Welcome to the 2013 Annual Healthcare Barometer. Having taken the industry’s views on specific topics earlier this year – namely property, community services and competition – this survey rounds up the market’s views on a variety of other issues currently facing the health sector as well as the general outlook for investors and operators involved in both NHS and private healthcare services.
This year has been marked by further controversy in relation to competition, both in an NHS context and as a result of the Competition Commission’s investigation into the private healthcare market. With commissioning power now firmly in the hands of CCGs, providers are starting to get a clearer picture of the extent to which CCGs are prepared to adopt competitive processes for the procurement of healthcare services at a local level. The survey results suggest that the market does not believe CCGs are backing the idea of a plural and competitive market place; although many respondents said they did not have a view which would signal that perhaps it’s too early to be ableto identify reliable trends.
One area where respondents are clear about the position is in relation to social enterprises. The majority believe there are real opportunities for social enterprises to grow their market share. For those who do not, there is clearly some scepticism about their ability to genuinely compete for business given their lack of resources and financial backing. This continues to be the main challenge for social enterprises to overcome but there are some signs that larger players are willing to partner with social enterprises to bolster their offering.
There is no doubt that social enterprises have a role to play in the delivery of community services and the market clearly believes this will be the direction of travel for healthcare delivery over the remainder of the Coalition’s term. The vast majority of respondents agree or somewhat agree that there will be continued support for the localisation of NHS healthcare services and an increased focus on the delivery of healthcare in the home. What impact this will have on larger scale hospital operations over the longer term is of course subject to ongoing debate.
Another factor which is likely to have an impact on larger scale hospital operations is the financial difficulties currently being faced by NHS organisations. There is a strong consensus among respondents that there will be an increase in the number of NHS Trusts and Foundation Trusts experiencing financial difficulties in the short to medium term. Interestingly, the market is agreed that this is likely to bring further opportunities for the private sector as services are restructured and in some cases broken up, opening up potential opportunities for the private sector to deliver a greater share of NHS services. On the other hand, among the more financially robust Foundation Trusts, there appears to be an emerging appetite for innovation and business growth. Part of this involves targeting the private patient market. While a number of respondents feel that Trusts are pursuing these opportunities seriously, this is only the case in some areas (as opposed to across the board) and a similar number of respondents do not think there is a serious NHS play for the private patient market. Clearly opinions remain divided on this topic.
As for the general outlook, the position looks similar to last year; the market is not confident that the value of healthcare companies will return to pre-credit crunch levels until 2015 or beyond, with a similar outlook in relation to healthcare M&A activity. This is coupled with mixed views on the extent to which the Coalition has and will continue to support the growth of private sector participation in the NHS market. That said, it is not all bad – most of the respondents believe that the UK healthcare market is attractive to overseas investors which indicates a reasonable level of confidence in the prospects for growth.
We hope you find the survey results interesting and useful. Thank you for reading and to those of you who participated in the survey.
Partner, Nabarro LLP
Partner, Nabarro LLP