Reducing NHS waiting times: a catalyst for UK Healthcare M&A?

Sir Keir Starmer, UK Prime Minister, has set an ambitious target to reduce the time between Referral To Treatment and non-urgent procedures from 18 months to the 18-week target outlined in the NHS constitution. This goal, last achieved in 2017, aims to address the current challenges faced by the NHS, including workforce shortages, financial constraints, and increasing demand for services. If successful, this initiative could significantly enhance patient care and the efficiency of the NHS but how will these changes ripple across the private healthcare landscape?
 

Ramsay Health Care is just one of the many private healthcare providers that have started collaborating with the NHS, offering care under contract services. By fostering partnerships between the NHS and private healthcare providers, these initiatives could lead to increased collaboration and potentially more mergers and acquisitions (M&A) in the sector. The utilisation of private resources to address waiting lists may mean a more integrated and cohesive healthcare delivery model comes to the forefront, creating a more favourable M&A environment characterised by well-developed contractual and regulatory frameworks. Moreover, technological capabilities and investment will continue to be at the heart of many M&A negotiations. Tech-enabled healthcare companies that are the most advanced in their field either through the speed or quality of treatment will be increasingly attractive M&A targets, as they help streamline healthcare services and reduce waiting times. Recent UK M&A activity has included:
 

• Maidstone and Tunbridge Wells NHS Trust acquisition of Spire Tunbridge Wells Hospital (now Fordcombe Hospital) for £10m (March 2024) – the acquisition of Fordcombe Hospital demonstrates the NHS’s appetite to expand capacity via M&A activity and represents an opportunity for private hospital owners to dispose of underperforming or strategically incongruent assets to the NHS who are likely to pay a premium in a market categorised by limited assets and top-down pressure.
   
• AXA PPP healthcare Group’s acquisition of Healthcare Business Solutions (UK) (“HBSUK”) for an undisclosed amount (February 2024) - HBSUK is the only UK provider delivering blended (physical and digital) pathways to the NHS, helping reduce NHS waiting times through its clinical insourcing services and working with private healthcare providers.  The acquisition will allow AXA to expand into direct access to clinician care for AXA Health members, supporting a broader range of customer needs.
   
• Medinet’s acquisition of HealthHarmonie for an undisclosed amount (February 2024) - HealthHarmonie is a leading provider of community-based healthcare, delivering clinical services across a range of ICBs and NHS trusts. Medinet’s is the UK’s leading NHS insourcing provider and this strategic acquisition will allow them to further support the NHS in delivering elective services and achieving its waiting time targets.
   
• Pure Health LLC’s acquisition of Circle Health Group Ltd for £733m (January 2024) – Pure Health LLC  is a UAE-domiciled operator of medical laboratories and its acquisition of Circle Health Group, a UK private treatment centre operator that executes outsourced NHS contracts, represents the attractiveness and confidence of growth in the UK private healthcare market to overseas investments, bolstering competition for these assets and putting upward pressure on valuations.
   

Recent M&A activity is representative of the multi-faceted drivers in the market space with large listed European corporates, non-EU healthcare operators and the NHS trust itself all showing a desire to implement M&A strategies to increase shareholder value, or for the NHS to gain operational capacity. Whilst Keir Starmer’s primary focus is improving healthcare delivery, it could fuel an already active UK M&A healthcare market forcing, greater collaboration, growth, and innovation across the sector.