A report commissioned by Norwich Union Healthcare has revealed the true extent of the financial contributions made by the private health sector to the Treasury and the National Health Service each year
The study, conducted by the National Economics Research Associates, estimates that around £1.7 billion is generated annually in revenue for the Treasury and in savings for the NHS through taxes, the savings in resources, and in profits on services purchased by the private sector.
The report took into account independent providers of acute, non-acute and nursing home care services, which range from suppliers of dental treatment, psychiatric rehabilitation and long term care to the eldery.
The findings show that taxes generated through direct benefits from the independent health care sector include £116 million in insurance premium tax, £401 million from income tax paid by employees receiving private health insurance as a benefit in kind and £141 million in national insurance contributions made by employers on these benefits. In addition, the report estimates that the Treasury receives around £299 million in income tax from consultant's private sector fees.
Privately funded health care saves the NHS money in medical services such as routine operations that would have otherwise been publically funded. The report calculates the value of privately funded care to the NHS to be around £66m in profits on pay-bed revenues and £8m on other services purchased by the private sector. However, the most significant contribution made by the private medical sector to the NHS is savings in resources, which would otherwise cost the NHS around £672m.
Tim Baker, commercial director of Norwich Union Healthcare, said: "We welcome the fact the Government is encouraging the NHS to use private provision because whichever way you look at it funding is still a the critical issue. The private sector makes a significant contribution to the NHS, and without it the Government would have to find this money from elsewhere.".
The investigation also found that the number of hospital admissions in the private sector has increased significantly over the last decade. Figures from Laing & Buisson show that between 1992 and 1998 the number of patients using independent hospitals increased by over 22%, and the private sector's share of the health services market is now around 20%. This growth was largely achieved by an increase of almost 69% in the number of patients admitted for day-care treatment in private hospitals.
This indicates that while people are reluctant to abandon the NHS, it is now recognised that the private sector does have a meaningful role to play in the provision of health services. Andy Sampson, head of planning and research at Legal & General, said: "People today are more attuned to having choices. It is not as simplistic as saying people no longer believe in the NHS, but they recognise its limitations.
