Welcome to The Healthcare Industry Barometer 2011.
For those who have been following UK health sector reform over the last 12 months, the themes emerging from this year’s survey results will come as no surprise: disappointment over Government’s handling of the Health & Social Care Bill, lack of confidence in short to medium term opportunities for growth in the sector and widespread uncertainty in relation to the final shape of legislative reform in both health and social care.
Comparing these themes with the results of the 2010 Barometer, there is no doubt that the mood in the industry has shifted significantly since the publication of the Government’s Health & Social Care Bill in January 2011. While the majority of 2010 respondents believed that the new Government would boost private sector participation in the NHS, the outlook from 2011 respondents is far less optimistic. Many believe the Coalition has not supported the recovery of the independent healthcare market and that it is unlikely to accelerate the expansion of the role of the private sector in the NHS.
For some, the current lack of optimism in the healthcare industry is seen as a natural consequence of the continued uncertainty in the political landscape, the lack of healthcare M&A activity and on-going instability in the stock markets. However, for those who are balancing the current debate on health sector reform along side sector developments on the ground, there may be some cautious optimism about the outlook for the industry:
•While there is no doubt that the independent sector does not believe there is currently a fair market for healthcare providers to compete for NHS patients, the majority of the 2011 respondents felt that the introduction of the new Clinical Commissioning Groups would lead to a more plural and competitive market place.
•While the ‘listening exercise’ has watered down proposals to actively promote competition in the NHS market place, the Government continues to back the introduction of measures to prevent anti-competitive behaviour and to ensure that no one type of provider, whether NHS, private or third sector, is given preference over another.
•While the 2011 survey results demonstrate mixed views on the impact of the lifting of the private patient income cap, there are a number of recent examples of the private sector joint venturing with Foundation Trusts to pursue opportunities in specialist care, pathology services and private patient units for example. This trend looks set to continue as Foundation Trusts become more entrepreneurial with fewer regulatory constraints.
• Investment in new and upgraded NHS hospitals has been slow in recent years but this may change with the emergence of Local Asset Backed Vehicles for the delivery of new hospital developments and the recent announcement by the Department of Health that Government guarantees will continue to be available to support PFI schemes (albeit the lower threshold value at which the guarantee will be offered has been increased).
•Shared services models are gaining support among Trusts and local authorities who are keen to benefit from the economies of scale that more integrated service delivery can offer. There are opportunities for the private sector to help shape these new structures and to be an integral part of their delivery. This is one of the areas to be considered by the NHS Future Forum in the next round of the listening exercise.
So while it is difficult to predict what will happen next in the political landscape of healthcare reform, there are reasons to be open minded about the prospects for growth in the healthcare industry over the next few years. In the meantime, we hope you find the 2011 survey results a useful measure of current opinion in the market. We would like to thank HealthInvestor for collating the survey and the respondents for their contribution.
Partner, Nabarro LLP
Partner, Nabarro LLP