Healthcare Vital Signs

After several years of growth in the private healthcare market, 2017 witnessed a reversal in income flow. Several factors came together to impact revenues for major central London operators, including a drop in central London health tourism – with Bupa Health Insurance policy subscriptions falling from circa 1.2 million to around 850,000, an artificially low oil price leading to fewer Middle Eastern patients, and uncertainty over Brexit. Nonetheless, these are expected to be short-term factors, and overseas and national operators continue to focus on the longer- term opportunities in the market. Economic challenges are being dealt with and though operating costs continue to rise ahead of inflation, increased self-pay, an ageing population and expectations of a recovery in health tourism are encouraging and sustaining new and existing operators. Occupational healthcare demand outstrips supply and in particular, increased demand for representation in the Harley Street Medical Area (HSMA) has been evident, with rents approaching and in some cases exceeding £90 per sq ft. . We are also seeing healthcare occupiers showing a preference for long leases – mostly in excess of 20 years. The arrival of major overseas operators into the London market – such as the Cleveland Clinic, Schoen, the Mayo Clinic and Oxford University – will change both the operational landscape and working practices in the private healthcare market. These groups, along with other European and global investors, represent an unprecedented surge in operational and tenant investment into London. The Cleveland Clinic, for example, are investing circa $1bn alone in 33 Grosvenor Place, in what will be the first major new central London hospital 30+ years. The gradual integration of private and public health systems in the UK is particularly evident in central London, where at least three major Foundation Trusts (FT) now have representation for their private divisions and associated activities. Acting as a gateway to their main hospitals, these FT private clinics can be highly profitable and generate surpluses to offset deficits in their NHS work. CENTRAL LONDON HEALTHCARE MARKET We’d love to hear your thoughts on this topic. Please get in touch at DAVID.KERR@CUSHWAKE.COM 28 | CUSHMAN & WAKEFIELD