healthcare market 2005

8/3/2019 Healthcare Market 2005

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Market Review 2005

Tenth Edition September 2005Edited by Isla Gower

ISBN 1-84168-846-0

Healthcare Market


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Healthcare Market Foreword

Key Note Ltd 2005

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Healthcare Market Contents

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Contents

Executive Summary 1

1. Market Overview 3

REPORT COVERAGE .......................................................................................................................3

Public Healthcare..............................................................................................................................3

The National Health Service.............................................................................................................3Private Healthcare ............................................................................................................................4

Private Medical Insurance ................................................................................................................ 4

Other Healthcare Services................................................................................................................4

REPORT BACKGROUND ................................................................................................................5

Devolution and Healthcare..............................................................................................................6

ECONOMIC TRENDS.......................................................................................................................6

Population.........................................................................................................................................6

Table 1.1: UK Resident Population Estimates by Sex (000), Mid-Years 2000-2004 ......................7

Gross Domestic Product....................................................................................................................7Table 1.2: UK Gross Domestic Product at Current and Annual Prices (m), 2000-2004 ..............7

Inflation.............................................................................................................................................8

Table 1.3: UK Rate of Inflation (%), 2000-2004 .............................................................................8

Unemployment.................................................................................................................................9

Table 1.4: Actual Number of Unemployed Persons (million), 2000-2004 .....................................9

Household Disposable Income.........................................................................................................9

Table 1.5: Household Disposable Income Per Capita (), 2000-2004 ............................................9

MARKET SIZE ................................................................................................................................10

The Total Market............................................................................................................................10Table 1.6: The Total UK Healthcare Market by Sector by Value (m,) 2001-2005 .....................10

Figure 1.1: The Total UK Healthcare Market by Value (m), 2001-2005 ....................................11

The National Health Service...........................................................................................................11

Table 1.7: Total UK Expenditure on the National Health Serviceby Sector by Value (m), 2001-2005 .............................................................................................11

Private Healthcare ..........................................................................................................................12

Table 1.8: The Total UK Private Healthcare Market (Including Private MedicalInsurance) by Sector by Value (m), 2001-2005 ...........................................................................13


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Other Healthcare Services..............................................................................................................13

Table 1.9: The Total UK Other Healthcare Services Marketby Sector by Value (m), 2001-2005 .............................................................................................14

MARKET SEGMENTATION ..........................................................................................................14


Hospital and Community Health Services .....................................................................................15

Family Health Services....................................................................................................................15

Private Healthcare ..........................................................................................................................15

Private Medical Insurance .............................................................................................................. 16

Complementary and Alternative Medicine...................................................................................16

Palliative and Hospice Care............................................................................................................16

INDUSTRY STRUCTURE................................................................................................................16

Employment....................................................................................................................................16

Table 1.10: Profile of NHS Employees in the UK, 1999-2003 ......................................................17

Distribution .....................................................................................................................................19

MARKET POSITION ......................................................................................................................20

KEY TRENDS ..................................................................................................................................20

Demographics .................................................................................................................................20

Population.......................................................................................................................................20

Table 1.11: UK Resident Population Estimates and Projections(000 and %), Mid-Years 1971-2026 ..............................................................................................20

Figure 1.2: UK Resident Population Estimates and Projectionsfor Those Aged Under 18 and of Pensionable Age

(000), Mid-Years 2001-2026 ..........................................................................................................21Births ............................................................................................................................................... 22

Table 1.12: Number of Births in the UK (000), 1970-2003 ...........................................................22

Legal Abortions ..............................................................................................................................22

Table 1.13: Actual Number of Legal Abortions in the UK(number and %), 1986-2003 .........................................................................................................23

Infant Mortality ..............................................................................................................................23

Table 1.14: Infant Mortality Per 1,000 Live Births in the UK, 1950-2002 ...................................23

Public Health...................................................................................................................................24

Cause of Death ...............................................................................................................................24

Table 1.15: Number of Deaths in the UK by Major Cause(number and %), 2002 and 2003 ..................................................................................................25

Infectious Disease ...........................................................................................................................25

Table 1.16: Notified Cases of Infectious Diseases in the UK(number and %), 2002 and 2003 ..................................................................................................26

Back Pain.........................................................................................................................................26

LEGISLATION .................................................................................................................................27

Scotland...........................................................................................................................................27


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KEY TRADE ASSOCIATIONS........................................................................................................28


The British Medical Association .....................................................................................................28

English Community Care Association............................................................................................28

The Federation of Ophthalmic and Dispensing Opticians ...........................................................28

General Dental Council ..................................................................................................................28

General Medical Council ................................................................................................................28

General Optical Council ................................................................................................................. 29

National Pharmacy Association .....................................................................................................29

Royal College of Nursing................................................................................................................29

Royal Pharmaceutical Society of Great Britain .............................................................................29

Private Medical Insurance .............................................................................................................. 29

Association of British Insurers........................................................................................................29

Complementary and Alternative Healthcare................................................................................29

Aromatherapy Consortium ............................................................................................................29British Acupuncture Council .......................................................................................................... 30

The British Herbal Medicines Association .....................................................................................30

Faculty of Homeopathy..................................................................................................................30

General Chiropractic Council .........................................................................................................30

General Osteopathic Council .........................................................................................................30

Palliative and Hospice Care............................................................................................................30

Association of Childrens Hospices ................................................................................................30

Help the Hospices ...........................................................................................................................31

The National Council for Palliative Care .......................................................................................31

Scottish Partnership for Palliative Care .........................................................................................31

2. PEST Analysis 33

POLITICAL FACTORS ....................................................................................................................33

Re-Election of the Labour Government ........................................................................................33

The NHS Plan...................................................................................................................................33

Key Targets .....................................................................................................................................33

Acute Trusts ...................................................................................................................................33

Primary Care Trusts ........................................................................................................................34Ambulance Trusts ..........................................................................................................................34

Selected Others ..............................................................................................................................34

Restructuring of Primary Care ....................................................................................................... 35

Staff Shortages ...............................................................................................................................36

Waiting Lists....................................................................................................................................36

Reform of the Ambulance Service.................................................................................................36

Long-Term Care and the Elderly....................................................................................................36

Tougher Healthcare Targets .......................................................................................................... 37


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ECONOMIC FACTORS ..................................................................................................................37

Funding Shortfalls and Budget Changes.......................................................................................37

NHS Funding ...................................................................................................................................38

Funding Crisis..................................................................................................................................38

SOCIAL FACTORS..........................................................................................................................38

Demographic Trends ......................................................................................................................38

Care in the Community ..................................................................................................................38

Obesity ............................................................................................................................................38

Severe Acute Respiratory Syndrome, Bird Flu and the Risk of Travel .........................................39

Treatment of the Terminally Ill......................................................................................................39

Smoking Trends ..............................................................................................................................39

Tuberculosis ....................................................................................................................................40

Protection From Poor Doctors ....................................................................................................... 40

TECHNOLOGICAL FACTORS .......................................................................................................40

Technological Advances in Medical Treatment............................................................................40

Digital Technology .........................................................................................................................40

Drug Resistance ..............................................................................................................................41

Measles, Mumps and Rubella ........................................................................................................41

3. Key Note Primary Research 43

INTRODUCTION ............................................................................................................................43

CONSUMER PROFILE....................................................................................................................43Table 3.1: Summary of Consumer Profile (% of respondents), 2005 ..........................................45

Thinking About the Last 12 Months, Which, if Any, of TheseStatements Apply to You? ............................................................................................................. 46

Took Out/Renewed Private Medical Insurance.............................................................................46

Table 3.2: Penetration of Taking Out/Renewing Private Medical Insurancein the Last 12 Months (% of respondents), 2005 .........................................................................48

Had NHS Surgery ............................................................................................................................50

Table 3.3: Penetration of Having NHS Surgery in the Last 12 Months(% of respondents), 2005 ..............................................................................................................51

Had Cosmetic Surgery ....................................................................................................................53

Table 3.4: Penetration of Having Cosmetic Surgery in the Last 12 Months(% of respondents), 2005 ..............................................................................................................53

Consulted a General Practitioner ..................................................................................................55

Table 3.5: Penetration of Consulting a General Practitionerin the Last 12 Months (% of respondents), 2005 .........................................................................56

Called a General Practitioner Out of Hours ..................................................................................59

Table 3.6: Penetration of Calling a General Practitioner Out of Hoursin the Last 12 Months (% of respondents), 2005 .........................................................................60


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Consulted NHS Direct .....................................................................................................................62

Table 3.7: Penetration of Consulting NHS Direct in the Last 12 Months(% of respondents), 2005 ..............................................................................................................63

Visited a Hospital Casualty Department .......................................................................................65

Table 3.8: Penetration of Visiting a Hospital Casualty Department

in the Last 12 Months (% of respondents), 2005 .........................................................................66Was Referred to a Specialist/Consultant .......................................................................................68

Table 3.9: Penetration of Being Referred to a Specialist/Consultantin the Last 12 Months (% of respondents), 2005 .........................................................................69

Used Over-the-Counter Medicines ................................................................................................71

Table 3.10: Penetration of Using Over-the-Counter Medicinesin the Last 12 Months (% of respondents), 2005 .........................................................................72

Used Herbal/Alternative Remedies................................................................................................74

Table 3.11: Penetration of Using Herbal/Alternative Remediesin the Last 12 Months (% of respondents), 2005 .........................................................................75

Regularly Took Vitamins/Minerals/Supplements ..........................................................................77Table 3.12: Penetration of Regularly Taking Vitamins/Minerals/Supplementsin the Last 12 Months (% of respondents), 2005 .........................................................................78

Visited a Dentist..............................................................................................................................80

Table 3.13: Penetration of Visiting a Dentist in the Last 12 Months(% of respondents), 2005 ..............................................................................................................81

Had a Routine Eye Examination ....................................................................................................83

Table 3.14: Penetration of Having a Routine Eye Examinationin the Last 12 Months (% of respondents), 2005 .........................................................................84

Consulted an Osteopath ................................................................................................................86

Table 3.15: Penetration of Consulting an Osteopath in the Last 12 Months(% of respondents), 2005 ..............................................................................................................87

Consulted a Chiropractor...............................................................................................................89

Table 3.16: Penetration of Consulting a Chiropractor in the Last 12 Months(% of respondents), 2005 ..............................................................................................................90

Had Physiotherapy..........................................................................................................................92

Table 3.17: Penetration of Having Physiotherapy in the Last 12 Months(% of respondents), 2005 ..............................................................................................................93

None of the Above.........................................................................................................................95

Table 3.18: Penetration of None of the Above in the Last 12 Months(% of respondents), 2005 ..............................................................................................................95

CONSUMER ATTITUDES ..............................................................................................................98

Table 3.19: Summary of Consumer Attitudes Towards Healthcare(% of respondents), 2005 ..............................................................................................................99

Which Three of the Following Actions Do You Consider MostNecessary to Improve the Health Service? .................................................................................100

Recruiting More Healthcare Professionals..................................................................................100

Table 3.20: Recruiting More Healthcare Professionals (% of respondents), 2005 ...................101

Monitoring Their Performance....................................................................................................103

Table 3.21: Monitoring Their (Healthcare Professionals) Performance(% of respondents), 2005 ............................................................................................................104


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Cutting NHS Waiting Lists............................................................................................................106

Table 3.22: Cutting NHS Waiting Lists (% of respondents), 2005 .............................................107

Increasing NHS Funding ............................................................................................................... 109

Table 3.23: Increasing NHS Funding (% of respondents), 2005 ................................................110

Monitoring Hospital Performance...............................................................................................112

Table 3.24: Monitoring Hospital Performance (% of respondents), 2005 ............................... 113

Improving Hospital Cleanliness....................................................................................................115

Table 3.25: Improving Hospital Cleanliness (% of respondents), 2005 ....................................116

Improving General Practitioner Out-of-Hours Services..............................................................118

Table 3.26: Improving General Practitioner Out-of-Hours Services(% of respondents), 2005 ............................................................................................................119

Increasing the Range and Availability of Over-the-Counter Medicines....................................121

Table 3.27: Increasing the Range and Availability of Over-the Counter Medicines(% of respondents), 2005 ............................................................................................................122

Encouraging Private Healthcare..................................................................................................124Table 3.28: Encouraging Private Healthcare (% of respondents), 2005 ...................................125

Changing Government Policy ...................................................................................................... 127

Table 3.29: Changing Government Policy (% of respondents), 2005 .......................................128

Educating the Public on Health Issues.........................................................................................130

Table 3.30: Educating the Public on Health Issues (% of respondents), 2005 ......................... 131

4. Competitive Structure 133

THE MARKETPLACE ...................................................................................................................133MARKET LEADERS......................................................................................................................133

Anchor Trust .................................................................................................................................133

AXA PPP healthcare Group PLC ................................................................................................... 134

Barchester Healthcare Ltd............................................................................................................135

The British United Provident Association Ltd .............................................................................136

FirstAssist.......................................................................................................................................137

Four Seasons Health Care.............................................................................................................137

General Healthcare Group Ltd.....................................................................................................138

HSA Group Ltd..............................................................................................................................139Norwich Union Healthcare Ltd .................................................................................................... 140

Nuffield Hospitals.........................................................................................................................140

Western Provident Association Ltd .............................................................................................141

Other Companies..........................................................................................................................141


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5. The National Health Service 143

DEFINITION..................................................................................................................................143

KEY TRENDS ................................................................................................................................143

NHS Funding and Investment ...................................................................................................... 143The NHS Plan.................................................................................................................................143

Staff Shortages .............................................................................................................................144

Waiting Lists..................................................................................................................................144

Day Surgery Inefficiency...............................................................................................................144

Performance Criteria and Foundation Trusts..............................................................................145

Antibiotic Resistance and Super Bugs .........................................................................................145

Litigation and Negligence............................................................................................................145

Healthcare Commission Report ................................................................................................... 145

Demographic Pressures ................................................................................................................147

Chlamydia Screening Programme ...............................................................................................147

Private Finance Initiative..............................................................................................................147

MARKET SIZE ..............................................................................................................................148

Table 5.1: Total UK Expenditure on the National Health Service (m), 2001-2005 .................148

Figure 5.1: Total UK Expenditure on the National Health Service (m), 2001-2005 ...............148

SUPPLY STRUCTURE...................................................................................................................149

Strategic Health Authorities ........................................................................................................ 149

Primary Care Trusts.......................................................................................................................149

NHS Trusts .....................................................................................................................................149

Monitoring of Standards of Care ................................................................................................ 150

The Private Finance Initiative.......................................................................................................150

Organisation of the NHS..............................................................................................................150

FORECASTS..................................................................................................................................151

Table 5.2: Forecast Total UK Expenditure on the National Health Service(m), 2006-2010 ...........................................................................................................................151

Figure 5.2: Forecast Total UK Expenditure on the National Health Service(m), 2006-2010 ...........................................................................................................................152

6. Hospital and Community Health Services 153

DEFINITION..................................................................................................................................153

KEY TRENDS ................................................................................................................................153

Budget Priorities...........................................................................................................................153

Patient Trends...............................................................................................................................153

Waiting Lists..................................................................................................................................153

NHS Beds and Patient Turnover...................................................................................................154

Hospital Cleanliness and Antibiotic Resistance...........................................................................154Changes to the Ambulance Service.............................................................................................154


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MARKET SIZE ..............................................................................................................................154

Table 6.1: The Total UK Hospital and Community Health Services Marketby Value (m), 2001-2005 ............................................................................................................155

Figure 6.1: The Total UK Hospital and Community Health Services Marketby Value (m), 2001-2005 ............................................................................................................155

Table 6.2: Profile of Hospital Activity for England by Numberof Episodes and Admissions, 2003/2004 .....................................................................................156


BUYING BEHAVIOUR .................................................................................................................157

Table 6.3: Hospital Operations in England by Type(number, days, years and %), 2003/2004 ...................................................................................158

Table 6.4: Hospital Episodes in England by Primary Diagnostic Group(number, days, years and %), 2003/2004 ...................................................................................159

FORECASTS..................................................................................................................................159

Table 6.5: The Forecast Total UK Hospital and Community Health Services Marketby Value (m), 2006-2010 ............................................................................................................159

Figure 6.2: The Forecast Total UK Hospital and Community Health Services Marketby Value (m), 2006-2010 ............................................................................................................160

7. Family Health Services 161

DEFINITION..................................................................................................................................161

KEY TRENDS ................................................................................................................................161

Improved Access ...........................................................................................................................161NHS Walk-In Centres ....................................................................................................................161

Organisation .................................................................................................................................161

Restructuring of Primary Care ..................................................................................................... 162

NHS Local Improvement Finance Trust........................................................................................162

MARKET SIZE ..............................................................................................................................162

Table 7.1: The Total UK Family Health Services Marketby Sector by Value (m), 2001-2005 ...........................................................................................162

Figure 7.1: The Total UK Family Health Services Marketby Value (m), 2001-2005 ............................................................................................................163

FORECASTS..................................................................................................................................164

Table 7.2: The Forecast Total UK Family Health Services Marketby Sector by Value (m), 2006-2010 ...........................................................................................164

Figure 7.2: The Forecast Total UK Family Health Services Marketby Sector by Value (m), 2006-2010 ...........................................................................................165

PHARMACEUTICAL SERVICES ..................................................................................................165

Definition......................................................................................................................................165

Key Trends.....................................................................................................................................166

The NHS Plan and the Expanding Role of Pharmacists ..............................................................166

The Drugs Bill and Price Regulation ............................................................................................166


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Prescription Volume and Charges ...............................................................................................166

Increased Generic Prescribing ...................................................................................................... 166

Consolidation of Pharmacy Outlets.............................................................................................167

Proposed Changes to the Pharmacy Contract ............................................................................167

Market Size ...................................................................................................................................167

Table 7.3: The Total UK Pharmaceuticals Services Marketby Value (m), 2001-2005 ............................................................................................................168

Table 7.4: Number and Type of Prescriptions Dispensed in Englandby Diagnostic Group (million and %), Year Ending December 2004 .......................................168

Supply Structure ...........................................................................................................................169

Table 7.5: Number of Pharmacies Contracted to Health Authoritiesin England and Wales, 1999/2000-2003/2004 ............................................................................170

Figure 7.3: Number of Pharmacies Contracted to Health Authoritiesin England and Wales, 1999/2000-2003/2004 ............................................................................170

Major Players ................................................................................................................................171

Pharmaceutical Companies..........................................................................................................171AstraZeneca .................................................................................................................................171

Eli Lilly and Company Ltd ............................................................................................................171

GlaxoSmithKline ..........................................................................................................................171

Pfizer Ltd ......................................................................................................................................171

Shire Pharmaceuticals ..................................................................................................................171

Pharmacy Chains...........................................................................................................................172

Boots the Chemist ........................................................................................................................172

Lloyds Pharmacy ..........................................................................................................................172

Moss Pharmacy ............................................................................................................................172

Buying Behaviour .........................................................................................................................172

Advertising and Promotion..........................................................................................................173

Forecasts........................................................................................................................................173

Table 7.6: The Forecast Total UK Pharmaceutical Services Marketby Value (m), 2006-2010 ............................................................................................................174

GENERAL AND PERSONAL MEDICAL SERVICES....................................................................174

Definition......................................................................................................................................174

Key Trends.....................................................................................................................................174

Access to General Practitioners....................................................................................................174

New General Practitioner Contracts............................................................................................175Market Size ...................................................................................................................................175

Table 7.7: The Total UK General and Personal Medical Services Marketby Value (m), 2001-2005 ............................................................................................................175


Table 7.8: Number of General Practitioners Contracted to the NHSin the UK, 2000-2004 ...................................................................................................................176

Figure 7.4: Number of General Practitioners Contracted to the NHSin the UK, 2000-2004 ...................................................................................................................176

Table 7.9: Average Number of Patients per General Practitioner

in the UK by Country, 2002 .........................................................................................................177


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Figure 7.5: Average Number of Patients per General Practitionerin the UK by Country, 2002 .........................................................................................................177


Forecasts........................................................................................................................................178

Table 7.10: The Forecast Total UK General and Personal Medical Services Market

by Value (m), 2006-2010 ............................................................................................................178DENTAL SERVICES ......................................................................................................................178

Definition......................................................................................................................................178

Key Trends.....................................................................................................................................178

Preventative Dentistry..................................................................................................................178

Dental Care Plans and Healthcare Insurance .............................................................................. 179

New Contract................................................................................................................................179

Market Size ...................................................................................................................................179

Table 7.11: The Total UK Dental Services Market by Value (m), 2001-2005 .......................... 179

Supply Structure ...........................................................................................................................179Table 7.12: Number of Dentists in the UK by Country (% and number), 2002 .......................180

Figure 7.6: Dentists in the UK by Country (%), 2002 .................................................................180

Table 7.13: Number of Adult Courses of Dental Treatmentin the UK (000), 2000-2004 ..........................................................................................................181

Table 7.14: Number of New Adult Dental Patients in England (000), 2000-2002 ...................181

Funding for Dental Services ......................................................................................................... 182


Table 7.15: General Adult Dental Services in England by Type of Treatment(%), 2002/2003 .............................................................................................................................182

Figure 7.7: General Adult Dental Services in England by Type of Treatment(%), 2002/2003 .............................................................................................................................183

Forecasts........................................................................................................................................183

Table 7.16: The Forecast Total UK Dental Services Marketby Value (m), 2006-2010 ............................................................................................................184

GENERAL OPHTHALMIC SERVICES..........................................................................................184

Definition......................................................................................................................................184

Key Trends.....................................................................................................................................184

Market Size ...................................................................................................................................185

Table 7.17: The Total UK General Ophthalmic Services Marketby Value (m), 2001-2005 ............................................................................................................185


Table 7.18: The Actual Number of Ophthalmic Practitioners in Englandand Wales by Type, 1999-2003 ................................................................................................... 186

Sight Tests and Eye Examinations................................................................................................186

Table 7.19: Number of UK NHS Sight Tests and Spectacles Redeemed(000), 2000-2004 ..........................................................................................................................187

Table 7.20: NHS Sight Tests in England and Wales by Type of Practitioner(% of sight tests performed), April-September 2004 ................................................................188

Table 7.21: Health Authority-Contracted Opticians by Number of Premisesin England and Wales, 1999-2003 .............................................................................................. 188


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Major Players ................................................................................................................................189

Boots Opticians Ltd.......................................................................................................................189

Dollond & Aitchison Ltd...............................................................................................................189

Specsavers Optical Group.............................................................................................................189

Vision Express................................................................................................................................189

Advertising and Promotion..........................................................................................................190Main Media Advertising Expenditure .........................................................................................190

Table 7.22: Main Media Advertising Expenditure on Prescription Framesand Contact Lenses (000), Year Ending March 2005 ...............................................................190


Table 7.23: NHS-Paid Sight Tests by Patient Eligibility in England and Wales(% of sight tests), April-September 2004 ...................................................................................192

Table 7.24: Percentage of Spectacles/Appliances for Which Vouchers WereReimbursed by the NHS by Patient Eligibility (%), April-September 2004 ..............................193

Forecasts........................................................................................................................................193

Table 7.25: The Forecast Total UK General Ophthalmic Services Marketby Value (m), 2006-2010 ............................................................................................................193

8. Private Healthcare 195

DEFINITION..................................................................................................................................195

MARKET SIZE ..............................................................................................................................196

Table 8.1: The Total UK Private Healthcare Market by Sector by Value (m), 2001-2005 ......196

Figure 8.1: The Total UK Private Healthcare Market by Value (m), 2001-2005 .....................196FORECASTS..................................................................................................................................197

Table 8.2: The Forecast Total UK Private Healthcare Marketby Sector by Value (m), 2006-2010 ...........................................................................................197

Figure 8.2: The Forecast Total UK Private Healthcare Marketby Value (m), 2006-2010 ............................................................................................................197

LONG-TERM CARE......................................................................................................................198

Key Trends.....................................................................................................................................198

Funding and Compliance .............................................................................................................198

Market Polarisation......................................................................................................................198

Demographic Trends ....................................................................................................................198

Social Trends .................................................................................................................................199

Increasing Investment in the Long-Term Care Market...............................................................199

Market Specialisation and Added Value.....................................................................................199

Market Size ...................................................................................................................................199

Table 8.3: The Total UK Private Long-Term Care Sectorby Subsector by Value (m), 2001-2005 .....................................................................................200


Table 8.4: Number of Long-Term Care Places by Subsector, April 2004 .................................. 201

Legislation and Funding of Long-Term Care .............................................................................. 202National Minimum Standards .....................................................................................................202


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Major Players ................................................................................................................................202

Anchor Trust .................................................................................................................................203

BUPA Care Homes.........................................................................................................................203

Craegmoor Group Ltd ..................................................................................................................203

Four Seasons Health Care.............................................................................................................203

Highfield Care...............................................................................................................................203Southern Cross Healthcare...........................................................................................................204

Westminster Senior Living ........................................................................................................... 204



Forecasts........................................................................................................................................205

Table 8.5: The Forecast Total UK Private Long-Term Care Sectorby Subsector by Value (m), 2006-2010 .....................................................................................205

ACUTE CARE................................................................................................................................207

Definition......................................................................................................................................207Key Trends.....................................................................................................................................207

Consolidation in the Marketplace...............................................................................................207

Cosmetic Surgery ..........................................................................................................................207

Fertility Treatment........................................................................................................................207

Market Size ...................................................................................................................................207

Table 8.6: The Total UK Private Acute Care Sector by Value (m), 2001-2005 ........................ 208


Table 8.7: The Total UK Private Acute Care Sector by Number of Hospitalsand Beds, 1999-2004 ....................................................................................................................208

Table 8.8: Ownership Status of Private Acute Care Providers(% of total beds), 1998 and 2004 ...............................................................................................209

Major Players ................................................................................................................................209

BMI Healthcare .............................................................................................................................209

Nuffield Hospitals.........................................................................................................................209

BUPA Hospitals Ltd.......................................................................................................................209

Capio Healthcare ..........................................................................................................................210

HCA International Ltd ..................................................................................................................210

Table 8.9: Leading UK Private Acute Care Providersby Number of Hospitals and Beds, 2004 ....................................................................................210

Private Care in the NHS................................................................................................................211



Forecasts........................................................................................................................................212

Table 8.10: The Forecast Total UK Private Acute Care Sector by Value (m), 2006-2010 .......212

PSYCHIATRIC CARE ....................................................................................................................212

Definition......................................................................................................................................212

Key Trends.....................................................................................................................................213

Market Size ...................................................................................................................................213

Table 8.11: The Total UK Private Psychiatric Care Sector by Value (m), 2001-2005 ...............213


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9. Private Medical Insurance 225

DEFINITION..................................................................................................................................225

KEY TRENDS ................................................................................................................................225

MARKET SIZE ..............................................................................................................................226Table 9.1: The Total UK Private Medical Insurance Marketby Subscription Income (m), 2001-2005 ...................................................................................226

Figure 9.1: The Total UK Private Medical Insurance Marketby Subscription Income (m), 2001-2005 ...................................................................................227


Number of Subscribers .................................................................................................................229

Table 9.2: Total UK Private Healthcare Policies by Number of Subscribersto Private Medical Insurance and Medical Expenses Schemes (000), 2001-2005 .....................229

Cost of Claims ...............................................................................................................................229

Table 9.3: The Total UK Private Medical Insurance Marketby Cost of Claims (m and %), 2001-2005 ..................................................................................230

MAJOR PLAYERS ........................................................................................................................230

Table 9.4: Leading Private Medical Insurers by Shareof Subscription Income (%), 2003 ...............................................................................................232

Figure 9.2: Leading Private Medical Insurers by Shareof Subscription Income (%), 2003 ...............................................................................................232

British United Provident Association Ltd ....................................................................................233

AXA PPP healthcare Group PLC ................................................................................................... 233

Norwich Union Healthcare...........................................................................................................233

Standard Life Healthcare Ltd.......................................................................................................233

FirstAssist.......................................................................................................................................233

ADVERTISING AND PROMOTION............................................................................................233


FORECASTS..................................................................................................................................234

Table 9.5: The Forecast Total UK Private Medical Insurance Marketby Subscription Income (m), 2006-2010 ...................................................................................235

Figure 9.3: The Forecast Total UK Private Medical Insurance Marketby Subscription Income (m), 2006-2010 ...................................................................................235

10. Complementary and Alternative Medicine 237

DEFINITION..................................................................................................................................237

KEY TRENDS ................................................................................................................................238

MARKET SIZE ..............................................................................................................................239

Table 10.1: The Total UK Complementary and Alternative Medicine Marketby Value (m), 2001-2005 ............................................................................................................239

Figure 10.1: The Total UK Complementary and Alternative Medicine Marketby Value (m), 2001-2005 ............................................................................................................239


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Table 10.2: Number of Complementary and Alternative Medicine Practitionersin the UK, 2005 ............................................................................................................................242

MAJOR PLAYERS ........................................................................................................................243



FORECASTS..................................................................................................................................244

Table 10.3: The Forecast Total UK Complementary and Alternative MedicineMarket by Value (m), 2006-2010 .............................................................................................. 245

Figure 10.2: The Forecast Total UK Complementary and Alternative MedicineMarket by Value (m), 2006-2010 .............................................................................................. 245

11. Palliative and Hospice Care 247

DEFINITION..................................................................................................................................247

KEY TRENDS ................................................................................................................................249

Demographic Trends ....................................................................................................................249

Greater Integration ......................................................................................................................249

Availability ....................................................................................................................................249

NICE Guidance ..............................................................................................................................249

Childrens Palliative Care..............................................................................................................250

Palliative Care Funding ................................................................................................................250

MARKET SIZE ..............................................................................................................................251Table 11.1: The Total UK Palliative and Hospice Care Marketby Value (m), 2001-2005 ............................................................................................................251

Figure 11.1: The Total UK Palliative and Hospice Care Marketby Value (m), 2001-2005 ............................................................................................................252


Table 11.2: Inpatient Palliative Care Provision in the UKby Number of Units and Beds, 2001-2005 ..................................................................................253

Table 11.3: Number of Palliative Care Support Servicesin the UK by Type, 2001-2005 .....................................................................................................255

Regional Variations ......................................................................................................................255Table 11.4: Inpatient Adult Palliative Care Provision in the UK by Number of Unitsand Beds by Country (number and %), 2005 .............................................................................255

Table 11.5: Inpatient Child Palliative Care Provision in the UK by Number of Unitsand Beds by Country (number and %), 2005 .............................................................................256

Table 11.6: Palliative Care Support Services in the UK by Type by Country(% and number), 2005 ................................................................................................................256

MAJOR PLAYERS ........................................................................................................................257

MacMillan Cancer Relief ..............................................................................................................257

Marie Curie Cancer Care ..............................................................................................................258

The Sue Ryder Foundation...........................................................................................................258


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Profile of Use ................................................................................................................................259

Table 11.7: Patient Usage of Palliative Care Facilities and Services(number of patients), 2003/2004 ................................................................................................259

Patient Profile ...............................................................................................................................260

FORECASTS..................................................................................................................................260

Table 11.8: The Forecast Total UK Palliative and Hospice Care Marketby Value (m), 2006-2010 ............................................................................................................261

Figure 11.2: The Forecast Total UK Palliative and Hospice Care Marketby Value (m), 2006-2010 ............................................................................................................262

12. A Global Perspective 263

OVERVIEW...................................................................................................................................263

Table 12.1: Total Healthcare Expenditure as a Percentageof Gross Domestic Product by Country (%), 2003 ......................................................................263

KEY OVERSEAS MARKETS ........................................................................................................264

France ............................................................................................................................................ 264

Germany........................................................................................................................................265

Italy................................................................................................................................................265

Spain..............................................................................................................................................265

The US ...........................................................................................................................................266

Japan ............................................................................................................................................. 266

13. The Future 269

INTRODUCTION ..........................................................................................................................269

The Economy.................................................................................................................................269

Table 13.1: Forecast UK Economic Trends (000, % and million), 2005-2009 ............................270

FORECASTS....................................................................................................................................270

Table 13.2: The Forecast Total UK Healthcare Market by Sectorby Value (m), 2006-2010 ............................................................................................................271

Figure 13.1: The Forecast Total UK Healthcare Market by Value (m), 2006-2010 .................272

FUTURE TRENDS .........................................................................................................................272

Demographics ...............................................................................................................................272

Antibiotic-Resistant Strains of Bacteria.......................................................................................272

Staff Shortages .............................................................................................................................273

Technological Developments.......................................................................................................273


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Healthcare Market Executive Summary

Executive Summary

This Key Note Market Review analyses the healthcare market in the UK,which can be divided broadly into public healthcare (the NHS, which

comprises hospital and community health services [HCHS] and family healthservices [FHS]), private healthcare (and private medical insurance [PMI]), andother healthcare services (covering complementary and alternative medicine[CAM] and palliative and hospice care). Key Note estimates that, in 2005, thetotal UK healthcare market will be worth 111.42bn, an increase of 8.9%on 2004.

Since its inception in 1948, the UK healthcare market has been dominated bythe significant, comprehensive NHS. When the NHS was established with theremit to provide healthcare based on need rather than the ability to pay,there was no conception of how much costs would rise as the boundaries ofhealthcare expanded, along with the increasing number of elderly people inthe population. In spite of the problems in funding and delivery, the Britishpublic remain fiercely protective of the NHS and politicians are aware thatany significant erosion of the central principles of the NHS will have a hugepolitical cost. At the same time, governments have had to grapple with thekey issues of limited resources, prioritisation of care and, most importantly,how best to deliver healthcare in the most cost-effective and efficient waywithout compromising the principles of the NHS.

Key Note estimates that, in 2005, the NHS will account for 80.7% of total UKexpenditure on healthcare services. The NHS is organised into two mainservice delivery organisations: HCHS, which are responsible for hospital-based

services; and FHS, which are responsible for frontline community-basedprimary care. HCHS account for the bulk of NHS expenditure. Within FHS, thehighest proportion of expenditure is on pharmaceutical services (PHS).

In the UK, the private healthcare sector has evolved in the shadow of thesignificant public sector, largely through supplying solutions to the problemsin the NHS. As a result, much of the private-sector provision is traditionally forroutine elective procedures, which are likely to have longer waiting lists onthe NHS. The private sector has also developed niche markets, such ascosmetic surgery, abortion services and fertility treatment, which are eitherlimited or unavailable on the NHS. More recently, the private sector and theNHS have been working in partnership, supplying services to reduce waiting

lists for the NHS or running services for the NHS directly, such as long-termcare, certain psychiatric care services and specialist diagnostic services. Primarycare services, particularly occupational health, are also a relatively small, butemerging, market in the private healthcare sector.

In 2005, Key Note estimates that private healthcare services (excluding PMI)accounted for 15.3% of healthcare expenditure in the UK. By far the largestprivate sector market was that of long-term care. PMI remains the principalsource of funding for the private healthcare sector, although the NHS hasbecome a significant commissioner of private-sector services and manyprivate patients are opting for self-pay fixed-price schemes.


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Healthcare Market 1. Market Overview

REPORT BACKGROUND

The UK healthcare system is highly complex in terms of the nature and type ofservices that it delivers. It is heavily influenced by trends and changes in thepopulation that it serves. In addition, it is highly dependent on the state of

the UK economy, as it relies on general taxation for the bulk of its funding.

When the NHS was founded in 1948, at a time when the country wasrebuilding in the post-war period, there was a general optimism that newtreatments (particularly antibiotics), together with improvements in diet,sanitation and housing, would lead to improvements in the general health ofthe population, which would limit the costs of healthcare. Instead, an ageingpopulation, along with rising levels of circulatory disease and cancer, as wellas chronic conditions such as asthma, have resulted in significant increases incosts. Previous problems, such as malnutrition and infectious disease, havebeen replaced with rising levels of obesity and viral diseases such as acquiredimmune deficiency syndrome (AIDS). Increasing levels of antibiotic resistancehave also begun to erode the advantages of antibiotics. Also adding to thesecosts are the advances in technologies that are expanding the scope andrange of treatment possibilities.

In an effort to contain and control costs, successive governments haveintroduced a variety of comprehensive reforms with the appropriatelegislation. During 18 years in power, the previous Conservative Governmentintroduced legislation that brought an internal market structure to the NHS,dividing it into service providers and service commissioners who boughtservices on behalf of consumers (patients). As part of the reforms, theConservative Government introduced tendering of services to bidders inside

and outside the NHS and, in an effort to obtain much-needed investment forthe NHS infrastructure, it extended the Private Finance Initiative (PFI) into theNHS. As part of its legacy, the previous government attempted to develop aculture of cost awareness and cost effectiveness although, ultimately, it wascriticised for the expanding centralisation and bureaucracy of services. Underthe reforms, the Conservatives introduced Care in the Community and closedmany psychiatric institutions. At the same time, the NHS began to withdrawfrom long-term residential care, relying increasingly on the private sector, andcosts continued to rise.

When the current Labour Government came to power, it did so with a clearcommitment to improving the NHS, and has proceeded to invest

unprecedented sums of money into the service. Although it abolished theinternal market as such, the current Government has retained something ofthe infrastructure, and has continued to foster private public partnershipsand the PFI with a streamlined approval process. The publication of the NHSPlan in 2000 set out its goals for reform, with a new system of healthcaredelivery and specific commitments for improvement in key areas, such asreducing waiting lists and improving access to care.


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Gross Domestic Product

At current prices, UK gross domestic product (GDP) has shown steady growth

over the past 5 years, rising year on year at rates ranging between 4.6% and5.5%. GDP increased from 950.56bn in 2000 to 1,160.34bn in 2004 atcurrent prices, an increase of 22.1%. Annual chain-linked GDP has also shownsteady annual rates of growth, varying from 1.8% in 2002 to 3.1% in 2004.The UK spends 7.7% of its GDP on healthcare, ranking it 19th in the world(see Chapter 12 A Global Perspective).

Table 1.1: UK Resident Population Estimates by Sex(000), Mid-Years 2000-2004

2000

2001 2002 2003

2004

Female 30,196 30,281 30,359 30,446 30,542

Male 28,690 28,832 28,963 29,108 29,245

Total 58,886 59,113 59,322 59,554 59,787

% change year-on-year - 0.4 0.4 0.4 0.4

census year

taken from Projections Database

Source: Monthly Digest, May 2005, National Statistics website/Projections Database, Government Actuarys Department Crowncopyright material is reproduced with the permission of the Controllerof HMSO (and the Queens Printer for Scotland)

Table 1.2: UK Gross Domestic Product at Currentand Annual Prices (m), 2000-2004

2000 2001 2002 2003 2004

Current prices 950,561 994,309 1,044,145 1,101,144 1,160,339

% change

year-on-year - 4.6 5.0 5.5 5.4

Table continues...


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Unemployment

The actual number of unemployed persons (claimants) in the UK fell steadilyfrom 1.1 million in 2000 to 850,000 in 2004.

UK healthcare services are major employers in the UK, with the NHSemploying around 1.4 million people directly, and many more in the varioussupply industries. However, the lack of suitably qualified healthcareprofessionals has resulted in a significant number of unfilled vacancies andthe NHS has been actively recruiting abroad (see Key Trends in Chapter 5 The National Health Service).

Household Disposable Income

Between 2000 and 2004, household disposable income per capita increasedby 18.3% to 13,210. According to Family Spending A Report on the

2003-2004 Expenditure and Food Surveyfrom National Statistics, averageweekly household expenditure on health was 5, which included an averageweekly spend of 3.30 on medicine, prescriptions and healthcare products.

Table 1.4: Actual Number of Unemployed Persons(million), 2000-2004

2000 2001 2002 2003 2004

Actual number of

healthcare market 2005

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