NHS cuts will benefit private healthcare, says Bupa boss

The boss of private medical insurer Bupa today said cutbacks to the NHS would be a "supportive trend for private healthcare" during the next few years, but also warned that the country's funding of long-term care for the elderly is in a dire state.

Ray King, chief executive of the healthcare group which is funded by bondholders, made the comments as he presided over a 10% jump in revenues to £3.7 billion for the six months to July, as underlying profit rose 5% to £183.6 million.

Bupa makes 40% of its profits in the UK, where it owns the Cromwell private hospital in Kensington as well as a large care home business and medical insurance division.

And ahead of the Government's expected squeeze on health board budgets, King said: "The NHS has got to decide what it will do to meet the ever-increasing demand for care and the higher costs.

"It may make productivity gains, but our experience is that people want more choice and control over their healthcare, so that's a supportive trend for private healthcare.

"The UK and US governments started to articulate their plans for reform of their healthcare systems and we believe that this should offer new opportunities for our businesses in the future," King said.

He warned, however, that squeezes in the funding of care homes for the elderly, where many of the places are paid for by local councils, threaten to damage the service provision.

Echoing comments by Britain's biggest private care home operator, Southern Cross Healthcare, which this week issued a profit warnings due to the impact of Government spending cuts, King said: "We're receiving very, very low settlements from local authorities — the average increase in rates per person per home is something like 0.5%, when our staff rates are going up by much more than that.

"The minimum wage is going up 2.2% in autumn and we employ a lot of people at the lower end of pay scale.

"This squeeze on margins and the funding of care for the elderly is a major issue of inter-generational concern. We're talking to the Government about it."

Southern Cross said it had seen fewer elderly people being admitted to its homes as local authorities sought to cut back on costs.

However, Bupa, which runs 304 homes in the UK, said that it had broadly maintained its levels of occupancy.