Private healthcare surge brings new business opportunities

The private healthcare industry is growing fast and, with it, an abundance of new business opportunities.

The recent impact of the private sector on the UK economy has been particularly weighty as, increasingly, it's called upon to support an already over-burdened NHS in meeting the demands of a rapidly ageing population.

Media-hyped fears over a so-called 'NHS crisis' have led to a rise in the number of British people taking out private medical insurance – the first rise since 2008 - as well as a hike in independent private healthcare companies and startups who are emerging on the scene to take advantage of these new openings.

These developments have changed the healthcare landscape in many ways, most recently through the emergence of new, hybrid private/NHS facilities, centres and clinics.

Birmingham Trust's new announcements for a £65m specialist facility housing 138 specialist beds offering both NHS and private care on the Queen Elizabeth Hospital Birmingham campus is one such example.

The 14,000 sq m site is expected to ease capacity for hospitals in the area by providing 72 new beds for NHS patients, as well as 66 private beds to be run by HCA Healthcare UK.

“The trust has no physical capacity in our existing hospitals to provide extra beds so this additional provision – on site – will be a huge support in managing our ever-increasing patient numbers,” said Dr Dave Rosser, executive medical director at University Hospitals Birmingham NHS FT.

Dr Rosser added that he welcomed private firm HCA's involvement, not only to free up NHS capacity, but also to offer patients a choice between NHS and private care without them having to travel to specialist facilities outside the region.

He acknowledged a growing trend for patients to 'shop around' for healthcare, especially when it comes to more complex procedures, and welcomed the change and the added benefits it would bring to the NHS.

“As a result of this group of patients being treated privately, more patients will be able to receive their complex treatment on the NHS within the trust. The development will also provide UHB with an additional revenue stream to reinvest into NHS patient care,” said Rosser.

The future of healthcare?
So is this new mode of hybrid healthcare delivery a wider signal of what's to come? Fiona Booth, chief executive of the Association of Independent Healthcare Organisations (AIHO) certainly thinks so.

“Having both the independent sector and the NHS deliver healthcare, is the future. It’s not about competing but complementing. Independent hospitals provide a high-quality service to patients and we offer value for money to the NHS. This has supported the sector’s growth.” A growth that's expected to explode over the next decade as private companies continue to diversify and expand into the mainstream healthcare market.

And it's not just the larger companies who'll be getting a slice of the pie.

Although big corporations such as HCA, Nuffield and Ramsay currently account for around two-thirds of the private hospital market, the real focus over the coming years will be on the smaller firms who surface to meet the new demands.

Having a multitude of different providers, from small clinics to specialist centres, is where the market's headed, according to Polar Capital partner Dan Mahoney.

“If you take cataract surgery, what we are seeing springing up are private operators who just do cataracts. So you’ll get referred by your NHS GP to a unit like that. Would you rather have someone doing the procedure who does 12 a day or a few a year? You get a much more uniform outcome this way at a lower cost.”

As a small business owner or someone who's looking to buy a business, the broadening of this sector provides a myriad of ways to move into it and capitalise on the growing trend. But aside from brick and mortar businesses, one of the most game-changing areas of growth for smaller companies is set to be in digital healthcare technology.

In the vast majority of cases, it's the private providers who are trailblazing in this field and setting the competitive groundwork for 21st century healthcare.

From step counters to apps that monitor blood glucose levels and software that aggregates patient data; the ways in which more tech-savvy individuals are interacting with healthcare is changing thanks to these ever-evolving apps and gizmos.

One business who have already anticipated this is Babylon, an app that allows you to speedily book an appointment with your GP via a screen. The service is cheap, fast and efficient, and users can have their prescriptions emailed to their nearest pharmacy.

The company's collaboration with an NHS surgery in Essex has already seen their waiting times fall substantially for the first time in nine years.

Despite its obvious benefits, healthcare has been one of the last industries to embrace digital technology, with the NHS only recently converting to electronic records. However, the influx of new, private solutions and innovative tech startups are rapidly creating competition that's forcing the NHS into the information age.

The technology group Halma has recently expanded its global reach into the meditech market with the acquisition of Cardios, a manufacturer that supplies blood pressure monitors to healthcare providers.

The products that Cardios supplies are used by cardiologists and GPs to diagnose and prevent heart and blood vessel-related diseases.

Although the products are currently being distributed primarily in Brazil, Halma’s expansion signals a growing global demand for this technology - one that’s already beginning to encroach on our own health service.

NHS investment in these areas has previously been seen as a costly risk for the cash-strapped service, but hospitals are beginning to realise that these new technologies may in fact save them money in the long-term.

Digital tech's popularity with consumers has also sent a clear message that demand for these products is strong. According to research by Strategy Analytics, the wearables market shipped 22m units in the second quarter of 2017; including a large number of specialist, medical devices.

One of the latest firms to get in on the trend is global powerhouse Amazon, whose highly confidential '1492' team is currently exploring opportunities for the company in the digital health sector. Others such as Apple are also reportedly working on similar projects; but as yet they're largely being kept from the public.

And it's not hard to see why.

As digital health solutions and connected health devices are still relatively uncommon, this market is potentially a very lucrative one.

But, often, the real value of healthcare technology is not in its physical assets, but its intellectual property.

In fact, the IP is often the most important asset for the buyers of these companies, due to the vast amount of valuable data they yield.

One of the main drivers of change in the global healthcare industry in recent times has been the clever use of data to monitor all aspects of patients' lives. This data has huge value in the modelling of patient care and the ability to monitor disease trends and patient outcomes.

It is this information that will shape the future of patient care and the global healthcare market.

A good time to invest
Overall, it's expected that the global healthcare sector will invest £315 billion in software, hardware and services in 2021, a six-fold increase from the current figure of £45 billion. Small firms who are able to find a place in the market will be able to enjoy their share of the market as it scales rapidly.

Foreign investors are already starting to take notice, and are offering another source of capital for those considering expansion. Namely, a number of US-based trusts who are reportedly interested in providing capital to independent providers wanting to expand in the UK, drawn by favourable tax rates and the fact we’re English-speaking.

Most recently, major US healthcare firm UltraLinq Healthcare has acquired Belfast medical technology group Intelesens.

Intelesens, who specialise in producing intelligent, wearable, non-invasive monitoring devices for both the hospital and home patient monitoring markets, has been acquired as part of the US firm's strategy to provide a cost-effective digital health platform for cardiovascular healthcare.

Stephen Farber, chief executive of UltraLinq Healthcare, said: “Together, with our existing cloud-based image and data management platform, we are going to be able to solve an abundance of care delivery problems that have never truly been targeted with this kind of technology.”

And breaking new markets is where the rewards lie for companies at the frontier of digital healthcare innovations.

More than ever before, people are able and willing to pay for innovative, top quality services, and as increasing numbers of hospitals realise the benefits of outsourced and supportive private services, it looks likely that this is only the beginning of a sector-wide overhaul.

All signs suggest that now is the ideal time for would-be buyers to make their mark on this growing industry, and with the variety of assets ripe for investment; there’s no shortage of roads in.

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