Long NHS waiting lists fuel return to profit at healthcare firm Spire
Spire Healthcare, Britain’s second-largest private hospital operator, has returned to profit after a surge in patients choosing to pay for hip and knee operations, as the NHS waiting lists for non-urgent surgeries reached unprecedented levels during the pandemic.
On the day the government revealed that the number of people waiting for hospital treatment in England has hit a record high of 5.61 million, Spire, which runs 39 hospitals and eight clinics, reported a pre-tax profit of £4.7m for the six months to June, against a loss of £231m a year earlier.
The firm reported record revenues from private patients without health insurance paying for their own treatments, with the number up almost 47% from pre-pandemic levels. The increase helped lift revenues nearly 40% to £558m.
Justin Ash, the chief executive, said the majority of private patients were aged 35 or over and most had a combined household income of £50,000. “It’s by no means the super well-off,” he said.
“There is record demand. The waiting lists will take years to get down,” Ash said. “Many people are realising they can pay themselves, they don’t need insurance, and it’s a broader part of the population.”
He said hip and knee operations had surged, as well as eye treatments and gynaecological procedures. Knee replacements generally start at just over £9,000, while cataract surgery costs from £2,040.
Spire’s revenues were boosted by an NHS contract from the start of the coronavirus pandemic until the first three months of this year. It was one of a number of private hospital operators contracted to hire out their clinics for NHS patients at cost, and without charging for executives’ time, to help ease pressure during the worst of the pandemic.
Ash was awarded an annual bonus of £322,000 last year after the business clinched the first NHS contract. He received a total pay package of £1.2m, up from £1m in 2019. Bonuses were spread across the company, with £7.3m shared by more than 13,500 frontline staff in the form of £500 “thank you” payments.
Spire made total revenues of £486m from its NHS work, but said it made no profit from the main contract that ran until the end of 2020. It has treated more than 260,000 NHS patients since March 2020. Its financial performance improved as private patients returned in the second quarter after the contract ended.
The firm has been hit by the cost of Covid safety measures, increased costs of staff absence and last-minute cancellations because of patients and staff being required to self-isolate by NHS test and trace in July and August as infections increased.
Higher labour costs related to cancellations amounted to £4m a month, while admissions in July and August were also hit by the spread of the Delta variant. Spire expects many of these pandemic-related costs to be offset by improvements in testing.