Established practice

Your costs are rising faster than your payers will allow you to recover

Energy, staffing, and supply chain inflation is compressing margins from one side while insurers resist rate increases and self-pay patients resist higher fees from the other. Most hospitals are absorbing losses they cannot sustain.

steps: 7; steps
to start: 2 to 3 weeks; to start

The short answer

Costs rose sharply after 2022 while insurer tariffs and self-pay prices lagged. The way through is to know your cost per case by procedure and payer, then act on both sides at once: take cost out where it is controllable (agency, consumables, energy, underused sessions) and recover price where you have evidence (insurer renegotiation and self-pay price reviews). Doing only one side rarely closes the gap.

7 steps

Do it yourself: step by step

0 of 7 done

Compare your cost base now with three years ago by line: pay, agency, consumables and implants, energy, rent and rates, IT. Show the change in pounds and per case.
Time
2 to 3 weeks
Typical cost
Staff time only
Who does it
Finance director
Done when: A one-page bridge showing where costs grew most.
Check contract end dates, decide with a broker between a set-price term contract and flexible purchasing, and review out-of-hours theatre ventilation settings where your estates engineer confirms it is safe. NHS Estates Technical Bulletin 2026/1 encourages overnight and weekend theatre ventilation setback and switch-off, with governance and annual verification.
Time
2 to 4 months
Typical cost
Broker fees vary
Who does it
Estates manager with finance
Done when: Energy contract strategy agreed and out-of-hours settings reviewed.

This problem is Solvable.

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Cost bridge and margin review table

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Table

Cost bridge and margin review

1. Cost bridge

Cost line	3 years ago (£)	Last 12 months (£)	Change (£)	Change %	Per case then	Per case now	Controllable?	Action owner
Employed pay							Partly
Agency and bank							Yes
Implants							Yes
Other consumables							Yes
Drugs							Partly
Energy							Partly
Rent and rates							No
IT and systems							Partly
Total

2. Margin by procedure and payer

Procedure	Payer	Price or tariff	Cost per case	Margin per case
[procedure]	Bupa	£	£	£
[procedure]	AXA Health	£	£	£
[procedure]	Self-pay	£	£	£
[procedure]	NHS	£	£	£

3. Target Margin improvement target this year: [£] From cost: [£] From price: [£]

Avoid these

Common mistakes

Cutting patient-facing services before measuring where costs grew.
Asking insurers for a blanket uplift without procedure-level costing.
Treating agency spend as unavoidable.
Switching consumables without surgeon agreement.
Looking at total margin only, so loss-making procedure and payer combinations stay hidden.

Free personal check

Done by Paul Robinson, not software

Give me three numbers and I'll show you how far your prices have fallen behind your costs

What I need from you

Cost growth since 2022 (%)
Average insurer tariff increase since 2022 (%)
Average self-pay price increase since 2022 (%)

What you get

The margin you have lost per year
Where cost and price recovery are most likely
The three moves to make first

Within 2 working days

No sign-in, no sales call. I read every request myself and reply on WhatsApp.

Free tools

Check where you stand

Your illustrative estimate

£656,500

Solvable estimate. Rounded to the nearest £500. Updates as you type.

Total cost base

Starting figure £25,000,000 (from £25m). Change it to match your practice.

Cost growth since last price review

Starting figure 15%. Change it to match your practice.

Price growth over the same period

Starting figure 8%. Change it to match your practice.

Share recoverable through cost and price actions

Starting figure 37.5% (midpoint of 25% to 50% (all Solvable estimates)). Change it to match your practice.

Formula

annual margin recoverable = total cost base x (cost growth rate minus price growth rate) x share recoverable

Variables and defaults

total cost base: £25m
cost growth since last price review: 15%
price growth over the same period: 8%
share recoverable through cost and price actions: 25% to 50% (all Solvable estimates)

Defaults only. Change them in the calculator to use your own numbers.

Assumptions and defaults

total cost base = £25m
cost growth since last price review = 15%
price growth over the same period = 8%
share recoverable through cost and price actions = 25% to 50% (all Solvable estimates)

£25m x 7% = about £1.75m a year of margin erosion, shown as context only, because some of it (rent, rates, national pay awards) no step can reverse. With 25% to 50% recoverable, about £440,000 to £875,000 a year (Solvable estimate).

Benchmarks

CPI inflation was 11.1% in October 2022, the highest in about 40 years
General cost pressure since many tariffs and prices were last set
Source: Office for National Statistics

Independent private hospitals are grappling with significant increases in operational costs, including energy, labor, and supply chain expenses, driven by high inflation and workforce shortages. Simultaneously, the market's capacity to absorb these increased costs through higher prices is limited, with private medical insurers (PMI) seeking value for money and self-pay patients becoming more price-sensitive due to the cost of living crisis.

Structural factors include a reliance on global supply chains for medical equipment and pharmaceuticals, making costs susceptible to international inflation and currency fluctuations.
Behavioural aspects involve a reluctance to pass on full cost increases to patients or insurers due to competitive pressures and patient price sensitivity.
Systemic issues include workforce shortages driving up labour costs, particularly for agency staff, and the inherent difficulty in achieving significant economies of scale in a fragmented private healthcare market.

No verified UK data available

Delayed investment in new medical technology or facility upgrades
Increased administrative burden from managing complex pricing structures and cost-cutting initiatives
Reduced capital investment in new technology and infrastructure
Erosion of cash reserves and increased borrowing costs
Perception of declining value for money among patients and insurers
Negative impact on brand image due to visible cost-cutting measures

What it looks like in practice

Delayed investment in new medical technology or facility upgrades
Increased reliance on temporary or agency staff to manage workforce gaps, leading to higher labour costs
Pressure to reduce non-clinical services or amenities to cut costs, potentially impacting patient experience
Strained negotiations with Private Medical Insurance (PMI) providers and increased scrutiny on pricing for self-pay patients

Paul Robinson

14 years in UK private healthcare

I solve this one for hospitals

Want a hand? I'll look at your situation and tell you the three things I'd tackle first.

A few quick questions, about two minutes. I read every one myself and usually reply the same day.

No sales call unless you ask for one. Just a straight answer from me.

I reply personally, usually the same day.

Questions

Frequently asked questions

Where should we start?

With the cost bridge. It shows which lines grew most and whether they are controllable.

Can we pass costs on to insurers?

Partly, through procedure-level renegotiation with evidence and time. A general request rarely works.

Should we raise self-pay prices?

Where you are below market for the same package or losing money per case. Check competitor prices first.

Is it worth costing every procedure?

Start with the top 20 by revenue. They usually cover most of your activity.

What about stopping some procedures?

If a procedure loses money with every payer and cannot be re-priced, stopping it can be the right decision.

Last reviewed: 30 October 2026

Sources

Office for National Statistics

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The short answer

Do it yourself: step by step

1Build a cost bridge2 to 3 weeks · Staff time only

2Cost your top procedures4 to 8 weeks · Staff time, or £5,000 to £20,000 for a costing supplier (Solvable estimate)

3Cut agency first3 to 6 months · Staff time only

4Tackle consumables and implants3 to 6 months · Staff time or share of savings

5Review energy and estates2 to 4 months · Broker fees vary

6Recover price3 to 9 months · Staff time

7Report monthly2 hours a month · None