The Awkward World of Private Insurance in the UK

Bob Wachter

Posted 1/16/12 on The Health Care Blog

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 thatare 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 contractin 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 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.”

Robert Wachter, MD, is widely regarded as a leading figure in the modern patient safety movement. Together with Dr. Lee Goldman, he coined the term “hospitalist” in an influential 1996 essay in The New England Journal of Medicine. 

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