Rich overseas patients help private hospitals beat recession

With signs in Arabic and English, prayer rooms and minibuses to the local mosque, London's £1.5bn private hospital market has beaten the recession by attracting wealthy patients from overseas.

The capital's private hospital market has grown about 9 per cent a year since 2006, according to a report by LaingBuisson, the healthcare researchers. Total revenues are expected to reach £1.5bn by the end of 2015, partly because of a surge in overseas patients demanding more costly and complex treatments.

Harley Street's reputation and London's sought-after consultants with access to the latest medical technology - often cheaper than in the US - are big draws for overseas patients, according to the report.

Patients, especially from the UAE, Kuwait, Qatar, Saudi Arabia and Bahrain, have driven almost 23 per cent of revenues. Much of it is paid for by Middle Eastern governments, which boosted expenditure on healthcare in the wake of the Arab Spring.

Most of the Gulf states will pay the bill for any medical care that is not available in their home countries, as well as providing generous housing allowances for patients and their families while they are in London.

Mohamed Khomsi, international relations manager at the Portland Hospital - run by the Hospital Corporation of America, the world's biggest private hospital chain - says patients come for more complex care as consultants in Britain are more likely to have experience with specialist conditions.

"The Gulf states have the latest facilities but do not have the volume of patients to develop specialist expertise in rare and complex conditions," he says.

HCA has set up dedicated patient liaison offices to attract customers from overseas. It now accounts for just over half of all private beds in the capital.

Interpreting and translation services as well as luxurious king-size suites that can accommodate entire families are also on offer at its hospitals, which include the Wellington, the Princess Grace, the Lister and the Portland.

The hospital chain earns about a quarter of its sales in Britain from overseas visitors - particularly from Russia, the UAE, Qatar and Kuwait - with the number of overseas visitors increasing by between 5 and 10 per cent in each of the past five years, it says.

The London Clinic derives 15 per cent of its earnings from overseas patients and Bupa Cromwell about 40 per cent, according to the report.

Within central London, Harley Street and the surrounding area still take about a third of the capital's income from private hospital patients. But large investments at London Bridge Hospital, Guy's Hospital and in private health facilities in the Shard - all near London Bridge station - suggest the City of London is an increasingly important rival.

Although volumes have not increased, revenues have as patients seek increasingly complex care. They pay up to £17,000 for a hip replacement or £90,000-£130,000 for a bone-marrow transplant.

The shift towards more acute care has raised profits, with revenue per bed ranging from £1.073m a year at the Lister Hospital in London Bridge versus £347,000 for King Edward VII's Hospital Sister Agnes. Most hospitals generate £3,500-£4,000 a day per patient.

This means that the London hospitals are under less pressure to seek lower-margin NHS work, in stark contrast with private hospitals in the rest of the country. In central London, the 14 independent hospitals have almost no income from the NHS but in the rest of the UK revenues from NHS patients grew 15.6 per cent between 2012 and 2013 and are the main driver of growth.

Hospital groups Ramsay and Spire, the only listed private hospital chain in Britain, have actively targeted the NHS market in recent years.

The report also covers a further 18 NHS private patient units at hospitals such as the Royal Marsden and Great Ormond Street. NHS private patient units in the capital are increasing revenues in line with the rest of the market by about 8 per cent a year, although there are wide variations between them.

Specialist NHS hospitals such as the Royal Marsden, which is renowned for its oncology treatments, are also targeting income from overseas patients. The private patient unit at Great Ormond Street children's hospital earns 80 per cent of revenues from overseas patients while at the Royal Marsden it is 20 per cent.

The Competition and Markets Authority recently investigated the industry after it was accused of excessive pricing. But although it initially ordered HCA to sell two London hospitals, it retreated after an appeal found its calculations had been flawed.

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