How the NHS backlog fuelled a private equity gold rush in UK health market

Private equity firms have shown a keen interest in the UK private healthcare market, driven by undervalued assets and substantial cash reserves. This interest was evident in the recent £1bn takeover of Britain's largest private hospital operator, Spire Healthcare, by Toscafund Asset Management. Earlier this year, UK healthcare property firm Assura received a takeover offer from KKR and Stonepeak worth around £1.7bn.

Tom Whelan, a partner at law firm Reed Smith, stated that the private healthcare sector is resilient and comprises a mix of private pay, insured patients, and NHS work, ensuring strong payer support. City lawyers expect the demand for private healthcare in the UK to remain robust, as the NHS backlog continues with the NHS waiting list in England standing at approximately 7.27 million cases as of June.

The NHS backlog has led to increased activity in the private health market, with private providers delivering care to a record number of both NHS and private patients. Four out of ten people now expect to use private healthcare in the coming year, and almost half of 25-34-year-olds have already utilized it. This trend is attributed to the growing age of the UK population and the well-known issues with the NHS, such as long waiting times and underinvestment.

City businesses are increasingly offering private healthcare insurance as an employee benefit to attract new staff, especially younger generations who value work-sponsored alternatives. The surge in insurance policies is expected to continue. Health Secretary Wes Streeting has called for the government to leverage the private healthcare sector to reduce NHS waiting lists.

Whelan believes that addressing the NHS backlog is challenging in the short term, further reinforcing the resilience of the private healthcare model. The rising number of patients, both those who can afford treatments and those with insurance, results in higher revenues and profits for private healthcare providers, making them attractive to private equity firms.

Spire Healthcare reported a 4.5% increase in total group revenue to £1.5bn for the 2025 financial year, with 43% coming from private medical insurance. Insurance companies, such as Vitality, reported revenues exceeding £1bn in their 2025 financial year.