Welcome to the Healthcare Industry Barometer 2012.
Since the publication of the 2011 Healthcare Barometer, the industry has experienced a roller coaster of ups and downs in relation to healthcare reform. Many of the views expressed in last year’s survey were largely speculative – the industry was theorizing about the likely impact of legislative reform. While the industry can now consider its future against a more concrete legislative platform, uncertainties still remain as to the prospects for private sector healthcare providers. This is fuelling a negative outlook for growth; many believe we will not see an upturn until 2014 or beyond.
While it is still early days in the implementation of the Health & Social Care Act, views are emerging as to its likely impact.
There is an acknowledgement that competition, albeit watered down, has been enshrined in the Act and that, on paper at least, this should help support the growth of private sector participation in the NHS market.
However, in contrast to the positive views expressed in our 2010 survey, most feel that there is limited Government support for encouraging an increase in the private sector’s share of the market.
There is also a sense that the long standing issues surrounding the lack of a genuine level playing field between Trusts and the independent sector is unlikely to be addressed. This is not helped by the continued uncertainty over the effectiveness of the CCP and its ability to protect and improve competition.
Respondents appear to be reasonably positive about the introduction of Clinical Commissioning Groups and the revised approach to commissioning. It is however clear that the market believes the Commissioning Board will play the most significant role in terms of decision making and control; a view most CCGs would no doubt disagree with, at least at a local level.
The market is not convinced that Government will take meaningful steps to integrate the funding of health and social care. This comes as no surprise given the difficult history of health and social care structuring and the challenges faced by Government over budget allocations and the division of responsibilities between various commissioning and provider groups.
There are other key issues which are likely to influence market outlook this year and next including: the final shape of the new licensing arrangements; the debate over the structure of the failure regime for healthcare providers; the outcome of the OFT’s referral of the private healthcare market investigation to the Competition Commission. There are also some interesting recent developments to track over the longer term including: the setting up of the NHS property services company and its plans for estate rationalisation across the NHS; the increased focus on community based care and the growth of private and third sector participation in community services contracts; the commercialisation of the NHS and plans to sell the NHS brand overseas.
So are this year’s Barometer results more optimistic than last year? On the whole, we do not think market views have changed substantially in the last 12 months. Investor interest in the sector is still considered stable or increasing which suggests that the legislative reforms have not been negatively received.
However, it is likely to be some time before the market is more certain about the overall impact of the Act and the roll out of the new commissioning and licensing structures. We hope you find the 2012 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