City limits: self-pay demand in the Capital

LaingBuisson Consultant and Report Author Ted Townsend

All of the evidence is pointing to a sustainable growth story for the UK self-pay market, but there are indications of a tale of two halves as demand outside of London outperforms the capital. As LaingBuisson publishes the eighth edition of its Private Acute Healthcare Central London Report, author Ted Townsend looks at whether the growth now being seen across London’s private hospitals is set to last



Self-pay revenues for private hospitals in Central London has been slow to come back although now appears to be booming, according to analysis by LaingBuisson.

New data provided by PHIN shows that self-pay volumes in Central London for the first half of 2021 were only marginally up on H1 2019, and in fact slightly down on the same period in 2018.

However, during the same period self-pay volumes were booming in the rest of England, with volumes up an average 25-30%, although this disguises a huge variation within the period.

Broadly, outside Central London, the first three months of 2021 were only marginally up on 2019, while for the later months the growth reached up to +42% in April, +44% in May and + 55% in June.

However, in Central London, self-pay volumes in the first three months of 2021 actually fell by a total of 39% compared to 2019 before bouncing back more modestly +11% in April, +13% in May and + 23% in June.

Given that self-pay volumes in Central London in the first half of 2020 fell by 42% (and in the second half by 19%, or 25% overall) compared to 2019, it appeared that the region was struggling to make up the deficit of c.7,000 self-pay episodes lost during Covid.

However, HCA’s revenues were up c.12% vs 2019 across calendar 2021, suggesting H2 saw a real pick-up in activity, while anecdotal reports from other private hospitals suggest everyone is ‘busy’. Given that embassy and PMI patients are all at much weaker levels than 2019, the difference must be self-pay.

HCA commercial director Andrew Coombs says: ‘We’re very confident about self-pay. All the arrows are pointing in the right direction’. Indeed, ‘Patients are arriving sicker’, says Coombs, which corresponds to Spire’s self-pay results – about half of its 63% increase in self-pay revenues for 2021 over 2019 was attributed to an increase in volumes, the rest to increases in average revenue per case.

Apart from addressing some of the self-pay backlog, private hospitals are benefitting from the slower return to normal service by the PPUs.

How long any of this will last is an open question.

Indeed, the relative boom in non-Central London self-pay suggests there has been a regional shift out of London, at least until more employees start coming back into the city on a regular basis.

If this shift was happening in PMI (and there is some evidence it is), then ‘I’d be loving it’ said one insurer privately.

The main structural reason is that Central London hospitals are broadly set up to treat more complex albeit still elective patients. This means they are more focused on attracting PMI patients, not to mention well-paying international or embassy patients.

Looking only at the two payor groups PMI and self-pay, the latter has increased its share of activity from 18% to 21% over the past three and a half years, according to the PHIN data, or a +3% share gain in Central London.

However, in the rest of England, the same figure has gone from 29% to 37%, or +8%, on a much higher base.

Given self-pay often comes third in most Central London hospital’s list of priorities (depending on how good a year it is for embassy patients), logistically it is often difficult for them to convert initial enquiries into actual procedures in theatre.

I constantly hear stories about ‘who’s going to answer the call’ and whose job is it to follow-up with the prospective patient.

Some of the smaller hospitals, where call handlers know the different consultants and their specialties and can book initial consultations on the hospital’s internal software while the patient is still on the line, seem to do better than the bigger groups where enquiries are managed through centralised systems.

This applies to benefit both PMI and self-pay patients, as it happens.

This analysis is supported by evidence, again from PHIN, that Central London hospitals have a different mix of activity compared to the rest of the UK.

For example, while specialties like ophthalmology, general and plastic surgery are roughly the same in relative importance for an in-London or out-of-London hospital, specialties like gynaecology, gastroenterology, and medical oncology are much more important to Central London hospitals.

The reasons for this are varied but in part depend on the expertise of the Central London teaching hospitals compared to the rest of the UK, as well as the predominance of super-specialisations in those hospitals that can be transferred to the private sector.

All of these more complex cases leave less room for the bread-and-butter of self-pay, hip and knee surgery, in the capital. Whereas outside London this is between a quarter and a third of private hospital activity (generally more on revenue), trauma and orthopaedics represents only 10-15% of patient volumes in London, depending on the hospital.

Another factor, though harder to quantify is that Central London hospitals have fought to build up their list of ‘big-hitter’ consultants who bring with them their whole practice of PMI, self-pay and international patients, generally at the more complex end of the scale.

Financially, these consultants often don’t need to chase self-pay work by lowering prices or agreeing to package deals just to get volumes up, so it seems much harder for enquiries generated by the hospital to convert into actual treatments in theatre simply because the consultant is not interested.

There’s probably a little bit more interest in self-pay at the moment because PMI and international patients have been slow to come back, and indeed some of these volumes are in fact still down on 2019, so it is not yet clear if this increase in self-pay activity is sustainable.

Anecdotally, there is also of course a lot for these consultants to get on with in their NHS practices as well, so sometimes they have less time for private work overall.

We sometimes forget in private healthcare that it is often the consultant and not the hospital who is the brand and drives activity. That means it can be hard for a hospital to ‘move the dial’ on self-pay without the other’s full engagement, at least in Central London.