fully independent hospital.
The Sainsbury and Charles Kingsley wings at Northwick Park are on the top floor, giving stunning views from the bedrooms, all of which are single rooms.
But, even though the facilities may be the same standard as regular private hospitals, Pam McGowan, the private patients manager at Northwick Park, realises the NHS/private wings are not regarded in the same light by many GPs and consultants.
“We have a different market to the fully private sector,” she says. “Our patients are mostly older people having more risky operations such as hip replacements. The consultants know they may need to use the intensive care or ventilation facilities so they send them here.”
There are 88 private wards in NHS hospitals at the time of writing and that number is growing all the time, according to Elizabeth Boultbee, the chairman of the NHS Private Healthcare Association. (Boultbee also runs the private and international Nuffield ward at Great Ormond Street Children’s Hospital in central London, which provides 29 beds for private patients.) “I want to see PMI units in NHS hospitals bloom and grow,” she says.
Boultbee points out that the money paid for NHS private care goes straight back into the NHS rather than into shareholders’ pockets.
“We’re here to generate funds for the NHS,” Boultbee says. “Last year £320m was generated, all of which went back into the NHS.”
Jo Clark of London-based insurer 21st Century Healthcare believes there is a growing market for PMI provision within NHS hospitals. Her company recently launched a discounted PMI plan that only offers places in NHS hospitals for individuals.
And the private hospital industry does have some disadvantages. “The isolation of a single room can be lonely and detrimental to people keeping an eye on you,” says IFA Penny O’Nions, the principal of Onion Group. “But on the whole the food is better and it’s easier for friends to visit.
“All my clients say they like the private hospital system but they would like to use the NHS if it was possible.”
The issue of competition between hospitals has become more relevant recently and now each major insurer has its own list of accredited hospitals.
This has been welcomed by the Office of Fair Trading of the Department of Trade & Industry, which stated in November 1999: “Policyholders have benefited from the decision of the major insurers to be selective about hospital provision in a market faced with increasing costs and more hospital beds than it can use.”
According to David Quick, the head of partnership development and quality at Bupa, the biggest insurer in the market, about a third of the patients in any private hospital at any one time will be Bupa customers.
Rather than going to the hospitals themselves, a new hospital will approach Bupa and asked to be included on its list.
“The hospital then needs to fill in a 51-page questionnaire followed by a quality assessment visit from me, an ex-hospital manager, a doctor and two nurses,” Quick explains.
Bupa offers two lists of hospitals to its customers. One allows customers to use the facilities of any of nearly 650 hospitals accredited by Bupa while the other offers any of the 180 hospitals on the partnership network.
The latter gives customers a saving of between five and eight per cent on their premium and allows access only to hospitals that have passed a more rigorous examination than the other hospitals on the Bupa list.
PPP selects the hospitals for its list by “competitive tender” whereby they choose what they consider to be the best hospital in each area.
Adrian Bull, the medical director at PPP healthcare, says they choose each hospital “on the basis of the quality, value and range of services provided, irrespective of whether the hospital belongs to a major chain, independent charity or NHS trust.”
PPP customers can also be treated in hospitals outside the network if the care they require is not available in a nearby network hospital.
Standard Life Healthcare also has its own list of hospitals. Peter Crane, provider services manager at Standard Life Healthcare, says: “We use regular questionnaires to ensure the quality is ongoing and constantly improving.”
Standard Life customers can choose to pay an extra premium to be able to use some of the more expensive hospitals.
PMI companies such as Bupa and PPP are the bread-and-butter customers of private hospitals so it is essential for the hospital groups to develop good relationships with the insurers. Therefore, with few exceptions, most hospitals accept all insurers.
Mike Parsons, the chief executive of the Clementine Churchill Hospital, says: “We have a good relationship with the insurance companies but it’s a professional relationship. We do welcome all insurers to our hospital.”
According to most people within the private hospital industry, the outlook for the future is looking good, despite the plateau in PMI sales in the 1990s.
Neil Huband, a spokesman for the HCA hospital group, says: “This is one of the most important times for PMI in the last 20 years. There is a growing recognition of the role of PMI in UK society.”
Peter Fermoy, the communications manager at the IHA, the body that represents the interests of nearly all the private hospitals, sees this as the start of a closer relationship between the public and private hospital sector.
He says: “We’re already part of the way towards the future – increasing the partnership between the independent sector and the NHS.”