Numerous stressors are impacting the UK Government’s ability to fund public health services and provisions. Additionally, the Home Office has signalled its intention (opens a new window) to reduce the ability of overseas healthcare workers to gain work visas — potentially exacerbating existing challenges. The private sector, with the right frameworks and guarantees, can support the NHS in supplying some of these much-needed services.
Investment and the role of the private sector was a key topic discussed at Lockton’s Annual Healthcare Conference 2025. The issues explored below are crucial for stakeholders involved in the commissioning of NHS services.
Issues squeezing government spending
The UK, among other countries, is grappling with unprecedent challenges to their fiscal policies. Financial constraints are emanating from a series of issues that are exerting increasingly demanding pressures on resources and public funds.
Some of these include:
Trade wars/tariffs
Supply chain shocks
Threat of stagflation
Unstable geopolitical environment
The Government has indicated it wants to clear barriers for investment and coordinated planning is required to achieve this. As the macroeconomic picture remains unstable for the foreseeable future, a sustainable, comprehensive plan is needed to attract and retain engagement from the private sector.
For 2024/25 it is forecast the UK will spend £251 billion on healthcare (opens a new window), and the Government is actively looking at how it could deploy private capital into the healthcare space. For example, a deal was formed between the NHS and the independent sector early this year (opens a new window) — aiming to provide one million extra appointments (opens a new window) to patients through use of private hospitals.
New priorities and shifts from the NHS
In January 2025, the NHS announced its priorities and operational planning guidance (opens a new window) for 2025/26. Guidelines seek to address many issues with the NHS, and to improve patient outcomes, will give authorities “greater financial flexibility to manage constrained budgets”. This will primarily be implemented through a “higher proportion of funding going directly to local systems” to give local authorities more autonomy.
The NHS is keen for integrated care boards (ICBs) to take a forensic look at their workforce and what services they are commissioning — ensuring they get value. According to the Health Secretary, this could be achieved through “leveraging private finance (opens a new window)”.
Beyond new priorities and planning guidance, the NHS has also targeted ‘three shifts’ as part of its’ 10 year health plan (opens a new window). To meet the changing needs of the UK’s ageing population, the NHS will concentrate on:
Focussing on prevention instead of treatment
Transitioning from analogue to digital
Moving care from hospitals to communities
Opportunities from the NHS’ new direction
Efforts to deliver these majors shifts will need to be boosted by targeted capital investment in buildings, facilities, and equipment. Currently, community providers do not have the necessary funding to facilitate the ‘three shifts’, according to nearly 90% (opens a new window) of community provision leaders.
Typically, over the past decade, the NHS capital budget has been accessed to fund (opens a new window) day-to-day spending. Billions of pounds have instead been used for backlog maintenance, depriving NHS services of the ability to invest in novel services that can bring efficiency and productivity to the system.
A national strategy and redefining of the private sector’s role frontline services would be key for attracting investment. Aligning public care and private capital is a fundamental principle for future NHS commissioning strategies. Failure to deliver guarantees may erode trust, confidence, and desire from the private sector to invest and support the public sector.
Defining a strategy for private finance initiatives
Investors remain incredibly keen to do business with the NHS. However, fears over short-termism, significant capital outlays, and lack of guarantees of future income, are making it difficult for private companies to progress.
While the NHS needs the private sector to play a role, the scale of this has waxed and waned due to necessity, funding, and political dynamics. To attract capital, the public sector must be able to instil confidence within independent companies that their services will be required periods of time that justifies significant capex upfront.
Changes in healthcare consumer habits
Patients desire high-quality, patient-centric treatment, and they don’t necessarily mind who or what organisation provides this. Emerging trends indicate the public are willing to engage with the independent sector for healthcare services at an increasing rate.
Habits of UK citizens are evolving amid record dissatisfaction with the NHS. In 2024, 21% of respondents (opens a new window) to the latest British Social Attitudes poll said they were ‘satisfied’ with how the NHS operates — the lowest figure the survey has ever recorded.
Furthermore, NHS waiting lists have been steadily increasing, with annual governmental targets missed for most years (opens a new window) since 2010. This has resulted in many members of the public being denied access to care.
Consumers are responding in logical ways — particularly younger cohorts — which is germinating future models of care. According to a poll by the Independent Healthcare Providers Network (opens a new window), 41% of respondents aged 18 to 24 said they had used private healthcare, the highest proportion of any age group. Additionally, employers are filling gaps by providing employees with holistic healthcare resources for staff, such as mental health support, private GPs, and health screening.
Recommendations for the private sector
When contracting with the NHS, there are a number of steps private companies can take to reduce their risk exposure, these include:
Conduct thorough due diligence
Assess the NHS trust’s financial stability, past contract performance, and reputational risks before entering into agreements.Devise clear, detailed contracts
Ensure contracts possess well-defined deliverables, payment terms, dispute resolution mechanisms, and risk-sharing clauses.Obtain appropriate insurance coverage
Secure professional indemnity, public liability, and other relevant insurance policies to cover potential liabilities arising from NHS contracts.Comply with regulatory requirements
Keep up-to-date with NHS procurement rules, data protection laws, and clinical governance standards to avoid penalties and reputational damage.
For further information, reach out to Amy Danu, Account Executive, Senior Vice President.
