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Why are our private hospitals so shy of lucrative markets?

If English private hospitals are unable to compete for lucrative US health tourists, how will they compete for far less profitable NHS care?

The government wants to create a healthcare market through its policy called Any Qualified Provider. The idea is that NHS money should be spent on private providers who will be paid the NHS rate (the tariff) for the procedure. I question whether the private sector in England is capable of doing this work. I think that there should be serious doubt because private hospitals in England are currently avoiding a far more lucrative market which could be worth hundreds of millions to them. If they are unable to compete for a lucrative market, then how will they be able to compete for the far more difficult, and less profitable, NHS care?

Recently Deloitte produced a document aimed at Americans who are considering "healthcare tourism", that is, going abroad for elective treatment. The document estimates that in 2010 there were 6 million Americans who were healthcare tourists and they travelled as far as India, Thailand and Malaysia for treatment. Deloitte produced the following table:

Comparison of private medical procedure costs

This says that the cost of surgery (and the stay in hospital) for a hip replacement is $43,000 in the US and $9,000 in India. The NHS tariff for hip operations is a maximum of £8,152 ("major hip procedure" involving a major complication or patient co-morbidity). Using an exchange rate of £1 = US$1.65 the maximum NHS rate is $13,451. The Deloitte table does not give details of what it means by "hip replacement", but it is reasonable to assume this is without serious complications, so this implies that the NHS rate is similar to the rates given for India, Thailand, Singapore and Malaysia, and far lower than the US rate.

If English private hospitals are expected to perform hip operations at the NHS tariff for NHS patients as Any Qualified Providers, surely they can provide the same operation for US healthcare tourists at the same rate? It seems not. The Deloitte document lists no English hospitals and omits to mention England as a destination for US healthcare tourists. This is odd since UK doctors are trained as well as (or even better than) US doctors, our cultures are similar and we even speak the same language. It seems like an ideal business opportunity: have a hip operation and then go shopping in Oxford Street, or visit Shakespeare's birthplace. Yet English private hospitals are avoiding this business.

Perhaps it is because the English private hospitals are unsafe? The Deloitte document goes to great lengths to say that the foreign hospitals are to US standards, even to point out that they have "partnerships" with US hospitals where the clinicians are trained. So standards are important. However, the Care Quality Council does not warn UK patients against using private hospitals, so one assumes that quality is good. The Deloitte report addresses the issue of safety and quality by mentioning an organisation called the Joint Commission International who accredits hospitals on quality. However, not a single UK hospital is listed as having JCI accreditation (but 24 Irish hospitals are listed).

It is as if the English private hospitals do not want a slice of this extremely lucrative US business! I suggest that the reason for this is because they know that they are unable to do the work because they do not have the capacity. Private hospitals in England are dependent upon clinicians who are trained and work in the NHS. I suspect that there are simply not enough clinicians in private hospitals to do this lucrative US healthcare tourism work. If this is the case, then are there enough clinicians in private hospitals to do NHS work under AQP?

Richard Blogger writes about the NHS and social policy at NHS Vault.


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