A Pay Within a Play: The Awkward World of Private Insurance in the UK

By  |  January 16, 2012 | 

I remember reading an article that observed that systems of universal insurance – which need to put their energy into providing a “decent minimum” for the masses – must also offer a “safety valve for the wealthy disaffected.” Canada bans private insurance for basic hospital and medical care services. So, when affluent Canadians want “the best,” some of them pop across the border to Cleveland or Ann Arbor.

But from the time of its founding in 1948, the British National Health Service has allowed – and, depending on which party is in power, promoted – a private insurance market. Private insurance in a single payer, government run healthcare system is a funny animal: one part incest, one part conflict of interest, and three parts strange bedfellows. And it’s infinitely fascinating. Here’s how it works:

The insurance part isn’t too difficult to understand. People living in Britain can obtain private insurance, and about 10 percent of them do. About one-third of people with private insurance purchase it with their own money, while the rest receive it as a benefit of employment. Many of the big multinationals provide such insurance, either to all their employees or to senior executives. It’s considered a plum perk for everyone, and most expats coming to work in the UK consider it an essential benefit.

Private insurance covers care provided outside the tax-funded NHS system. Sometimes, people use it to obtain items that the NHS has chosen not to cover, like medications or devices with low cost-effectiveness ratios (as I described in my previous blog on NICE). But that’s unusual. Far more commonly, the insurance is used to purchase services that are freely available in the NHS, such as subspecialty consultation and elective surgery.

The delivery side is more interesting – and fraught – than the insurance side. Private insurance generally doesn’t cover primary care; most patients seem relatively satisfied with their publicly funded general practitioners (whom I described here) and most GPs make enough money that they don’t seek more work. The action in the private world stems from occasionally poor access to specialty care in the NHS, both because of limited numbers of specialists and gatekeeping by GPs. The result of these limitations is the famously long NHS queues – in the 1970s and 80s, patients often had to wait up to a year for an elective hip replacement. While the queues improved after a Blair-era initiative to enforce a maximum wait between GP visit to surgery of 18 weeks (and despite the Brits’ amazing equanimity in the face of “queuing up”), many patients still have to wait longer than they’d like in the NHS. Such patients find the private sector’s shorter waits attractive.

There are few purely “private doctors” in Britain – most private care is delivered by moonlighting NHS physician-specialists. Since inking the national consultant’s contract in 2003, the NHS’s 30,000 specialists have had no cap on the amount of money they can earn from private practice, as long as they clock 40 hours a week for the Health Service (about one-fourth of which can be administrative and CME activities). As you might imagine, a system in which the same doctors work (for a relatively low and fixed salary) in NHS hospitals and (for fee-for-service, at lucrative rates) in private practices can generate some interesting, amusing, and, at times, ethically dicey situations.

For example, one GP told me that he tries hard not to obtain specialty consultations unless absolutely necessary, as a matter of pride and – to a degree – economics (each primary care network has a global budget that covers only so many specialty consultations). But there is a subtler disincentive for GPs to obtain consults: specialists, salaried and often overwhelmingly busy, can be nasty. “I’ll send an NHS patient to an orthopedic surgeon,” this GP told me, “and I’ll get back a letter from the consultant. What it says is civil enough. But between the lines, its message is: ‘How could you be so stupid that you couldn’t manage this patient yourself?’”

Anyone who has ever seen a harried cardiology fellow attack an intern for a “lame consult” may not be surprised by this behavior from an overworked consultant who lacks any economic incentive to see the next patient. But things are different when the patient has private insurance. Suddenly, the threshold for consultation is much lower, the consults aren’t scrutinized by anyone (since the payment comes from the insurer, not the NHS or the practice), and the consultant is tickled pink to see the patient and pocket the generous fee – and sings a very different tune to the referring doctor. “When I send a private patient to the very same orthopedic surgeon,” the GP told me, chuckling, “I get a very different type of letter back. It might say, ‘You were brilliant to send this patient to me. I so look forward to managing this patient with you.’ Doesn’t the surgeon realize I’m the same person?”

The conflicts play out within the specialists’ practices themselves. One London neurologist told me that he might see a patient in consultation for a neurological disorder and offer a follow-up appointment in several months, assuming there is no urgent clinical need. “But if the patient has private insurance, she can see me tomorrow if she’d like.”

The average specialist in the UK augments his or her income by about 50 percent through private practice, but there are wide variations. Specialists operating in the countryside, where few patients have private insurance, may have no opportunity to practice privately. On the other hand, some London specialists double or triple their salaries through private work. I asked several prominent specialists why they didn’t just ditch the NHS and switch to full-time private practice. The answers varied, but usually included some version of “I take my obligation to participate in the NHS seriously” (this may sound a bit too idealistic for jaded Americans, but I found this credible in the UK, where belief in the NHS can be near-religious) and, more pragmatically, “It is my NHS practice that allows me to be prominent enough to attract patients to my private practice.”

The latter rationale is no doubt true, and it led several NHS administrators I spoke with to bemoan the fact specialists can create a name for themselves in the public system, and then trade on this “brand equity” to enrich themselves… while the public system starves. One CEO told me that the NHS made a major strategic error by allowing a completely independent private sector to spring up. He was enthusiastic about a recent trend – promoted by the Cameron government – to encourage NHS hospitals to tap into the private market; many have responded by building their own private wings. “At least we keep a portion of the income generated by this work, as opposed to it all going to the specialists and the private clinics and hospitals,” he told me. Whether the

London Bridge Hospital, a private facility

private facility is freestanding or connected to an NHS building, the amenities in British private hospitals and clinics are more like what we’re accustomed to in US hospitals and boutique practices: fluffy pillows, single rooms, fresh gardenias, and marble floors. It’s the first class to the NHS’s middle seat in economy.

Interestingly, while the care is clearly more patient-centric, it’s not a slam dunk that the quality of care is better in these private facilities (particularly the freestanding ones) and there are even legitimate concerns about whether it’s as good. Sure, the thread counts are nice, and who wouldn’t prefer to stay in a single room rather than the six-bedder typical of many NHS wards. But there have been poor outcomes born of understaffing, the lack of on-site resources to manage critically ill patients, or limited availability of the specialists (who may pop in to see their patients once a day but then rush back to their NHS hospital across town). The accreditation process for private hospitals and clinics has been far more lax than in NHS facilities, though it has tightened up recently. When a patient crashes in a private hospital, he or she is transferred to – you guessed it – the nearest NHS facility.

Of the many things that surprised me about the British health system during my six months in London, this parallel world of private healthcare was high among them. In a system predicated on a communal, tax-based insurance pool, I wondered whether the emergence of a vigorous private sector would threaten the viability of the NHS. It is a perennial worry: in 1983, one analyst fretted, “Will a one-class universal national health care system survive, or is there danger of serious, possibly fatal, mutation?” From what I saw, I’m not too worried. Most people – even patients who have private insurance and doctors who practice in the private sector – believe strongly in the NHS. I met no one – including senior executives at BUPA, the country’s largest private insurer – who felt the UK would be well served by a much larger private sector if it meant a diminished NHS.

That said, the issue of privatizing the NHS is a perennial hot-button issue, and decisions regarding how much private healthcare to allow can be counted on to generate those remarkably rowdy parliamentary brouhahas between the prime minister and back benchers. In general, Labour tries to rein in the private sector while the Conservatives – currently in power – promote it, which explains the current state of private practice perestroika.

Yet while they differ at the margins, both parties seem content to allow private practice to exist, and sometimes thrive. I wondered why: doesn’t the private sector siphon off resources – both money and providers’ time – from the NHS? I finally had my aha moment when one NHS manager likened the situation to that of US private schools operating alongside our underfunded tax-based public school system. “All the people using the private system have already paid their taxes, so they are siphoning volume out of the NHS that the system otherwise would have to manage,” he said. “The NHS would come to a grinding halt if private practice went away.”


  1. Alfredo Guarischi. MD January 16, 2012 at 5:18 pm - Reply

    In Brazil we have a System called SUS – Sistema Único de Saúde – Heath Care Unique. All brazilian citzen and some foreign people that Brazil has some settelment have all care (medical and surgery, even transplant). The tax is Brazil is 8 to 10% of the worker salary but covers health care and retirement. The defict is growing each year. We have much more people living more. We are any more a young country as 40 years ago. We have one of most biggest transpant in the worldo. SUS pays for that. This happens also with oncology and hemodialysis. He have have the AIDS free program in the world.
    Are we happy?
    Basic care is still a big problem. SUS pays Private medicine were we don´t have Public Hospital or when Private Hospitals make special agreement to have some taxe discount to do special care (transplant is the most profit bussines in this game…).
    Is difficult to know what is the best way to deal with money in health system. In the USA is 16% of GIP, 9% in GB and 8% in Brazil.
    Goverment spends 40% of this 8% and private insurance spend 60%, but less than 30% of people have privated insurance (most payed buy the employer.
    This three countries have diverse health systems and people are not happy in all countries.
    I lived for two years in Canada (84-86). That time Canada health system was changing. Now is different that was – worse.
    Many factors.
    Medicine is a bussiness. Probably this is the worst issue. Medicine is also a social science and this poetry to some. Poetry thus not change the world. May change some people that this special people may change the world.
    So, my dear Bob, let´s do what must be done: call out and make numbers clear. Bussinessmen and congressmen are smart enough if we – enganged people – speak out the right numbers.
    May best
    Alfredo Guarischi, MD

  2. Bob Wachter January 17, 2012 at 8:59 pm - Reply

    Thanks to Paul Levy for highlighting my blog on his post today, and also for pointing to his 2007 post in which he predicted that the US and European healthcare systems would eventually converge. In it, Paul wrote:

    The health systems in these countries are owned and financed by the government and are often appropriately cited for the quality of care offered to the public. Indeed, in debates here in the US, they are often called out as examples of what we might strive for in terms of universal coverage and a greater emphasis on primary care than we have.

    [In a nationalized health system, the] appropriation by the parliament is a politically derived decision. . . . In the face of inevitable limitations on the ability of the national hospital system to offer all services demanded by the public, a growing parallel system is emerging, in which private practitioners offer elective therapies and procedures outside of those supported by the national system.

    I predict . . . that the systems will start to look more and more alike over time. Pressure in the US for a more nationally-determined approach. Pressure in Europe for more of a private market approach. It shouldn’t surprise us to see this convergence. After all, the countries are dealing with the same organisms, both biologically and politically.

  3. Pritpal S Tamber January 18, 2012 at 8:25 am - Reply

    Dear Bob,

    Just a comment on your interesting blog. There is no such thing as a British National Health Service. The approaches taken in England, Scotland and Wales all differ slightly but significantly. The differences are not material to this specific article but they would be in other areas. Wales, for instance, has a far more integrated approach. Such things are material when one considers outcomes.

    Keep up the good work.


  4. Richard Blogger (@richardblogger) January 18, 2012 at 10:27 pm - Reply

    A few points.

    1) The NHS is a weekday service for electives. Bizarre as that sounds, if you have an elective procedure then it has to be Mon – Fri. There is, of course, emergency cover over weekends, but sadly not enough. Every NHS hospital has a mortality spike at weekends (if they are honest enough to show you) and this shows that the emergency cover simply isn’t good enough. (I suspect it is because the weekend cover is by more junior staff.) This means that the private sector is a weekend business. For electives many patients want this since they can reduce the amount of time they take off work. As you note, private hospitals do not do emergency work.

    2) I am an elected FT governor. FTs have the power to change employment contracts. At my trust we are trying (all too slowly, in my opinion) to get weekend working. We are also looking at reducing the moonlighting, so that specialists are 100% NHS. We think we can do this because we have facilities that are not available in the local private hospitals, and so the more challenging work – with the best equipment and staff – will be in our theatres.

    3) Specialists are essentially self employed when they do private work. That means *huge* liability insurance (say ~£40k compared to the £100k a specialist is paid by the NHS), which explains why they are so happy to see *any* private patient – they have a lot of work to do before they can actually earn anything. When the specialist is in an NHS hospital treating NHS patients s/he is covered by the NHS liability insurance.

    4) Private medical insurance is currently in recession (presumably because companies regard PMI as a luxury they cannot afford at the moment). Self pay is slightly up, and that is probably due to the government’s squeeze on NHS funds. The PMI companies are now trying to squeeze the private hospitals, for example BUPA have stopped using most BMI hospitals. Further, at a time when the NHS is gearing up for far greater patient choice of providers, PMI are restricting the specialists their subscribers can use (to restrain costs).

    5) Anecdotally, in my area the local private hospital is regarded as being quite poor quality compared to the local NHS hospital (as I mention above, I am biased). However, the private hospital performs electives at weekends, and more or less on the day the patient requests… Over the last decade, my local hospital has increased the number of patients it treats (and has improved its facilities, and it makes a better than average surplus). So the local NHS facilities have improved and demand for the private hospital has fallen. (This is a hospital out of London.)

    6) Dare I mention the British class system? There is an attitude with some people that if you are paying for it, it *must* be better. A proportion of people that do not want to be treated along with the hoi poloi. My opinion is that this is the main reason that private healthcare was allowed to exist alongside the NHS. I should also point out that Madonna refused to have her child in an NHS hospital, which shows how comfortably she assimilated the British class system.

    7) I am not so sure about the final comment. Bear in mind that NHS hospitals in England have 180,000 beds and private hospitals have 10,000. (Outpatient numbers are roughly this proportion too.) Locally, my local NHS hospital has 450 beds (at occupancy of 97% or more) and the private hospital has 45 (with occupancy rates around 60-70%). Through “efficiency savings” the NHS hospital expects to lose 40-60 acute beds in the next few years (they won’t actually be lost, the hospital plans to expand maternity services). As I mentioned in #1 the NHS hospital essentially runs 5 days a week. If we move to 7 day working we could easily take on all the patients the private hospital treats. However, those new patients would not be able to choose when they were treated, since the NHS prioritises on clinical needs, not patient demands.

    • neowulf February 28, 2012 at 10:46 pm - Reply

      Thank you for your excellent, insightful response Richard Blogger. It rounds the original article off quite nicely with your perspective.

  5. Natalie S. January 26, 2012 at 10:05 am - Reply

    I recently moved to England for a year-long fellowship, relieved at the prospect of the NHS. I have an endocrine disorder that is manageable, but requires a great deal of follow-up and supervision, and I was eager not to have to fill out insurance paper work after each visit. I was floored when, at my first visit to the GP, I was asked, “How good is your private insurance?”

    The wait time for a specialist was up to 18 weeks (which is now fast approaching). Had I access to independent funds or insurance, I could be seen right away.

    I was struck by this experience in that it reveals the difficulty in finding balance between cost-effective care and timely treatment. Were I ever severely sick, I would surely be taken care of by either my GP or at the A&E. The overall care I am getting, however, is no where near that of what I had in the US prior to arriving in the UK.

    Interestingly, I was truly able to empathize with the patient perspective on both sides of the issue. Initially, I was content with having to wait and continuing care with my GP; I was aware this was the appropriate sacrifice one has to make in a universal health care system, and that I would be taken care of to the best of their abilities at this time. As soon as the option of independent insurance was introduced, I felt a great deal of resentment and entitlement. I feel this is somewhat reflective of the different cultural attitudes prevalent in the US and the UK towards healthcare.

    My experience with the physicians I have interacted with in the UK has been extremely positive overall. I have been sufficiently taken care of, and never felt neglected by the health care system. I was diagnosed several years ago, and it took some time to develop a manageable and appropriate regiment of care. I do wonder how things would have been different were I not yet diagnosed or confident with my medications and monitoring.

    There is certainly a lot of good to be taken from both systems; but it is interesting to experience some of the weaknesses, as well!

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About the Author:

Robert M. Wachter, MD is Professor and Interim Chairman of the Department of Medicine at the University of California, San Francisco, where he holds the Lynne and Marc Benioff Endowed Chair in Hospital Medicine. He is also Chief of the Division of Hospital Medicine. He has published 250 articles and 6 books in the fields of quality, safety, and health policy. He coined the term hospitalist” in a 1996 New England Journal of Medicine article and is past-president of the Society of Hospital Medicine. He is generally considered the academic leader of the hospitalist movement, the fastest growing specialty in the history of modern medicine. He is also a national leader in the fields of patient safety and healthcare quality. He is editor of AHRQ WebM&M, a case-based patient safety journal on the Web, and AHRQ Patient Safety Network, the leading federal patient safety portal. Together, the sites receive nearly one million unique visits each year. He received one of the 2004 John M. Eisenberg Awards, the nation’s top honor in patient safety and quality. He has been selected as one of the 50 most influential physician-executives in the U.S. by Modern Healthcare magazine for the past eight years, the only academic physician to achieve this distinction; in 2015 he was #1 on the list. He is a former chair of the American Board of Internal Medicine, and has served on the healthcare advisory boards of several companies, including Google. His 2015 book, The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age, was a New York Times science bestseller.


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