There are three big trends happening in English primary healthcare. You may well have noticed them personally, and you’re not imagining it. There are indeed (a) far more private consultations (often on a phone apps), (b) there are also many more clinical staff who aren’t doctors but in GP practices. Less obviously, (c) these practices are now probably part of larger organisations, delivering ever more contracted services intended to substitute for hospitals.
Do any of these trends change the investment opportunities available, assuming you’re not a doctor yourself but a financial investor, just as they have been in Ireland and similar markets? There are already such sub-segments with private operators – imaging, substitutes for A&E like urgent care and 111, but let’s explore the impact of these changes in the value chain for doctor-supervised clinical work. This would also need a (1) property to do it in, (2) those facilities managed and (3) administrative support.
1.Currently property ownership and facilities remain the most substantial opportunity, since it is challenging for a corporate (for-profit ltd company) to employ doctors under their direction for NHS-paid work.
As mentioned, Practice Plus Group and others do ‘Urgent Care’ walk-in work, but the share of true GP practices not owned by partnerships is tiny. Operose is the only medium-sized company, and LaingBuisson found four smaller corporates.
Nearly the only private equity investment in NHS GPs is Twenty20 Capital’s Health Care Resourcing Group (HCRG) comprising Operose Health (only GPs) and the former Virgin Care. Though nearly half of GPs are salaried, they are employed by their fellow GPs in partnerships.
Long before his report this September 2024, Lord Darzi previewed much of the recent changes in promoting multi-service polyclinics in the New Labour noughties. At broadly the same time, there was much interest in purpose-built properties which would enable site-level service redesign.
MedicX Fund was founded in 2004 by Cabot Square Capital to lease such properties. Octopus Healthcare acquired it in 2015 before it was merged with Primary Health Properties (PHP) in 2019. By now PHP and Assura REITS have developed and acquired 1100 properties between them and receive about a quarter of the rental spend. NHS Property Services owns much of the property, and doctors own the rest.
The REITs should benefit from having the powerful doctors’ union on their side, as according to LaingBuisson, public rent spending has increased at 4% CAGR over the last ten years, to around a billion pounds.
Purpose-built is not a legally defined term so we would be careful assuming how much is truly modern. A 2020 GP survey found only half were ‘fit for purpose’ and 20% were ‘fit for the future.’
2. The biggest corporate suppliers into healthcare are facilities management, such as Serco and Sodexo, so investment is public markets, multi-sectoral or both and so not a healthcare-specific opportunity.
3. Administrative support companies – which do everything bar making the clinical decision – can be a successful model in jurisdictions which do not allow corporate ownership at all. But GP practices are tremendously complicated operationally and administratively. There are so many interactions, with so much individual variability. It would be very difficult for a corporate provider to execute this well for a share of public payor revenue, and few have even attempted here. It is very challenging to standardise the processes and procedures, and the margin is not there.
It requires very smart, highly trained and financially incentivised doctors to make it work and that leaves little opportunity for a privately backed investor. Other NHS organisations – including independent ‘social enterprises’ with inherited staff from the previous era of Primary Care Trusts – would be a far more obvious supplier: with some shared costs elsewhere, expectations and culture.
But are the big three trends weakening the barriers to private income, and could doctors follow the dentists into a truly mixed economy?
a. More Private-Paid Consultations.
LaingBuisson has done a lot of work tracking the rapid growth in private GPs. They detail in their report what was otherwise anecdotal, that private consultations have grown tremendously to a striking 13%, of which a third are virtual. Private consultations are much more often delivered by a pharmacist, nurse or a therapist than public consultations. This is either activity which is just not done by the public doctor or the GP could be displaced.
The telemedicine companies can be profitable if private, and have picked up some work from public GP practices but the volume isn’t high and we would infer that price point they achieve isn’t high either and KRY (Livi) and Babylon, now eMed, don’t seem to be profitable for NHS-paid work.
When dentists have refuse to take patients at NHS prices, this creates those politically highly sensitive ‘NHS deserts’ where those who can’t pay, can’t access treatment.
One would imagine this happening to family doctors, but NHS GPs can’t offer private and public services from the same site, can’t sell their businesses for more than the book value and obviously can’t be paid to promote a private alternative. Dentistry is not a happy example to follow for politicians, as the public surveys suggest even more unhappiness with dentistry than with doctors, so these barriers are unlikely to be removed any time soon.
GPs do have similar complaints to dentists about the nature of their public work; insisting that 25 contacts a day is the safe limit. And despite recent pay agreements which have favoured them, GPs continue to complain, threatening strikes and ‘work to rule.’
GP Partners are not poorly remunerated by global standards nor relative to the British population, but they do need to hustle for multiple sources of public income. This system was designed to promote early detection and other worthwhile activities; however, it is extremely complex and requires GP partners to learn every nuance.
The NHS income per minute was not necessarily the problem here too, but dentists can spend twice as long with a private patient to achieve the same income. Fewere appointments makes it more pleasant, safer and more effective.
Dentists could always switch easily, from tooth to tooth, between NHS-paid work and private. But this generation of GPs are used to work privately out-of-hours without fear of interruption from NHS patients. NHS pensions are transferable to corporate employers, and more recently it would takes a moment to switch to virtual private appointments at the end of the day.
There are more subtle barriers in the nature of the work. Being a private dentist is probably always much more pleasant. But being a private doctor changes the nature of the relationship, and the form of the conversation. Along with allowing far more time for a thorough investigation, doctors must spend more time talking to the worried well and the complaints of the affluent. NHS GPs have traditionally been able to retain complete control of every interaction, and if the patient is a consumer, then it is a luxury, personal service which is very well remunerated per minute. The middle ground of a premium service, but which is not a one-off transaction but a long-term family doctor, is a different financial model and mindset. Unfortunately for the patient experience, and probably outcomes, this offering is still rare and will remain so while the free option is still available if one sounds sick enough.
Where they exists, such practices have often been acquired by the private hospital chains hoping for their referrals. Importantly, private doctors do share information with the public doctor, but the NHS patient record is not reliably integrated and maintained.
b. The second big change is a 20% higher primary healthcare workforce than 2015. There are notably far more locums, and GPs-in-training, especially from outside Europe. Locum growth is a sign that salaries are not enough in many areas, though this is undesirable as training and patient continuity are poorer. GPs are, like specialists, spending far longer in training, in their case as many choose longer primary healthcare placements over more varied shifts in a clinic somewhere.
Since 2019 the introduction of the Additional Roles Reimbursement Scheme (ARRS) has added nearly 30,000 workers to the NHS front-room. We have encountered a number of people and organisations benefitting from this scheme, but only the LaingBuisson report made clear its scale. Most such staff would always have been working out-of-hospital; however, physio is a great example of hospital substitute activity. Every commentator has bewailed the lack of progress on effort out of hospital and into the community but seem to have missed this material change in how far this has gone.
c. The third big change was how NHS Primary Care organisations have amalgamated, expanded into and grown NHS Community Services. The newish health secretary Wes Streeting has pledged to “invest [spend] more in primary care and reintroduce the family doctor” but, as often happens, the centre and their policies are following the individual decisions of hundreds of decision-makers across the nation, as the opportunities present themselves, rather than following an edict from on high.
The first opportunity was Primary Care Networks (PCNs) who share back-office costs, employ full-time staff and share support for care homes, home visiting, community clinics, etc. but are not usually legal entities. Then came Federations, assimilating half of GP Practices and seeking revenue outside the core contract, such as GP extended access hubs, urgent and out of hours care, specialist out-patient clinics etc.
These GP federations increasingly compete in the broader community health space with the competitive advantage of being part of the ‘NHS family.’ Support companies, equivalent to insourcers in specialist care, do exist such the PHL Group backed by Ethos Partners. This demonstrates that corporates can compete, but it is a nascent sector, even compared with insourcing into hospitals.
There is much opportunity for entrepreneurialism by GPs, but backing them beyond property or long-standing niche services has not yet been demonstrated at substantial scale. Primary healthcare is only a tenth of NHS spending, but far more of the patient experience and outcome, so thoughtful reforms here would have enormous impact on public perception and actual outcomes. We’ll leave you with just one further thought: yet another thing you’ll find validated in the LaingBuisson report, is that the most stressed GPs internationally are apparently those in the NHS. And the least are their Dutch peers, who are paid by individual insurers under a universal coverage mandate.
