Reflecting on 2024 and Looking Ahead at 2025: Healthcare
NHS
2024 saw continued industrial action and funding challenges and a strong focus on increasing productivity. A new government in July and Lord Darzi’s independent review that followed highlighted the NHS was in trouble, “broken but not beaten”. Not many in the service would disagree. The autumn budget saw the NHS allocated £25.7bn but this will arguably cover standing still costs rather than fund anything at scale.
2025 promises a new 10 Year Health Plan for England to be launched in Spring, with Wes Streeting promising “Our 10 Year Health Plan will deliver 3 big shifts in the focus of healthcare:
- From hospital to community – reducing length of stay in hospitals and improving services closer to home and in the home
- Analogue to digital – from diagnostics to treatment, supporting streamlined patient pathways and virtual wards
- Sickness to prevention – improving public health education and primary care services
We will refresh the NHS workforce plan to fit the transformed health service we will build over the next decade, so the NHS has the staff it needs to treat patients on time again.”
The demand for modernisation has extended itself to mental health providers, with a focus on improving and updating legislation to promote patient autonomy, specifically, making changes to the Mental Health Act. Community services will be relied on heavily, with the hope of reducing the number of individuals displaying symptoms of secondary mental health issues, whilst ensuring individuals are able to access a multidisciplinary team quicker, and closer to home. This offering will not just be for adults, but for children and young people too. This Government shows a commitment to addressing extensive waiting lists for those seeking support with their mental health, however we know there are many hurdles to overcome including recruitment challenges, budget constraints, and promotion of community services.
There are some incredible digital healthcare solutions to speed up diagnostics and provide healthcare at home services that could indeed be a saviour to parts of the NHS, but NHS leaders will need support on that quest. One area that is a key focus of development is AI and its ability to inform the NHS and predict a patient’s care needs and likely outcomes from treatment. However, utilising AI will not come without assurance challenges around its reliability and governance concerns.
It’s hard to talk about improving the NHS without talking about tackling social care but with a 2028 reform date it makes it hard to pinpoint action dates but collaboration across healthcare systems is key to improvement.
Recruitment continues to be a challenge from frontline key workers to senior leadership roles. The Government has launched a consultation on potential regulation of NHS Managers which may deter individuals from seeking promotion. With finances continuing to be squeezed and operational pressures not easing up, the NHS needs to nurture and engage with its workforce, look after their wellbeing and support their career aspirations.
Private Healthcare
2024 was disappointing for private healthcare providers with a new Labour Government we saw stalling in funding from the NHS coupled with high interest rates which has suppressed the pipeline of M&A in P/E. Patients nationally have been affected by this delay and waiting lists are longer across both physical and mental health. There also seems to be a move towards longer hold periods for p/e which puts pressure on management teams.
2025 Outlook is improving in healthcare albeit slowly for those organisations that have the NHS as their primary or sole client. The government has made various public promises and plans vis a vis elective waiting lists, primary care, mental health and others but the funding is slow and often sits at a local level, making it challenging to reach. A new ‘deal’ has recently been announced which promises to ensure that as many patients as possible wishing to choose an independent sector provider for their care are supported to do so by involving independent providers in local planning and supporting long-term commissioning and contracting arrangements. This has led to a change to the NHS App where patients now have a broader choice of provider for their treatment.
The private pay market continues to improve steadily however the PMIs prove to operate in a counter productive manner for the patient and we are seeing premiums increase for MSK treatments. For one such provider, the solution is to bypass the PMI and target the corporate directly offering a comprehensive alternative to the cost increase. We expect a further cut in interest rates from the Bank of England this week which will underpin the expected amount of M&A activity although there remains a premium on differentiation and a bigger challenge in delivering PE returns in a climate of higher interest rates.
For our clients in independent healthcare, the key challenges of recruitment/retention and costs remain. Employers are very focused on improved employee values and recognition to address this first challenge and the second has spurred a theme of ‘commercial operator’ emerge at executive level which marries the COO and CCO skill set and reflects the environmental tone.
