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Private healthcare providers feeling the pinch

By Mike Broad - 30th January 2012 10:46 am

The private acute healthcare industry is facing contraction despite the potential for NHS work increasing, according to analysis.

Laing & Buisson’s Healthcare Market Review shows that revenues generated by independent hospitals providing medical treatments in 2010 were flat at £3.84bn.

The main funding source for independently run hospitals is patients with private medical cover. However, the proportion of business accounted for by this audience has slipped consistently over the past five years, accounting for just 59% (£2.3bn) of revenues generated in 2010 - compared to 65% in 2005.

NHS patients using private facilities now account for a quarter of hospital income (compared to 14% in 2005) generating £957m. Latest analysis, though, suggests that this source - which has bolstered market fortunes in recent years - may be reaching a cyclical high.

Pay-as-you-go patients provided 14% of revenues (£534m) for independent medical hospitals, up by 0.5%. Other sources contribute the remaining 2.5% (£104m).

In addition to static income, the report suggests that competition is increasing. It reported a record 515 independent medical hospitals at mid 2011, compared with 454 in mid-2010. Of these, 211 offer 9,545 inpatient beds and 304 provide only day surgery. In addition, 73 private patient units within NHS hospitals also compete for a slice of the private healthcare market.

Co-author Philip Blackburn said: “There are certainly near term challenges for service providers of private acute healthcare under current market conditions, but also opportunities in the longer term.

“Delivery efficiencies from providers are being solicited, not least from medical insurers, which are seeking savings to pass on to their customers, and the recent OFT report, which found evidence of potential competition limiters in the provision of private healthcare by hospitals and consultants.”

The report also says that with the government’s proposed increase in the private patient income cap to 49% for the NHS, independent hospitals will also face competing interest from this area, though there is certainly limited scope for increased private healthcare capacity at this time.

The independent acute sector is estimated to have treated around 425,000 NHS (overnight and day case) patients in 2010. Centrally procured ISTC activity decreased only marginally in the year to £357m (2009: £365m) with Care UK, Circle and UK Specialist Hospitals the largest scheme providers during 2010, accounting for 35%, 18% and 16% respectively of the total centrally procured services.

During the period 15 schemes came to the end of their initial contracts, while two new large scale facilities carried out their first full year of activity. Revenues from centrally procured schemes are expected to dip more significantly in 2011 as a further 13 schemes are due to expire.

Tags: Private healthcare, Private practice
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Up to 50% private patients in English NHS hospitals

BBC Health - 28th December 2011 9:23 am

NHS hospitals in England will be free to use almost half their hospital beds and theatre time for private patients under government plans.

A recent revision to the ongoing health bill will allow foundation hospitals to raise 49% of funds through non-NHS work if the bill gets through Parliament.

Most foundation trusts are now limited to a private income of about 2%.

The health secretary says the move will benefit NHS patients but Labour claimed it could lead to longer waiting lists.

Private docs judged anti-competitive by review

By Francesca Robinson - 15th December 2011 4:32 pm

Consultants have rejected accusations by the Office of Fair Trading (OFT) that some of their practices are responsible for distorting competition in the £5 billion UK private healthcare market.

The OFT is considering whether to refer the private healthcare sector in the UK to the Competition Commission for a full blown investigation following publication of a critical market study.

Consultants are demanding that any further investigation must be widened include the activities of the private medical insurers.

The OFT study highlights concerns about transparency, the dominance of leading providers and obstacles faced by new providers of private healthcare.

There is criticism of some consultant practices. The study highlights:

- A growing trend of anaesthetists to form private practice groups. Some 44% of anaesthetists are signed up to an anaesthetist group and the study claims that a high concentration of these groups in some local markets may reduce competition and keep prices high.

- Concerns by consumers about extra payments charged by consultants, known as “shortfall payments”, which are not covered by insurance polices.

- Complaints by GPs and health insurance providers about a lack of easily comparable information on the quality and costs of private health facilities and consultants.

- The practice of consultants to treat most of their private patients at one main private healthcare facility. Patients are insured by different providers and as only five large organisations - General Healthcare, Spire Healthcare, Nuffield Health, HCA International and Ramsay Healthcare UK - dominate the market, the study claims this makes it harder for new entrants to attract a sufficient number of consultants to practice at their facilities.

- Incentives given to medical consultants to treat all their patients at one facility. This creates another barrier for new healthcare providers.

The study also considers numerous complaints from doctors and medical organisations about price capping by private medical insurers of consultants’ fees. But the OFT concludes that this practice is not anti-competitive. “Overall, while price or fee caps are, in principle, capable of distorting supply in markets, the OFT has not seen evidence to suggest that the supply of consultants has been affected,” says the report.

The Association of Anaesthetists of Great Britain and Ireland (AAGBI) said the OFT had found no objective evidence to prove that anaesthetic groups distorted the local market and the study had failed to emphasise the advantages of anaesthetic groups in promoting patient safety and best practice within the private sector.

On the issue of shortfall charges the AAGBI had always recommended that consultant anaesthetists should not seek these payments if a fee estimate had not been given prior to surgery.

Dr Sean Tighe, chairman of the AAGBI’s Independent Practice Committee, said they were disappointed that the OFT had concentrated on the relationship between consultants, patients and hospitals without addressing concerns about the private medical insurers.

“Insurance premiums have risen inexorably with an ever increasing plethora of confusing policies that inevitably restrict patient access to the consultants and hospitals of their choice. The AAGBI believe that if there is a problem with anaesthetic fee shortfalls, this is directly attributable to the failure of the insurers to maintain the value of their benefit maxima.”

FIPO, the Federation of Independent Practitioners Organisations, which represents doctors involved in private practice, also demanded that any investigation by the Competition Commission should be expanded to include the operations of private medical insurers.

FIPO spokesman, Richard Packard, said the issue of shortfalls on consultant fees could only be properly reviewed if the data from all the insurers was scrutinised. They believed the average shortfall was insignificant, at around 1.5%, and blamed the problem on a lack of transparency at the point of sale of PMI policies.

“An investigation by the Competition Commission of what is a complex market, where the health and safety of patients is the key concern of consultants, must include the PMI providers. Recent developments on ‘open referral’ PMI policies, and inducements to patients with PMI policies to transfer into the NHS, make the inclusion of insurers in the Competition Commission investigation essential to the future of a fully functioning sector,” he said.

Natalie-Jane Macdonald, managing director of BUPA Health and Wellbeing, said: “For too long, the lack of competition among private hospitals and consultants in private practice has pushed the price of health insurance up to unsustainable levels.”

John Fingleton, OFT chief executive, said: “It is important that patient demand and choice are able to drive competition and innovation in this market with a view to better value for all patients.”

The OFT’s decision to refer the market to the Competition Commission is subject to a consultation exercise that will close on 30 January.

The Private Healthcare Market Study and consultation can be accessed here.

Tags: Private practice
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Scottish docs set up private firms to do NHS work

Herald Scotland - 12th December 2011 1:11 pm

Scottish health secretary Nicola Sturgeon has ordered an investigation into an NHS board’s use of a private hospital to hit waiting time targets.

Auditors for NHS Lothian revealed the board’s doctors had set up firms to secure NHS work farmed out to the independent sector.

This was creating a “conflict of interest” in which consultants and other NHS staff could benefit financially through transferring cases from the health service to Spire Healthcare’s Murrayfield hospital. Patients are still being sent for treatment at Spire.

In 2008, a year after the SNP’s first Holyrood election victory, NHS Lothian agreed a three-year contract with Spire to treat patients in its Corstorphine hospital. The budget was set at £3.2 million a year and included a 20% discount on Spire’s standard tariffs.

In nearly all the cases, the consultants who dealt with patients at Murrayfield were employees of NHS Lothian. The board’s auditors launched an investigation into the policy after a hospital doctor raised concerns.

According to the report, the consultant was concerned surgeons and anaesthetists in his field “may be obstructing the efficient throughput of patients to promote the transfer of cases” to Murrayfield.

The audit concluded “these suspicions could not be substantiated”, but it flagged up concerns about the policy’s impact on staff behaviour.

Patients go private in wake of blocks to GP referrals

Pulse - 8th December 2011 11:58 am

Patients are increasingly being driven to pay for private healthcare because of tough restrictions being placed on GP referrals and cuts in the availability of some procedures on the NHS.

Three major private healthcare companies have reported a surge in the number of ‘self-pay’ procedures, as patients who do not have medical insurance choose to go private to avoid blocks placed on GP referrals.

Challenge to ‘open referrals’ in private practice

By Geoffrey Glazer, chairman of the Federation of Independent Practitioner Organisations - 15th November 2011 3:10 pm

BUPA has recently announced that it is introducing an Open Referral Service as a standard enhancement to its Corporate Select Product. It says the new service is partly to tackle shortfalls in claims, but also because of “high variation in clinical practice between many specialists” and to provide greater patient choice.

The open referral process proposed by BUPA, which is intended to come into effect in January 2012, means that instead of referring patients who are insured under the Corporate Select Product directly to a consultant, GPs will complete an open referral form provided by the insurer detailing the nature of the condition or procedure, but with no named consultant. Patients will then contact BUPA to gain a pre-authorisation and, provided this is covered by the policy, will be given a short list of BUPA approved consultants from which to choose.

I and many of my colleagues are extremely concerned about the impact this new service will have on the patient pathway and patient care. The open referrals process doesn’t take into account the relationship with, and confidence in, their GPs that most patients have. The vast majority rely on their GPs for advice on which specialist to consult. This point was in fact emphasised by the Office of Fair Trading in a survey it carried out as part of its market study into private healthcare. In it, the OFT said “participants generally trusted their GPs and were happy to pursue private treatment based on their recommendation”. The new proposal by BUPA puts this trust in jeopardy.

I also fear for those patients with long term conditions - will they be able to continue to see their established consultant? Under BUPA’s new scheme, they may find themselves redirected to a BUPA approved consultant, thereby endangering their continuity of care.

BUPA and its managing director Dr Natalie-Jane Macdonald have made several claims about the variation in clinical practice between specialists. However I have not seen any hard data to support this. Dr Macdonald has been quoted as saying that BUPA understands “who the most effective practitioners are”. There’s an implication that ‘BUPA approved’ consultants are of a higher quality but this is unsubstantiated. In fact, only those consultants that have agreed to BUPA’s scale of fees will be on the list of approved consultants, thereby actually restricting patient choice.

Protests are coming from GPs, consultants and hospitals about the shattering of the dynamics between the GP, consultant and patient. At a time in which the NHS is trying to restore the GP-to-consultant referral pathway, why is BUPA compromising this?

Tags: Private practice
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Private practice: Bupa clients get ‘open’ referral

By Mike Broad - 10th November 2011 12:40 pm

Doctors’ representatives have reacted angrily to Bupa’s move to remove a GP’s ability to refer a patient privately to a named consultant.

In a change to Bupa’s coporate select policy, coming into effect in January, insured patients visiting a GP and seeking private treatment will be provided with an open referral for a named procedure.

The insurer will then authorise the treatment and select a consultant from a list of its ‘recognised’ consultants.

Mr Derek Machin, chairman of the BMA’s private practice committee, said: “We’re completely opposed to this. It’s disingenuous - even insulting to GPs - to suggest that they’re not the right people to advise their patients on who is best placed to give them the treatment they need.

“GPs have the best interests of their patients at heart, as well as detailed knowledge of consultants in their area.”

The policy concerned covers 40% of Bupa’s three million customers.

A spokesperson for Bupa said the insurer was not trying to supplant the role of GPs, but help patients make an informed choice.

From April, NHS patients will be able to choose a named consultant for all referrals.

Geoffrey Glazer, chairman of the Federation of Independent Practitioners (FIPO), said: “The vast majority of patients rely on their GPs for advice on which specialist to consult. The Office of Fair Trading made this point in a survey it carried out as part of its market study into private healthcare when it said ‘participants generally trusted their GPs and were happy to pursue private treatment based on their recommendation’. We believe that to put this trust in jeopardy is a dangerous route to go down.”

He suggested that BUPA’s plans are based more on commercial concerns than on care for the patient, and expressed concern that patients with long-term conditions will not be able to continue to see their established consultant, thereby endangering their continuity of care.

“It is also strange that at a time in which the NHS is trying to restore the GP to consultant referral pathway that BUPA is trying to destroy this,” he concluded.

Tags: PMI, Private practice
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Will ‘consultant incentives’ be common in a reformed NHS?

By Melanie Newman - 7th October 2011 1:27 pm

Advocates for more competition in the NHS should pay attention to the Office of Fair Trading’s recent statement on financial incentives offered to private doctors.

The trade body is part way through an investigation into the private healthcare market. The interim statement suggests hospital groups may be asked to stop paying doctors to treat more private patients at their facilities, amid fears the incentives are influencing decisions on patient care.

The OFT has two major concerns about consultant incentives, which include ‘loyalty’ payments, equity share schemes and non-financial incentives such as free secretarial support.

“Consultant incentives may increase the cost of private healthcare without driving improvements in quality,” it said. “Second, the OFT has concerns that the provision of certain incentives may foreclose competing providers from entering or expanding into the private healthcare market since these arrangements may distort the referral patterns, and in some cases incentivise consultants to direct a significant proportion of their patients to one facility.”

Attracting consultants

The incentives reflect the fact that providers are now competing on their ability to attract consultants rather than competing directly for patients on quality and price, the watchdog added.

The insurer AXA PPP has previously complained about consultants’ incentive payments to the GMC as well as the OFT.

Dr Simon Peck, head of investigations at AXA, said: “We understand that certain incentive payments are made by some hospitals and laboratories to doctors in return for their using or increasing their usage of facilities. These are generally confidential and it is hard to see any other motive for such payments other than to influence the way in which doctors treat their patients. These payments are not generally disclosed to patients or to insurers.”

BMI Healthcare, the UK’s largest private hospital group, is one private operator that is understood to pay consultant incentives. A spokeswoman said: “Across our organisation, the scale of any incentives for growing private practice at BMI is small, and the operation of these is kept under review for compliance with guidelines from the General Medical Council.”

She added: “BMI sees some aspects of consultant incentives as an issue for the industry and the medical profession, and supports the OFT in its review of current practices.”

While the payments are currently only offered in the private sector, an increase in competition in the NHS could lead to similar incentives emerging in the state-funded sector.

GP sweeteners

Consultants have far less influence over decisions about who they see and treat in the NHS than in private healthcare. But as numbers of operators increase in the NHS - and competition for patients heats up - it’s almost inevitable that some will attempt to incentivise referrals, perhaps through sweeteners for GPs.

Just last year a PCT was seriously considering plans to pay GPs to refer patients to an independent sector treatment centre. Such payments are not illegal, though BMA guidance says doctors should avoid taking payments to refer in a certain way.

As well as direct payments, the OFT is looking into the effects of equity share schemes on competition, referrals and patient choice. One company that runs such a scheme is healthcare provider Circle Health. Circle, which is 49.9% owned by its staff, treats private and NHS patients and offers all its employees shares in the company.

Before the company built its flagship Bath hospital, it asked its doctors to commit to bring a proportion of their private practice - usually around 60% - to the facility during its first year of its operation.

Dr Peck said: ‘We do have concerns about the situation where doctors have a direct financial interest in facilities where they refer patients. Whilst we would like to believe that most doctors in such situations act in the best interests of their patients, it is possible that financial interests may distort their referrals decisions. At least, however, the equity share model used by Circle is transparent.”

The NHS is not affected by the Circle doctors’ patient referral commitments, except in that they are key to the firm’s expansion plans. These plans could be affected by a possible negative OFT pronouncement on the model. Circle is planning to build a network of hospitals which would treat NHS and private patients.

Former BMA chairman Sir Sandy Macara, however, has raised concerns that share ownership could cause a conflict of interest where Circle partners are working at rival NHS hospitals. Criticism of equity share schemes by the OFT could exacerbate those concerns.

Circle also has 676 GP shareholders, who were issued shares in 2007 and 2008 before the company decided to end its involvement in primary care. Circle told the Bureau that all the GPs are based in Hampshire and Dorset and are therefore not in a position to refer patients to Circle’s current facilities. But Circle wants to build a hospital on the edge of Southampton. The company says it will buy back the shares from GPs who practice in the same areas as future Circle hospitals.

But the issue - as with the points raised by the OFT - illustrates the complexity and potential for conflict that is likely to accompany the increased marketisation and commercialisation of the NHS.

This article was developed by the Bureau of Investigative Journalism, and first appeared on its website.

Tags: Private practice, Privatisation
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GPs offer ‘private’ alternative to NHS minor ops

The Guardian - 5th October 2011 10:06 am

GPs at a health centre in York have written to patients saying the NHS will no longer fund minor operations and instead offering to carry out the procedures for a fee, an unprecedented step in the health service.

In a letter obtained by the website nhsmanagers.net, patients are advised that for a number of minor surgical procedures, such as ingrowing toenails, mole removal and chopping out warts and cysts, they would have to go private.

It says: “We are holding your details on a list of patients who require a minor surgical procedure that is no longer paid for by the NHS.”

The letter identifies four “local service providers who offer the procedure privately”, including HBG Ltd, which it admits is “a company that is wholly owned by the practice”. The price list of treatments range from £56 to remove a skin tag to £243 for lipomas.

The advantages of electronic billing in private practice

By Mark Jones - 8th September 2011 8:53 am

When consultant physician Dr Adrian Draper first started practising privately eight years ago, he made the decision to manage his own medical billing, rather than devolve the work to a medical secretary. His preference was to maintain complete control over the financial aspects of his practice, including the task of invoicing insurers and self-paying patients.

Dr Draper started by devising his own system to generate paper bills that, although effective, took up a considerable amount of time. Generating the paper invoices and mailing them out was time-consuming enough. Tracking payments and chasing outstanding invoices took up yet more valuable time. The need for a more efficient system became an imperative.

Examining the options led Dr Draper to conclude that electronic billing was the way forward for his practice and he signed up to Healthcode, the electronic bills clearing system used by virtually all the private medical insurers and private hospitals in the UK. Straightaway he noticed a big reduction in the amount of time he spent on paperwork and mailing.

Today Dr Draper creates all his medical bills through Healthcode’s ePractice biller Plus, and sends them to insurers via Healthcode’s secure online network which is encrypted to online banking standards. He also uses ePractice biller Plus to generate invoices for self-paying patients.

A feature that Dr Draper finds particularly useful is the payment-tracking tool, which helps him keep on top of unpaid bills. “Being able to record and track payments helps me manage debts more efficiently. With a summary of unsettled invoices to hand, I can chase up payments from individual patients in good time. This has clearly improved my cash flow.”

Sending medical bills direct to insurers through the system has also had a positive impact on cash flow. As Dr Draper’s bills pass through the Healthcode system they are validated automatically. If all the information has been entered into the electronic bill correctly, there are no queries for insurers to resolve and they are able to settle the invoices more quickly, many paying by bank transfer.

After some initial familiarisation with the new system, Dr Draper found ePractice biller Plus straightforward to use and he is now well aware of the advantages that several of the features offer. “The membership enquiry feature is particularly useful”, he says. “I can validate a patient’s insurance details online before sending the invoice.”

Dr Draper also uses the Healthcode system to produce reports for his annual accounts. “When my accountant asks for information at the year-end, I can use the report generator to produce much of what is required.” Reports can be run to list invoices by patient, payor and invoice date and also to list payments by patient, payor and invoice date, filtered by selection of status (settled, outstanding) within a selected date range.

Dr Draper believes many private practices could benefit from electronic billing. “It is much more efficient than paper systems and with systems like payment tracking and reports, ePractice biller Plus has much to offer consultants managing their own finances like myself and to medical secretaries who are looking after larger practices.”

Tags: Private practice
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