Driven by a rapidly-ageing and growing population, demand for Irish healthcare services is set to rise steeply in the coming decade, exacerbated by staff supply shortages, capacity constraints and inflation.
These trends are likely to fuel growth in the sizable private healthcare sector as consumers seek access to care in the face of rising levels of chronic disease and growing waiting lists. These changes demand a proactive response by sector stakeholders in order to maintain access and drive care quality.
In particular, we see significant opportunities to further enhance efficiency through technology adoption and innovation, optimised staff utilisation, and accelerating the shift towards preventive care.
Healthcare: the next decade
The next decade of healthcare in the Republic of Ireland (RoI) will be shaped by a range of factors, the most obvious of which is its ageing population and the associated increase in the prevalence of chronic disease.
The Government expects demographic shifts will drive healthcare costs upwards from 6.6% of Gross National Income (GNI) in 2019 to 7.2% in 2030, and 8.3% by 2050.1
The current patient journey in RoI is split between a public system in which most care is delivered by the Health Service Executive (HSE), where the large majority of diagnostics, consultations and treatments are co-located in hospitals, and a well-developed private system (accounting for around 20% of overall healthcare expenditure and hospital beds) with an increasing prevalence of clinic offerings outside the hospital environment.2
The National Treatment Purchase Fund (NTPF) plays a role in finding treatment and care capacity across both the public and private systems for patients on the public waiting list.
In Northern Ireland (NI), universal coverage is provided by the National Health Service (NHS), leading to a fundamentally different model of provision.
Only around 18% of the NI population holds private health insurance (PHI), sustaining a smaller private sector, with the UK national average being 11%.3,4 This is relative to 47% of the RoI population.5
Typical healthcare pathways across ROI and NI
Private healthcare sector
Certain niches have been a focus for RoI’s private system, including orthopaedic, general surgery, cardiac surgery, and ophthalmological care; private provision is also significant in dermatology, vascular, endoscopy, and women’s health.
Nineteen of RoI’s 88 hospitals are private, owned by a diverse ecosystem of providers (e.g. UPMC, Blackrock group, Mater Group), whilst the private sector also accounts for a sizable number of clinics, GPs and consultants.6,7
According to the RoI Health Insurance Authority, some 47% of the population, amounting to 2.5 million people, had health insurance at the end of Q3 2023, with market share breaking down as follows: VHI 49%, Laya Healthcare 28%, Irish Life Health 21%, and Restricted Membership Undertakings (RMUs) >3%.8 Barriers to entry are high, especially for new private hospitals. There are 47 public hospitals and 22 voluntary publicly funded hospitals.
Private and public sector providers alike face significant headwinds in the short and medium term. Healthcare inflation has tended to outstrip general inflation in recent years, with some insurers announcing premium hikes up to 10% in 2023.9
Significant pay increases have, however, been insufficient to plug chronic staff shortages, resulting in a reliance on healthcare staffing agencies. According to a 2022 spending review, agency expenditure increased by almost 100% from 2015 to 2022, jumping from €259m to €619m.10 While exact figures are not yet available for the Covid-19 period, it is expected that agency spend continued to grow.
Agency and overtime expenditure in the HSE in RoI, 2012-2019
Physician specialists per 1,000 capita – RoI compared with other OECD countries
Upcoming healthcare changes
According to a 2023 Government (capital) Analysis of Medical Workforce Supply, RoI has the sixth-lowest number of physician specialists per capita of OECD countries for which data is available, and the fourth highest proportion of foreign-educated doctors, indicating RoI is unlikely to solve its workforce shortages in the near term.11
RoI’s healthcare landscape is also set to evolve significantly in the coming decade in response to Sláintecare’s ‘shifting left’ approach, which will see increased community delivered care, as well as the implementation of new consultant contracts and associated impacts on take-up rates in the public system.
In the private sector, we expect to see more M&A activity aimed at leveraging these shifts, in line with recent acquisitions of Whitfield and Aut Even hospitals, Sports Surgery Clinic, and Laya Healthcare.
Healthcare demand: on the rise
A previous report from the Economic and Social Research Institute forecasts demand for public hospital services could rise by 37% by 2030 from a 2015 baseline, with private hospitals and GPs likely to experience similar demand pressures driven by population growth, ageing, and long-term increases in chronic diseases.12
This demand picture collides with staff shortages at all levels of the system to produce lengthy and growing waiting lists across all specialisms, with over 560k people on outpatient active waiting lists for care in hospitals as of the end of December 2023.13
Supply has not matched demand growth, for a number of reasons. Compared to other EU countries, RoI is not cost-effective, having the 10th highest health expenditure per capita in the EU. RoI is also not self-sufficient in nurses or GPs and suffers from chronic staff shortages, constraining provision growth.
According to a recent Irish Times report, almost 1,000 permanent consultant posts were unfilled in July, and RoI has the fourth-highest proportion of doctors educated abroad amongst OECD countries for which data is available, implying RoI does not have the workforce to meet domestic demand.14,15,16
While there has been demonstrable uptake of Sláintecare public-only consultant contracts, with over 1,000 consultants having signed such contracts between March and mid- November of 2023, it remains unclear when this additional capacity will begin to alleviate the backlog of demand.17
These trends have driven an expansion of private provision models, with insurers broadening the scope of their coverage, and offering ‘fee-for-service’ care models, and other integrated care and insurance packages.
How to respond: fresh thinking required
It’s clear that radical change is required to meet growing demand whilst maintaining quality of care in the face of these substantial headwinds. Over the next decade, every aspect of healthcare will be digitally transformed, from the patient experience thorough to clinical and operational systems.
The pandemic has proven that transformation is possible, and the most innovative and ambitious organisations globally are already planning for this change and delivering on a vision that places the patient at the centre. They are creating a seamless care journey which is connected across care settings, and integrating their organisations across front, middle and back offices.
To embrace this in RoI, fresh thinking is required, especially in three key areas:
- Maximising workforce efficiency
- Driving innovation through technology adoption
- Supercharging Slaintecare’s ambition to deliver care in the community
Maximising workforce efficiency
RoI’s healthcare services are not utilised evenly, creating ‘quick win’ opportunities for optimisation. Physiotherapists and pharmacists, for instance, could both have capacity to handle additional patient demand, and could be used to alleviate a burden currently falling on GPs.
In the UK, the First Contact Practitioner (FCP) model has seen physiotherapists placed directly into GP practices to treat patients with musculoskeletal problems, with the The Chartered Society of Physiotherapy (CSP) estimating that FCPs could see up to 5% of GP patients.18
Similarly, the Irish Pharmacists Union has suggested that ~5% of GP consultations could be redirected to pharmacists, under approaches like the NHS’s Minor Ailment Scheme, under which patients with minor ailments are evaluated and – if necessary – prescribed medication directly by pharmacists.19
This elevation of pharmacists’ role in the UK’s primary care landscape will also be promoted by the imminent Pharmacy First scheme, which will see health care advice, treatments, and medicines for common illnesses dispensed from a patient’s local pharmacy without the need for an appointment, as well as access to patient health records digitally extended to those same pharmacists.
The use of Advanced Nurse Practitioners (ANPs) is another proven means to expand primary care capacity by redirecting patient demand away from GPs, as was starkly illustrated during the pandemic, when extraordinary patient demand saw ANPs play a critical role in keeping patients out of hospitals and unblocking access bottlenecks to primary care services, often via virtual clinics.20
Despite their proven value, RoI has relatively few ANPs, creating a significant opportunity to raise system efficiency by training more.
Raising capacity and staffing levels meaningfully will require significant investment in both the private and public sectors. The private sector’s ability to make such investments would benefit from longer contracts that provide the necessary stability and cash flow visibility to do so.
Shifting healthcare out of hospital into community
The high costs of hospital relative to preventive treatment creates a strong incentive to shift as much healthcare as possible out of the hospital environment and into the community – a pillar of the Sláintecare strategy. To this end, recent years have seen the expansion of primary care centres and a sustained focus on integrated care and electronic health records (EHRs). The private sector is already responding to
this transition through expanded diagnostics, walk-in screening, primary care clinics, and fee-for-service healthcare providers such as SouthDoc and Webdoctor, all of which can help alleviate the healthcare burden on RoI’s expensive secondary care system.
Innovation and technology
As in all sectors, adoption of new and emerging technologies offers significant potential for efficiency, quality and access gains. 21st-century healthcare will come to be defined by the ‘digital front door’ paradigm, in which patient interactions with providers will match their experiences elsewhere in the economy of frictionless and value-adding digital assistance. Private providers such as Allview Healthcare and Webdoctor are already embracing telehealth, where the pandemic has greatly accelerated patient engagement. This growing consumer comfort with platform-based services has also opened space for other service providers and innovations, such as harmonised EHR implementation across the primary and secondary care systems.
A range of other technologies look set to have starring roles in the near future of healthcare, e.g.:
- Artificial intelligence (AI) is widely anticipated to deliver some of its most profound benefits in this sector and holds huge potential to unlock efficiency gains through vastly improved patient results analysis, diagnostics, and automation of routine tasks.
- Advances in robotics promise to revolutionise surgical treatment by greatly enhancing the capabilities of human consultants.
- Virtual wards and telehealth, in which patients can receive continuous monitoring and care from the comfort of their home environment, can minimise the inpatient burden on hospitals whilst allowing patients a greater degree of comfort and security.
- Digital therapeutics, which see medical treatment administered via clinically-evaluated software, often in the form of an app, allow patients to receive care through their own smartphone, and provide opportunities to expand care capacity across a range of ailments.
- Wearable technology can vastly increase the amount and accuracy of health data collected by all its wearers, empowering them to take greater responsibility for their health while empowering physicians to make more informed diagnoses, more quickly.
With all of these technologies already being adopted in the world’s leading healthcare systems, we expect to see them play a larger role in RoI in the near future.
The Digital Front Door – current, near, future states
Conclusion
The coming decade poses huge challenges for the RoI healthcare system, which will need to navigate its ageing population, chronic staff shortages, cost inflation, supply constraints, and soaring demand.
Bold and innovative responses are required across the system to maintain or raise current levels of care and address extensive waiting lists.
Both private and public providers must urgently adopt measures to optimise human resources, embrace innovation and technology, and accelerate the shift of healthcare out of hospital into the community. Below we list some key takeaways by stakeholder:
HSE/NHS
As the island of Ireland does not have sufficient scale to build-out all solutions in the public sector, partnerships with external providers are incredibly important. Sharing information on long-term needs with private providers would enable them to make the necessary investment to support capacity and high-quality services for patients. Multi-year contracts in areas where there is consistently high demand could also help secure supply and facilitate efficient investment.
Private healthcare providers
Focus on specialist clinic offerings away from the hospital setting to provide better access to patients stuck in bottleneck areas of the system. This is also a significantly less resource-intensive investment exercise than continued hospital capacity expansion.
Investors
The supply/demand mismatch on the Island of Ireland is unlikely to be addressed in the coming years. There is opportunity for strong return-on-investment in areas that help support the delivery of healthcare supply or use innovative approaches to address inefficiencies in the market.
Insurers
A move into the digital-first “payvidor” space, offering both health insurance and health provision, is likely to yield long-term benefits for larger PHI players. The trend toward “consumerisation” of healthcare should be carefully watched as patients worldwide increasingly expect value-add services such as aesthetic treatments, exercise advice, and dietary guidance.
Policy makers
Considering new partnerships and approaches could be a way to further drive efficiency in healthcare, which can be done by identifying the policies to incentivise collaboration. Easier and re-imagined pathways to reimbursement for value-add innovation, whether novel devices, therapeutic software, or clinical services, would benefit both the public system and its suppliers. In NI, there is an opportunity for the sector to be a material net exporter of private capacity. This should be considered in the context of wider benefits to the local economy and encouraged as appropriate.
Naturally, there are wider impacts of any policy or investment changes on other parts of the healthcare landscape, particularly for the primary care sector. This will be addressed in our next paper on the innovative options for GP, pharmacy, and other parts of primary care.
Queries? Contact our Deal Advisory Healthcare team
Discover more in Healthcare
Footnotes
- https://www.gov.ie/en/publication/6ba73-population-ageing-and-the-public- finances-in-ireland/
- https://www.drugsandalcohol.ie/37620/1/Health%20in%20Ireland%20Key%20 Trends%202022.pdf
- Owners of private health insurance, by region of the UK 2017 | Statista
- Population covered by health insurance UK 2020 | Statista
- Market reports and bulletins | The Health Insurance Authority (hia.ie)
- https://www.ibec.ie/connect-and-learn/industries/public-sector/hospitals#:~:text=Public%20 health%20services%20in%20Ireland,hospitals%20and%2019%20private%20hospitals.
- https://www.lenus.ie/bitstream/handle/10147/631192/irelands-takeover-of-private-hospitals-during- the-covid-19-pandemic.pdf?sequence=1&isAllowed=y
- https://www.hia.ie/publications/market-reports-and-bulletins
- New health insurance increases to add hundreds to annual cost – The Irish Times
- HSE agency costs increase by 139% despite a one-third increase in staff numbers – The Irish Times
- https://assets.gov.ie/249693/50cccee6-e8dc-4312-a439-423f981628ed.pdf
- https://www.esri.ie/system/files/publications/RS67_Print%20%26%20Online.pdf
- National Treatment Purchase Fund (NTPF)
- https://www.irishtimes.com/health/2023/07/09/almost-1000-hospital-consultant-posts-not- filled-with-some-vacant-for-years-figures-show/
- https://health.ec.europa.eu/system/files/2017-12/chp_ir_english_0.pdf chp-ireland2023 (1).pdf
- https://assets.gov.ie/249693/50cccee6-e8dc-4312-a439-423f981628ed.pdf
- https://www.gov.ie/en/press-release/d5387-minister-donnelly-announces-more-than-1000- consultants-have-signed-the-new-public-only-slaintecare-contract/