Dec
15
UK’s National Health Service Required to Save Billions
By Thomas | Published December 15, 2010
The British Government is asking for massive budget cuts in the wake of recently enacted austerity measures; as part of these measures the government, led by Prime Minister David Cameron, has called on the National Health Service (NHS) to become more efficient, in addition to providing more value-for-money. As a consequence the NHS is set to be tested to the limit, as the Government demands that the British Public Healthcare sector slash £20 billion (US$32 billion) in costs by 2015; an amount which equates to cost reductions of 4 percent per year.
The austerity measures, and drive for efficiency savings, are the largest ever seen in the United Kingdom. This has left the NHS in the challenging position of making drastic spending cuts while retaining current levels of services. Local Authority provided Social Services are also being affected along with public healthcare services, and both entities have been charged with delivering noticeable improvements in the quality of their services in certain problem areas.
The nation’s Health Select Committee – appointed by the House of Commons – is entrusted with the examination of health policies, administration, and expenditure by the Department of Health, and the Committee’s associated bodies have been in charge of the spending review covering the NHS and social service departments. The Select Committee recognized that the UK public healthcare sector is being set a significant challenge. The level of savings required is estimated at 4 percent per year – a level which has never been achieved by the NHS since its inception in 1948.
There has been no attempt to achieve efficiency gains of this magnitude within a national healthcare system anywhere in the world previously. The unprecedented measures being adopted by the UK’s Government have been criticized for being unclear and lacking significant information on how the quality of healthcare services will maintained, while achieving the financial cuts sought – although the need to maintain or improve standards of care is still necessary. It is seen as vital for the NHS to maintain the established standard of care provided to British nationals, but the government demand for improved financial management of the system is seen to be of paramount importance to the overall expenditure cuts being implemented in the country.
The NHS has already put in place measures to become more cost effective, with savings being found by reducing the length of patients stays in NHS hospitals, reducing hospital infection rates, and by cutting the number of unscheduled attendances at Accident & Emergency (A&E) departments. As government ministers and local authorities set out budgets in order to achieve the savings sought for the NHS and social services, there is recognition that the UK private healthcare sector may be able to benefit from the government’s plans for cost reductions in state funded healthcare.
According to research carried out by Laing and Buisson – an analyst and research company specializing in the independent healthcare sector in the UK – private hospitals increased the amount of medical procedures carried out for the NHS in 2008/9 despite the impact of the recession in the UK. Revenue from private hospitals within the country increased by 3.5 percent, to £421 million (US$673 million) for the year. The Laing and Buisson report highlighted that patients using private healthcare facilities funded by the NHS, under the waiting-list criteria, dramatically increased between 2008-2009 when 212,000 NHS patients were dealt with in this way; this accounted for 22 percent of private hospital treatments compared to 6.3 percent in 2007.
The recession in the UK dented the demand for private medical cover in 2009, with Laing and Buisson reporting that as the UK economy struggled there was a decline of 4.8 percent in private medical insurance and medical schemes funded by employers. At the start of 2010, there were 7,238,000 people holding British private medical insurance and self-insured medical expense schemes, representing 11.7 percent of the UK population.
Although the UK private healthcare sector has been vulnerable to the financial cutbacks by companies, and lower levels of personal disposable income, the reform of the NHS is likely to present increased opportunities for the private healthcare sector.
However, the private healthcare market in the UK – which is estimated to be worth £5.5 billion per year – is set for a review by the Office of Fair Trading (OFT). The OFT said that it will examine the nature of the market, in addition to the competition and the effectiveness of healthcare provision for private patients. The OFT highlighted that the private healthcare sector in the country is growing in importance as proposed NHS reforms are implemented, the demands from an ageing population increase and the overall need for better medical outcomes.
Sonya Branch, OFT Senior Director of Services and Public Markets said: ”We are keen to establish whether patients and buyers of private healthcare services, including the NHS, are getting the full benefit of choice and competition.”
The private medical insurance sector in the UK is dominated by Bupa, AXA PPP, PruHealth and Aviva.
The leading providers of hospital care in the independent UK healthcare sector include Netcare’s General Healthcare Group, Spire Healthcare, Hospital Corporation of America (HCA), Ramsay Health Care and Nuffield Health. There is the possibility that new independent hospital providers make seek to enter the market and meet demand from NHS patients.
UK independent hospitals could face a potential dilemma resulting from being called upon to provide more services under NHS conditions in the future. While the benefits from generating more business would be self evident, the attractiveness to privately funded patients may lose its appeal if it is seen that equivalent treatment can be obtained under state funding.
While the private medical insurance sector in the UK has declined with the impact of austerity measures following the global financial crisis in 2007-08, the measures being adopted to reform the public health system could result in an increase in demand for private medical insurance.
Companies Mentioned:
General Healthcare Group
General Healthcare Group (GHG) is leading health care services provider in the UK. GHG primary focus is treating private patients, while maintaining our position as a dynamic partner of the NHS. GHG has a network of 67 hospitals and treatment centres across the UK
Ramsay Health Care
Ramsay Health Care was established in 1964 and has grown to become a global hospital group operating over 100 hospitals and day surgery facilities across Australia, the United Kingdom, Indonesia and France.
Spire Healthcare
Spire Healthcare’s mission is to be the best private provider of quality healthcare. Spire Healthcare has 26 year heritage in the private healthcare sector.
The Hospital Corporation of America (HCA)
The Hospital Corporation of America (HCA) is the largest private operator of healthcare facilities in the world. HCA operates some 170 acute care, psychiatric, and rehabilitation hospitals in the worldwide.
Bupa
Bupa was established more than 60 years ago in the UK and is now has ten million customers in over 190 countries, and over 52,000 employees around the world. Bupa is a leading international healthcare provider, offering personal and corporate health insurance, workplace health services and health assessments. As a provident association Bupa has no shareholders, because of this it uses its profits to invest in healthcare and medical facilities around the world. Bupa has operations around the world, principally in the UK, Australia, Spain, New Zealand and the US, as well as Hong Kong, Thailand, Saudi Arabia, India, China and across Latin America.
AXA PPP
Originally known as PPP Insurance, the company became part of the Global AXA Group in 1999 and changed its name to AXA PPP in 2002. AXA PPP is now an international health insurance company with over 2 million customers around the world.
Aviva
Europe’s fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions.
PruHealth
PruHealth is part of a joint venture named Prudential Health Holdings Limited, between Prudential Assurance Company of the UK and Discovery Holdings. The joint venture was started in 2004 and offers private medical insurance in the United Kingdom. Currently Discovery Holdings owns a 75 percent stake in the joint venture while Prudential Assurance holds the remaining 25 percent.
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