How the NHS backlog fuelled a private equity gold rush in UK health market
Private equity firms have been circling several UK sectors, driven by a perfect storm of undervalued assets and large cash stockpiles, but the latest Spire Healthcare deal showed that external investment’s strong interest in the private healthcare market has continued.
Britain’s biggest private hospital operator, with 38 private hospitals in its portfolio, on Sunday agreed to a £1bn takeover by Toscafund Asset Management. This is the latest deal after UK healthcare property firm Assura received its “best and final offer” from private equity giants KKR and Stonepeak for a takeover worth around £1.7bn in June.
Speaking to Morning Wire, Tom Whelan, partner at law firm Reed Smith, said: “Private healthcare is a resilient market, and comprises a mix of private pay, insured patients and, in the case of Spire Healthcare, NHS work, so generally good payers.”
City lawyers said they expect the appetite for private healthcare to continue in the UK, as there is no immediate end in sight to the NHS issues.
Problems facing the NHS
Activity in the UK private health market has surged as a result of rising NHS waiting lists after the Covid pandemic, which have struggled to decrease. As of June, the total NHS waiting list in England stands at approximately 7.27m cases.
The backlog in access to state healthcare has also had a knock-on effect on rising employee sickness, as almost two-thirds of employees find it difficult to book a doctor’s appointment.
An IHPN spokesperson said: “Private healthcare providers are now delivering care to record numbers of both NHS and private patients, with IHPN’s latest Going Private research finding that four in ten people now expect to use private healthcare in the coming year, while almost half of 25–34-year-olds have already used it.”
“Given the increasing age of the UK population, with correspondingly greater healthcare needs, and the well-known problems of the NHS in terms of longer waiting times for treatment and underinvestment, it is not surprising that this would drive investment by private capital into the private healthcare market,” Whelan said.
Uptick in insurance policies
City businesses are also increasingly offering private healthcare insurance as an employee benefit when trying to recruit new staff, recruiters and insurers told Morning Wire in 2024, with younger generations in particular valuing a work-sponsored workaround.
The IHPN spokesperson said it has seen record numbers of policies being issued by employers to new staff, a trend it expects to continue.
As health secretary, Wes Streeting said the government should use the private healthcare sector to help slash NHS waiting lists.
Whelan said: “It’s hard to see how the NHS will be ‘fixed’ in the short term, which reinforces the resilience of the private healthcare model.”
“[This] should also mean that the NHS will continue to lean on private healthcare providers to plug the gap in delivery of its own healthcare services as it strives to improve services and being down waiting times, adding further to private healthcare provider revenues,” he added.
The rise in patients, both those who can afford to pay for treatments and those who have insurance, is resulting in greater revenues and profits for private healthcare providers, making the businesses attractive to private equity.
Spire Healthcare reported total group revenue of £1.5bn for the 2025 financial year, a 4.5 per cent increase from the previous year, with 43 per cent of its revenue coming from private medical insurance. For health-focused insurers, Vitality’s revenue passed the £1bn mark in its 2025 financial year after falling to a pre-tax loss of £168,000 in the prior year.