Faced with a daunting NHS wait-list for her first hip replacement, Helen Walters travelled to Turkey for a private operation that drained her entire pension.
Two years on and she is waiting for her second hip replacement. But this time she has decided to borrow to cover the £15,000 surgery at a private hospital in London.
“I don’t have a choice about this. If I don’t take the loan I can’t continue to work. I can’t continue to pay my mortgage,” said the 62-year-old nursing manager from Cambridgeshire. “Sometimes the pain is unbearable.”
Walters is one of a growing number of patients seeking private treatment loans to fund elective medical procedures, as long NHS backlogs and the rise of retail medicine reshape the economics of healthcare.
However, doctors and patient advocacy groups warn that people on lower incomes and with serious conditions are at greater risk of wracking up debt, which could end up adversely affecting their health.
For more than a decade, payment plans for cosmetic and dental work have been popular, but more recently hospital groups and independent clinics have begun to advertise financing packages for diagnostics and surgeries.
Self-pay treatment — not covered by medical insurance or NHS-funded private care — has surged to 32 per cent from pre-pandemic levels, according to the Private Healthcare Information Network, an independent, government-mandated research body.
About 30 per cent of UK inpatients and day care admissions are self-paid, according to the PHIN. Patients tend to self-fund if they are uninsured, have gaps in coverage, or because they elect not to use their insurance for certain procedures.
Data on treatment loans remains closely guarded. However, 8 per cent of 2,400 people surveyed by fintech company Lenvi borrowed money for treatments, such as healthcare, cosmetic surgery and IVF, in the past year.
“We’re at a time when credit is expensive, nevertheless, we’re seeing really quite strong growth in [healthcare borrowing],” said Richard Gregory, head of strategy at Chrysalis, the UK’s largest provider of treatment loans.
Some private hospitals and clinics typically partner with lenders such as Chrysalis — whose partners include Nuffield Health, Ramsay Health Care and Practice Plus Group — to offer patient payment plans. Lenders usually pay providers upfront for the cost of treatment, charging them for the financing costs.
Many large healthcare providers advertise interest-free patient loans for the first six to 12 months — with rates rising to 9.9 to 16.9 per cent thereafter.
Chrysalis said its most commonly financed treatments include knee and hip replacements; ear, nose and throat procedures; and cataracts and exploratory surgery. Financing options are also available for more complex procedures, such as cardiac surgery.
“We tend to be providing loans on some of the bigger ticket items,” Gregory said. The company’s average loan value is about £5,500.
Liz Heath, a consultant at LaingBuisson, said long delays, high cancellation rates and the designation of some surgeries as non-urgent within the NHS had pushed up demand for treatment loans.
“For those without private medical insurance, the ability to spread the cost of treatment means many who would not previously have considered private healthcare are now doing so,” she added.
Castle Trust Bank, owned by US private equity group JC Flowers, is another major player in the UK healthcare loan sector. The bank’s retail lending arm provides loans for Spire Healthcare and Circle Health Group, two of the UK’s largest hospital groups.
Castle Trust’s latest financial report stated that the healthcare market contributed to “strong new loan origination volumes”.
Doctors and patients groups have sounded an alarm over the rise in medical loans.
Dr Latifa Patel, the British Medical Association’s representative body chair, said: “Borrowing money to fund private treatments is likely a last resort for people who can least afford it, risking further financial insecurity — something we know poses its own health risks.”
David Finch, assistant director at The Health Foundation, a charity, cautioned that those taking on healthcare debt may be in a vulnerable position. “Ultimately some people may feel forced to make a decision about whether the debt from the loan is worth taking on given how the condition is affecting their quality of life,” he said.
LaingBuisson’s Heath highlighted the use of “buy now, pay later” services, especially among the young. “The younger consumer who may not have access to instant amounts of money is far more likely to seek a way to spread the cost of treatment,” she said.
Some regulators and consumer protection advocates have criticised the BNPL sector, which claims to offer frictionless access to lending.
Tech companies including Klarna and Clearpay are prominent BNPL providers in the private healthcare sector. A person familiar with Clearpay said it had seen a rise in private healthcare and diagnostic businesses wanting to offer its services.
But Chrysalis’s Gregory was highly critical of BNPL services. “[Chrysalis] are vehemently against unregulated loans dished up in quite an attractive, enticing way. I think it is pretty reprehensible.”
He said the company was actively lobbying for further regulation on BNPL services.
Gregory said Chrysalis maintained strict eligibility criteria for borrowers. “We do not want any patients falling into any unmanageable situations of debt and obviously situations are going to arise.”
Klarna said that unlike its short-term, interest-free BNPL products, its higher-value interest-bearing loans were regulated by the Financial Conduct Authority. “We have argued strongly in favour of regulation to raise standards across the industry and protect consumers,” the company added.
Clearpay said BNPL was a “trusted, everyday payment solution” for consumers who want to spread payments without the burden of high interest rates and the risk of revolving debt.
