Is private practice losing its appeal?

Authors: Kathy Oxtoby 

Publication date:  04 Jul 2012


Some doctors used to supplement their NHS income in private practice, but pressure on this sector means that some are finding it a less attractive option, reports Kathy Oxtoby

Ever since 1948, when the NHS was founded, private practice has been an alternative means for doctors to treat patients. For a few clinicians it is a full time business, and for others it is a way of supplementing their NHS earnings.

Now it seems private practice is losing its appeal. Ray Stanbridge, managing director of the specialist medical accountants Stanbridge Associates, says that doctors grossing less than £20 000 a year in private practice are abandoning such practice and doing extra NHS lists instead.

One of the reasons that private practice is becoming less attractive, doctors say, is that demand for private healthcare has dropped. Outside London and the south east of England, where taking out private insurance remains popular, clinicians report that fewer people are choosing to pay for such schemes.

Ian McDermott, a consultant orthopaedic surgeon who is based at London Sports Orthopaedics, a private practice in the City of London, says that while “business is flourishing” he is aware that outside London “many colleagues have been suffering considerably, with noticeable drops in the volume of their private practices.”

The economic downturn may mean that fewer people can afford private health insurance. Successive governments’ investment in healthcare, which has reduced NHS waiting lists, could also be responsible for this drop in demand, doctors suggest (box 1).

Box 1: Doctors’ reasons for loss of appeal of private practice

  • Demand for private practice (outside London and the south east) is falling

  • The number of consultants has risen, making the shrinking private practice market more competitive

  • Major medical insurance companies require doctors to sign up to what some believe are restrictive contracts with lower fees

  • More NHS hospitals are commissioning private services and may be better than clinicians at negotiating a cheaper price for healthcare with insurers

  • The cost of medical insurance has risen as a result of growth in patients’ complaints and claims

  • Some costs, such as tax, need to be paid whether or not doctors’ services have been paid for

  • Rent of rooms for private practice and secretarial costs have risen

  • More doctors want a better work-life balance rather than spending their evenings and weekends on private work

Supply and demand

Although demand for private healthcare may be falling, the number of qualified doctors who could potentially take a share of this market is rising. Fazel Fatah, a consultant plastic surgeon and president of the British Association of Aesthetic Plastic Surgeons (BAAP), said, “It’s a crowded market at the moment, and there are many more consultants around now who may want to get a part of what is probably a shrinking sector.” Faced with such competition, some doctors may decide not to pursue a career in private practice.

Restrictive insurance contracts

A crucial factor that could be discouraging consultants from going into private practice is that major medical insurance companies now require them to sign up to what some doctors say are restrictive contracts with lower fees. Those who refuse to sign up to such contracts are then unable to work for these companies, doctors have told BMJ Careers.

Geoffrey Glazer, a consultant surgeon and chairman of the Federation of Independent Practitioner Organisations, said that these requirements by major insurers are “making it difficult for consultants to work in private practice.”

Younger consultants are being particularly affected by this move by insurers, said McDermott. “Younger, newly appointed consultants are facing a stark choice: either sign up to restrictive contracts with some of the insurance companies or be excluded from seeing any of ‘their’ patients,” he believes.

He said that those who do sign up to these contracts then believe that they are “tied in, hamstrung, and at the mercy of the insurance companies,” leaving “many younger consultants facing the prospect of only being able to charge surgical rates for some private patients that are actually lower than what can be earned from operating on NHS Choose and Book patients.”

The move towards NHS hospitals commissioning private services could also be deterring doctors from private work. A report by Laing and Buisson, an organisation that provides information about independent healthcare, shows that in 1994 doctors’ fees accounted for 28% of the private healthcare market, while hospital fees made up 72%. Now doctors’ fees make up 22% and hospitals 78% of that market, its report for 2011-12 found.[1]

Stanbridge suggested that this fall in the proportion of doctors’ fees may be because hospitals are better than clinicians at negotiating a cheaper price for healthcare with insurers. “The NHS is putting pressure on consultants’ private practice income because they are now a big customer within the private sector and want services at a cheaper price,” he said.

Medical negligence insurance

The cost of private medical negligence insurance is another reason why private practice is losing its appeal, particularly for young consultants. The cost of insurance has “skyrocketed,” said McDermott. In some specialties, such as obstetrics and spinal surgery, the premiums can be “prohibitively expensive,” in excess of £100 000 a year.

Matthew Lee, professional services director for the Medical Defence Union (MDU), said that the rising cost of subscriptions for members in recent years is due to such factors as the growing number of complaints made to the General Medical Council, the increase in medical claims, and the cost of claims being settled.

Lee said that the MDU is taking steps to drive costs down to keep subscriptions as low as it can for members, such as giving evidence to a review of civil litigation costs in England and Wales conducted by Lord Justice Jackson in 2009. Lee hopes that recommendations from this review will bring more proportionality to claims next April, when civil litigation costs are set to be reformed.

Tax liabilities

Income tax is another harsh reality for those doing private practice work, particularly for new consultants, said McDermott. Tax is billed on invoices raised, not payments received. Some insurance companies can take several months to pay bills, while some self funding patients can take even longer or may even try to avoid paying altogether, McDermott said. “These factors combined can make for a situation where the newly appointed consultant may face bills in their first few years of practice that nearly reach, fully match, or even exceed their actual income.”

In addition to these difficulties, secretarial costs and the cost of renting rooms for private practice “have gone up dramatically over the last 20 years,” said Derek Machin, chairman of the BMA’s Private Practice Committee.

Some doctors also choose not to supplement their NHS practice because they want to have a good work-life balance. “Some consultants don’t like the idea of having to do private practice in the evenings or at weekends, which they see as being personal and family time,” said Fatah.

Faced with these challenges it is not surprising that some clinicians are deciding that private practice is not worth the effort. Referring to surveys of consultants’ income by the BMA,[2] Machin said, “These surveys show that, for a large percentage of consultants, doing private practice is no longer economically viable.”

An attractive option

But despite the problems of working in private practice, many doctors still believe it to be an attractive option. Although private practice can be more lucrative than NHS work, money is not the only motivating factor, consultants say (box 2).

“Private practice is extremely appealing when you consider that the NHS is getting worse in terms of doctors’ working conditions,” said Cosmo Hallstrom, a consultant psychiatrist based in London who went into private practice 15 years ago. He said that his decision to resign from the NHS just before his 50th birthday took a lot of courage, “but it saved my soul.”

He said, “I couldn’t work for the NHS any more—it was no longer enjoyable. So I left the NHS, and I’ve never looked back.”

Being your own boss, generating your own work, and practising in an environment of your choosing are just some of the benefits of life in private practice, he said.

Sarah Burnett, a consultant radiologist who left the NHS in 2001 and now works in private practice in London, enjoys the freedom of being able to work when she wants to and not having to fulfil management obligations. Ben Challacombe, a consultant urologist in London, finds private practice appealing because it allows him to spend more time with patients. “You can offer a more personal service in private practice than when you’re working in the NHS, which gives you real job satisfaction,” he said.

Box 2: Ten ways to get the most out of private practice

  • Don’t just dabble in private practice. Either do it properly, which requires effort, initial cost, and commitment, or don’t bother, as your costs might exceed your earnings.

  • Employ a full time private secretary immediately— this initial cost outlay will more than repay itself in the long term.

  • Get an accountant. You cannot afford to get your accounts or, worse, your tax wrong.

  • Shop around for your medical negligence insurance— it could save you money.

  • Subspecialise as much as you can, as soon as you can. Be the very best at what you do within a narrow subspecialty niche, although bear in mind that this might only be feasible if you work in a large city.

  • Be prepared. It may be tough when you first start in private practice, and it may take a few years for your business to progress.

  • Find a mentor, as it’s far better to learn from the mistakes of other people than from your own mistakes.

  • Promote your services by creating a website.

  • Market your services by, say, talking to general practice commissioners about what you have to offer.

  • Add value to your business by purchasing specialist equipment.

After working for five years in private practice, McDermott has no regrets about leaving the NHS but emphasises the importance of working hard to achieve success in this area.

“We’re now running a thriving practice. Did it come easy? No. Was it very hard work? Yes. Am I glad I’ve done what I’ve done, and would I do it all again? Absolutely,” he said.

To achieve success in private practice these days consultants planning to develop their own independent standalone private practice will need to be fully committed to making their business a success. “This requires enormous effort and an initial cost. If you just dabble half heartedly then your costs might actually exceed your earnings,” McDermott said.

NHS will suffer

Given the commitment needed and the increasing challenges of doing private practice, however, for newly qualified and for established consultants, it is likely that fewer clinicians will choose this work in the future, which could put more pressure on NHS services.

Machin said that if private practice continues to lose its appeal to consultants, the health service will lose the “safety valve” that has traditionally helped to reduce NHS waiting lists. As a result the NHS will “not be in good health,” he warned.

Although it is difficult to predict the future of private practice and the implications for healthcare, one thing is clear: for newly appointed consultants the days of dabbling in private practice are gone. As McDermott said, “Things are getting a great deal tougher for younger consultants, and sadly I believe that things could be set to get even worse.”

Competing interests: None declared.

Kathy Oxtoby freelance journalist London, UK

 kathyoxtoby@blueyonder.co.uk

Cite this as BMJ Careers ; doi: