LaingBuisson has published the 5th edition of their Mental Health Hospitals UK Market Report.

  • The total independent sector mental health hospitals market is valued at £2.358 billion (2023). It is estimated to have grown £296 million year-on-year (2022 to 2023)
  • At 89.7%, the occupancy rate in NHS beds was recorded at its highest ever levels in 2023. Between 1997 and 2023 the occupancy rate range fell as low as 85.1% before reaching its peak
  • In-house NHS inpatient bed capacity have begun to stabilise after more than four decades of declining volumes – with current declines accounting for a far larger proportion of learning disability total stock than mental health.
  • Out-of-area placement volumes have been increasing despite a clear central policy objective to eliminate them. This has taken place against a backdrop of rising occupancy rates in NHS Mental Health Trusts.
  • The new Labour Government looks set to ensure the passage of a new Mental Health Bill, although the impact of the review into the Valdo Calocane case may mean increased caution is taking when assessing inpatients for their suitability for step-down placements

The independent sector mental health hospital sector has continued to grow in value against a backdrop of occupancy rates in NHS mental health trusts reaching highest ever recorded levels, according to research published by LaingBuisson.

LaingBuisson’s latest annual Mental Health Hospitals Market Report values the total UK market at £2.358 billion in 2023. This represents just under 12% of the £21.2bn spent on the mental health and learning disability hospitals market.

Providing NHS-funded care is by far the largest segment of the independent market value. LaingBuisson estimates that approximately 92% (£2.16 billion) of the market value is generated from public payors (either NHS or local authority funding streams). Health insurance and self-pay options exist but the high price introduces affordability barriers and much of this market operates in the early-intervention space with objectives to provide alternative support options that mean an inpatient say is not required.

Occupancy rates in NHS mental health trusts have reached nearly 90%. The Royal College of Psychiatrists recommend 85% as good practice and those Trusts operating 75 – 90% receive a green tick from NHS England. High occupancy rates are a driver of supply to the independent sector, with NHS Trusts likely to preference their own services if they are able to provide a suitable placement and looking to utilise the independent sector when support is not available in-house.

Out-of-area placement volumes have been increasing despite clear central policy guidance to eliminate them. This is another indicator of a system under strain and a driver of volumes to the independent sector. At a local level, provider collaboratives are increasingly taking responsibility for resolving out-of-area challenges and providers have reported to LaingBuisson that they have begun to reposition services to meet local need. This may help reduce out-of-area placements in the future but not necessarily volumes flowing to the independent sector.

Report author, Tim Read said:

“LaingBuisson’s analysis suggests that the independent sector continues to provide critical services for people with mental health needs. Whilst data suggests that the NHS has finally come to an end of stripping back its own in-house provision, the expansion of community services has clearly not done enough to reduce demand for inpatient support.

The independent sector – which includes not-for-profit alongside for-profit providers – is vital if the NHS is going to ensure is enough capacity in the system to support those who need it. However, with provider collaboratives increasingly taking control of local priorities, we are seeing green shoots of better local alignment of need and independent providers will have to consider their role in supporting these ambitions.

Future sector growth will depend on NHS commissioners’ continued appetite for outsourcing to the independent sector. The policy focus for several years has been on increasing community provision, with a growing interest in early intervention and prevention models that are either digitally delivered or accessible through networks in schools. This creates opportunities for non-NHS services but not necessarily within the core expertise areas currently delivered by independent mental health hospital providers.”