NHS consultants, whose rates for private work are the highest in the world, are beginning to see their fees squeezed. And for private patients there is the potential for the cost of treatment to fall, at least in real terms, as the government begins to create a genuine market in healthcare supply. In the longer term, however, the market could threaten the business of Bupa, Axa PPP, Norwich Union, and the other private medical insurers. According to David Mobbs, chief executive of Nuffield Hospitals, and Tim Elsigood, chief executive of Capio – two of Britain’s big four private hospital suppliers – the market is being transformed by the arrival of the NHS as a bulk purchaser of care from the private sector. The change has come in two stages. The first was the government’s decision to bring in overseas suppliers to compete for chains of fast-track treatment centres to provide 250,000 operations a year for NHS patients. When the deals were announced, almost all the preferred bidders came from overseas – from South Africa, Canada and the US – on the grounds of price and innovation. Home-grown operators, which include Bupa and General Healthcare’s BMI hospitals, lost out. The second breakthrough came last month, when the private sector reacted to the threat to their business. Capio, which is Swedish owned, and Nuffield won the deal to provide 25,000 operations this year by offering prices that neither they nor the NHS would disclose in detail. However, John Reid, Health Secretary, said they were ‘on a par with equivalent NHS prices’ while Capio described them as ‘very, very close to NHS costs’. That compares with the premium of 20 per cent to 46 per cent over NHS costs that the service has been paying for the 60,000 to 80,000 procedures a year that it has bought from UK private hospitals. The competition is starting to make private treatment affordable for the NHS ?