Private equity firms are circling the UK's healthcare market as NHS backlogs push a growing wave of patients towards private providers, experts have said.

Britain's biggest private hospital operator, Spire Healthcare, which runs 38 private hospitals, agreed on Sunday to a £1bn takeover by Toscafund Asset Management. The deal is the latest in a string of private capital moves into UK healthcare: earlier this year, private healthcare property firm Assura agreed a tie-up with listed rival Primary Health Properties following a bidding war with private equity giants KKR and Stonepeak. The sector has attracted infrastructure and buyout funds alike because healthcare assets tend to generate long-term, predictable cash flows — a profile that has made them a growing share of European private equity dealmaking in recent years.

City lawyers said they expect investors' appetite for private healthcare to continue in the UK, with no immediate end in sight to the issues plaguing the NHS.

"Private healthcare is a resilient market, and comprises a mix of private pay, insured patients and, in the case of Spire Healthcare, NHS work, so [they are] generally good payers," said Tom Whelan, partner at law firm Reed Smith.

An ageing UK population and the persistent problems facing the NHS were driving investment from private capital investors into the private healthcare market, he added.

Problems facing the NHS

Activity in the UK private health market has surged as a result of rising NHS waiting lists since the Covid pandemic. As of June, the total NHS waiting list in England stands at approximately 7.27m cases.

The backlog in access to state healthcare has also had a knock-on effect on rising employee sickness, as almost two-thirds of employees find it difficult to book a doctor's appointment.

A spokesperson for the Independent Healthcare Provider Network (IHPN) said: "Private healthcare providers are now delivering care to record numbers of both NHS and private patients, with IHPN's latest Going Private research finding that four in ten people now expect to use private healthcare in the coming year, while almost half of 25–34-year-olds have already used it."

Uptick in insurance policies

City businesses are also increasingly offering private healthcare insurance as an employee benefit when trying to recruit new staff, recruiters and insurers have told City AM, with younger generations in particular valuing a work-sponsored workaround.

The IHPN spokesperson said the group has seen record numbers of policies being issued by employers to new staff, a trend it expects to continue.

As health secretary, Wes Streeting said the government should use the private healthcare sector to help cut NHS waiting lists. That stance matters for investors because continued NHS outsourcing of elective work provides private operators with an additional revenue stream beyond insured and self-pay patients, though it also ties their fortunes to government commissioning decisions.

Whelan said: "It's hard to see how the NHS will be 'fixed' in the short term, which reinforces the resilience of the private healthcare model."

"[This] should also mean that the NHS will continue to lean on private healthcare providers to plug the gap in delivery of its own healthcare services as it strives to improve services and bring down waiting times, adding further to private healthcare provider revenues," he added.

The rise in patients, both those who can afford to pay for treatments and those who have insurance, is resulting in greater revenues and profits for private healthcare providers, making the businesses attractive to private equity.

Spire Healthcare reported total group revenue of £1.5bn for the 2025 financial year, a 4.5 per cent increase from the previous year, with 43 per cent of its revenue coming from private medical insurance. Among health-focused insurers, Vitality's revenue passed the £1bn mark in its 2025 financial year after falling to a pre-tax loss of £168,000 in the prior year.

What happens next will hinge in part on whether the NHS waiting list continues to fall and whether demand from employers and younger patients for private cover holds up — the same factors that drew buyers such as Toscafund into the market in the first place.