UK healthcare overview

The National Health Services (NHS) in the United Kingdom provides universal healthcare free of charge at the point of delivery for all residents.

Each of the four nations within the UK – England, Scotland, Wales and Northern Ireland – sets their own national health policy and each operates a separate tax-funded NHS to deliver healthcare services at a local level. More than 80% of the UK population lives in England and the English NHS is the largest health service.

The Department of Health & Social Care is responsible for setting health policy in England and funds NHS England to manage and deliver healthcare services. 80% of that funding is sourced from general taxation and 20% from national insurance (a payroll tax paid by employees and employers).

NHS England was formally established in 1948 and is based on the philosophy of “healthcare to be provided based on need rather than the ability to pay”.  The NHS has historically outsourced services to the private sector for dentistry, eye care, pharmacy and GP practices are frequently private partnerships.

The national government owns the public hospitals and organisational units, serving either a geographical area or specialised function (like the ambulance service), are called NHS Trusts. In any specific location, there may be several NHS Trusts involved in providing different aspects of care to the local population.

Since January 2006, patients requiring referral to secondary care have been entitled to a choice of four or five providers and from April 2008, that choice was extended to any eligible NHS or private provider in England.[1] 

The King’s Fund reports that following the Health and Social Care Act of 2012, which extended market-based principles and introduced more competition to the NHS, the number of contracts awarded to private providers increased. Although the volume of contracts has seen an upturn, especially post COVID-19 pandemic, the proportion of the NHS funds spent on private providers has remained largely unchanged since 2012 at approximately 7%[2].

It is important to note that the competition and market-based approaches introduced by the 2012 Act were removed by the Health and Social Care Act 2022. This change enabled commissioners to reduce the frequency of clinical services being put to tender by allowing contracts to roll over, especially if the existing provider is meeting an acceptable service level. 

Healthcare funding

In July 2022, NHS England introduced a new structure to manage the delivery of healthcare.

The previous 191 Clinical Commissioning Groups which planned, commissioned and paid for hospital and community care in their areas, were reduced to 42 integrated care systems (ICS). Each ICS represents a population of 500,000-3 million and is allocated a budget by the NHS to commission services for primary care (GP), hospital-based services, social care and community services that meet the needs of their population.

The objective of the new NHS structure is to better integrate public health services vertically, providing patients with a structured care pathway.

NHS healthcare expenditure is fairly evenly allocated between outpatient services (approx. 31% in 2019) covering primary care (GP), diagnostics and day-case procedures, and hospital-based inpatient services (29%). 

Each ICS has an Integrated Care Board (ICB) which determines how the healthcare budget will be spent in its district and how many contracts will be awarded to private healthcare providers. All ICBs refer patients to both public and private providers and the proportion varies between districts. 

All providers are paid at the same fixed national tariff set by NHS England. All hospital services are funded on a fee-for-service model calculated by healthcare resource group.

Under the NHS Choice Framework, patients are able to choose their healthcare provider (public or private) to receive free healthcare, as long as their chosen provider has a contract with the NHS (via their local ICB) for the services they require.

The uptake of private health insurance in England is low (<10% of the population) and usually employer funded. 

Mental health

Mental health services in England are provided by NHS Trusts, charities, not-for-profit organisations and private companies. The private sector market share has grown over the past decade from 27% to 33%.

All of Elysium Healthcare services are fully funded by the NHS and local authorities. All clinicians working at Elysium are employed, including consultants (psychiatrists), mental health nurses, social workers, occupational therapists, art therapists, healthcare assistants, and psychologists. This differentiates Elysium from the majority of competitors and is viewed positively by referrers and the NHS.

[1] June 2010. Appleby, J, Robertson, R, Burge, P et al.  Patient choice: How patients choose and how providers respond. Kings Fund  https://www.kingsfund.org.uk/publications/patient-choice

^[2] August 2022. Wickens, C. Health and social care in England: tackling the myths King’s Fund https://www.kingsfund.org.uk/publications/health-and-social-care-england-myths

Disclaimer

The information in the ‘Our markets’ section of the Ramsay Group’s website is based on information obtained from external sources and is current as at 16 February 2023. Ramsay has not independently verified the information presented in this section. The information is in summary form and is not necessarily complete.

Ramsay will not be liable for the correctness and/or accuracy of the information, and undertakes no obligation to update the information.  

The information is not investment or financial product advice and should not be relied upon in making investment decisions. Before making an investment decision, you should seek appropriate financial advice, which may take into account your particular investment needs, objectives and financial circumstances.