Emergence of ‘super specialty’ clinics in Central London
The Central London private hospital market is opening up to a new breed of small, highly specialised provider, according to the latest research from healthcare analyst LaingBuisson.
Findings published in the updated Private Acute Medical Care in Central London show that theatre capacity in the capital’s private hospital sector is set to increase by around 10% this year as a number of small, ‘super-specialty’ clinics become operational. Although not a dramatic increase in terms of market-size, the new models of care being adopted by these operators could present a challenge to incumbent providers as they seek to build brand awareness and take greater control of the patient pathway.
A number of major players have signalled their interest in entering the London private hospital market in recent years. Earlier this year, UAE based healthcare giant VPS Healthcare announced plans to open a 150-bed cancer centre on the site of the former Royal Masonic Hospital in Hammersmith. Circle is planning to open a proton beam therapy centre in Harley Street in a joint venture with Advanced Oncotherapy and the Cleveland Clinic has taken out a long-term lease on a 198,000sqft building in London’s Grosvenor Place. Meanwhile, Spire has confirmed it is still looking for a site in the capital – although it flatly denied rumours it has secured a site in Earl’s Court.
Despite these potentially market-altering announcements, to date there has been little action on the ground: the last full service private hospital to open in central London was the Weymouth Street Hospital in 2010. However, three new super-specialty hospitals are set to open in the Harley Street district within the next few months. Small in scale, with a total of just seven theatres, these might not be overnight game-changers but they could represent a growing trend.
Formerly the London Orthopaedic and Sports Medicine Centre, Fortius Group is opening two new sites in 2016: a 12,000sqft diagnostic and treatment centre in King William Street in the City of London, and a three-theatre surgical centre in Bentinck Street in Marylebone. Founded in 2010, by surgeons Andrew Williams and Jonathan Lavelle, the company has over 40 consultants and focuses exclusively on orthopaedics, MSK and sports injury. Crucially, its strategy is to control the whole patient pathway by providing integrated care including consultations, diagnostics and surgery.
Nuada Medical Group – originally prostate cancer specialists but now focused on gynaecology and urology – will open a two-theatre site on Harley Street next year. Although the company’s model differs from Fortius in that it is looking to expand the number of specialties it offers under the Nuada brand, it is also a consultant-owned business that sets out to cover the full care pathway.
Finally, eye care specialist Optegra opened its first London hospital in Queen Anne Street at the end of December. Although not clinician-owned, the hospital has lined up 25 Moorfields consultants to provide highly specialised treatment at the flag-ship site, which includes two operating theatres and eleven overnight beds.
According to report author Ted Townsend, the move towards ‘super-specialty’ clinics can be seen as a product of the growing trend in central London towards high acuity care. He commented:
“For some years, private hospitals in central London have been moving up the complex care trajectory and the emergence of super specialties is taking that to another level as groups of consultants get together to offer highly specialised services. By focusing on the whole care pathway, these companies are effectively cutting out the hospital. They can provide the consultations, the diagnostics, including imaging, and the surgery, meaning that the can make money from the whole patient journey rather than just their consultant fees.”
Clinicians have always operated independently in London’s Harley Street district but what makes these new operators different is their level of management expertise and their concept of brand identity. Fortius Group appointed a chief executive, Jim McAvoy, from day one and has been profitable since its first year. Nuada is highly brand-focused and is setting out to operate in a similar way to a large law firm, where professional services are owned by the partners. Optegra, meanwhile, is backed by Fidelity so is able to take a long term view of the market.
Mr Townsend added:
“In the past, what you had were basically cottage industries vs large hospital operators but these new providers are bringing in management skills to work alongside clinical expertise. So far, the challenge to the existing general hospital is small but the trend towards day surgery means that for a lot of specialties you don’t need a full service hospital. It won’t change the market overnight but the emergence of these operators could continue to chip away at the incumbent market and in five years or so we could see more smaller providers delivering high acuity care in the less capital intensive specialties.”
LaingBuisson’s Private Acute Medical Care in Central London is the definitive study into the value of this market, examining providers and their portfolios; identifying recent trends; analysing financial results and investigating all sources of funding including PMI, self-pay and revenues from overseas patients.
LaingBuisson Private Acute Medical Care in Central London – 2nd edition: Key Facts
14 private hospitals and 18 NHS PPUs with c. 1,691 in-patient beds. 76 operating theatres (excluding dedicated endoscopy suites) and c. 475 consulting rooms for use by c. 3,000 privately operating consultants
Worth an estimated £1.9 billion in the year to December 2014 (including specialists’ fees)
The London acute healthcare market has grown by 8.3% p.a (in current terms) since 2006, meaning that revenues have nearly doubled over the period (+91%)
Independent sector hospitals account for 77% of total market revenue – the top ten hospitals account for 67% of total revenue. Within this HCA accounts for c. £688m and 49% of revenues generated by facilities profiled in this LaingBuisson report
Revenue per in-patient bed
Independent hospital – averaged in 2014 c. £835,000 – NHS PPU – averaged in 2014 c.£750,000