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Tuesday, May 19, 1998 Published at 22:12 GMT 23:12 UK

The size and role of private medicine

Bupa nurse checks pulse of expanding private sector

Britain's ageing population and the ever-increasing cost of funding a modern health service have brought the private and public sector together in a very complex relationship.

The trend began in the 1970s, but was given real impetus under the Conservatives. And Labour, with its adherence to Conservative spending levels, appears to be toeing the private/public partnership line.

Latest figures show:

  • The number of private acute, medical and surgical beds has almost doubled over the last 19 years. In 1979, there were 6,700 private beds, compared with 12,000 now. But the number of private hospitals and clinics has fallen from 200 to 150.
  • Around 18,000 of the 23,000 NHS consultants do some private practice, according to the Independent Healthcare Association.
  • The British Medical Association estimates that in 1982 about 25 per cent of NHS consultants' income came from private practice, compared with 50 per cent now. This is not just because private practice has increased. It is also because NHS salaries have not risen at the same rate as comparable professions, such as accountancy and law.
  • The Independent Healthcare Association says the maximum salary earned by an NHS consultant is around 110,000, considerably less than a lawyer or accountant at the top of their profession.
  • The value of the UK private acute healthcare market reached an estimated 31.9bn in 1993, with over 3 million people subscribing to health insurance schemes for private medicine. About half are in group schemes, some arranged by firms on behalf of employees.
  • A 1994 survey showed that 36% of households with an annual gross income of 26,000 or more had private medical care, compared with only 3% of those with an annual gross income of less than 8,000. Those on higher incomes were also more likely to have the majority of the costs of their private medical insurance met by their employer.
  • Private medical insurance coverage is expected to keep growing, with the number of people taking out insurance predicted to rise from 11 per cent in 1996 to 15.3 per cent by the year 2000.

There has been some crossover between the public and private sectors since the foundation of the NHS. Hospitals have been able to have 'pay beds' for private patients. Consultants have also been able to hold part-time contracts with the NHS so they can practice privately as well. Patients have always had the right to receive private medical treatment, either paid for out of private healthcare insurance or directly.

But the private sector remained dominated by charitable hospitals and NHS 'pay beds' until the 1970s, when the number of private consultants began to increase. The 1974-9 Labour administration tried to phase out 'pay beds' in the NHS. This actually stimulated the development of private, profit-making hospitals. After a decline in 'pay beds' in the late 1970s, there are now around 1,500 private beds in NHS hospitals, roughly the same number as in the early 1970s.

"Creeping privatisation"

When the Conservatives came to power, they introduced new consultant contracts which allowed full-time NHS consultants to do up to a tenth of their work in the private sector. The Health Services Act of 1980 also stimulated an increase in private provision.

Conservative policies, such as contracting out some services, the growth of private healthcare firms operating in the internal health market and the introduction of the Private Finance Initiative in 1992, led to fears about creeping privatisation of the NHS. PFI allows private firms to put up much of the capital for new developments, such as hospitals.

It is too early to say what the impact of Labour's election pledges on reducing waiting lists and abolishing the internal market will be for the private healthcare sector. One area the government is currently tackling is that of full-time or mainly full-time NHS consultants who work in the private sector. There is talk, for example, of introducing a 'naming and shaming' policy for so-called 'fat cat' consultants who make a lot of money out of private work. But it is likely to face opposition from the British Medical Association, which is calling for consultants to be allowed to do as much work in the private sector as they like.

Whatever the government's policy on hospital care, the private sector's influence in primary and continuing care is likely to increase into the millennium.

Most of the government's new health initiatives include stipulations that the public sector work in partnership with business as well as voluntary organisations. And private healthcare insurance, particularly for long-term care, is also under discussion as part of a review of the needs of Britain's ageing population.

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