Population health trends: what they mean for UK investors

CF’s analysis of linked NHS records shows that 25% of England’s population accounts for 82% of healthcare cost, and that concentration is increasing.

The fastest-growing groups, people with multiple conditions, frailty or at the end of life, absorbed nearly three quarters of recent NHS acute and community spending growth.

Much of the new money is going into elective and outpatient care, and clearing the waiting list needs far more outpatient activity than current plans assume, leaving a large role for the private sector.

Growing demand is necessary for an investment case but rarely decisive: policy direction, who pays, margin and the ability to hold a position often decides how an investment performs

25% of the population accounts for 82% of healthcare cost. Rising demand is a necessary part of any healthcare investment case, but never enough on its own. We set out where need is concentrating, where NHS money has followed it, and which of those markets hold up against four further tests.

Most analysis of private sector healthcare starts with revenue or spend, and leaves the patient implicit in the numbers. Starting from population and patient needs is a more reliable guide to demand. Linked, patient-level data covering the whole of England shows underlying demand across every health condition, how much of it is being met, and how it turns into activity and cost. It reveals a market that is smaller, more concentrated and more specific than spend-based forecasts suggest.

We test the attractiveness of a private healthcare market against five drivers:

Demand is the first of the five and the one that gets most attention in an investment case. It is necessary, but the other four more often decide how an investment performs.

Healthcare cost is concentrated in 25% of the population

In 2025/26, 25% of the population accounted for 82% of healthcare cost and 90% of hospital bed days. Narrow it further and the concentration is sharper still: people with multimorbidity, frailty and dementia, cancer or in the last year of life are 16% of people and 71% of cost. The generally healthy are three quarters of the population and 18% of the cost.

So the healthcare market is a defined group of people rather than the whole population. These are people we can identify and whose costs we already know. Their numbers are also rising, and that is unlikely to change.

Source: CF Health Strata© and National Cost Collection, 2025/26, CF analysis. HealthStrata© Carnall Farrar Ltd all rights reserved. May not be reproduced or distributed without express written consent.

The high-cost segments have already grown

We use the linked data to track how the population moves between segments over time, on two broadly irreversible factors: ageing and the acquisition of health conditions. In the three years to 2025/26, the generally healthy share of the population fell four percentage points, from 79% to 75%.

The multimorbidity segment, now 6.8 million people, grew 28%. The single long-term condition segment, now 4.6 million people, grew 23%. Between them they added 2.5 million people in three years.

Where NHS spending growth has gone

Total NHS funding rose £21bn between 2022/23 and 2025/26, from £182bn to £203bn. Of that, £15.2bn went into acute and community care, taking it from £100.2bn to £115.4bn in constant prices. The 2025/26 A&E and community spend is estimated from historic trend, as full-year data was not yet available.

Three segments absorbed £11.1bn of the £15.2bn, or 73%: multimorbidity, frailty and dementia, and end of life. Add cancer and the four segments take £12.5bn, 82% of the increase. That is around 14% of the population absorbing the great majority of new money. The group growing fastest is also taking a rising share of spend, so the concentration is tightening.

Most of the growth is in the work the private sector already does

Of the £15.2bn increase, £7.2bn went into elective inpatient, daycase and outpatient care: elective inpatient up 9% (£0.9bn), elective daycase up 20% (£2.7bn) and outpatient up 22% (£3.6bn). NHS spending is rising fastest in the settings where independent providers already carry significant volume.

At specialty level, elective growth is concentrated. Eight specialties account for about 65% of the increase in elective cost, led by trauma and orthopaedics at 22% and gastroenterology at 10%, alongside general surgery, cardiac, ophthalmology, urology, gynaecology and clinical haematology. The remaining 35% is spread across around 150 other specialties. Outpatient growth is more evenly spread. Each specialty has grown roughly in line with its size, so no small group of specialties dominates the increase. That makes outpatients a capacity problem across the whole system, rather than a few pathways under strain.

The waiting list solution does not work without the private sector

This growth has two sources. Need is rising, as more of the population moves into segments with long-term conditions. And the government has committed to the constitutional standard that 92% of people should have their hospital referral resolved within 18 weeks, which makes the NHS a willing payer for the capacity to get there, and creates room for a margin in providing it.

Progress on the list is slow. It has fallen 3.6% from its 2023 peak of 7.68 million to 7.4 million, and 40% of it sits in six specialties: trauma and orthopaedics, ENT, ophthalmology, gynaecology, dermatology and general surgery.

The common assumption is that people on the waiting list are waiting for an operation. Four in five open pathways need a clinic appointment rather than an admission, and the average pathway needs 1.3 to 1.7 appointments to resolve, not one. Per capita outpatient activity has grown 4% a year for a decade, as referral to specialists for advice becomes routine. The list needs far more activity than the policy assumes.

Source: NHSE, CF Analysis.

Labour’s 2024 manifesto promised 40,000 more operations, scans and appointments a week, 2 million a year, as a first step to cutting waiting times, and the Prime Minister restated it when launching the Elective Reform Plan (Prime Minister’s Office, 2025). The commitment is clear, but the maths is wrong. It implies one extra unit of activity for each of the almost 8 million people on the list when the pledge was made: 40,000 a week for 50 weeks is 2 million a year, or 8 million over four years. Clearing the list takes more than 40,000 extra appointments a week for four years. Our analysis puts the requirement at 52,000 to 68,000 outpatient appointments a week, 30% to 70% more than the pledge, plus around 8,000 operations a week and the diagnostics behind them.

That leaves a large role for independent providers. They already deliver more than £2bn of NHS waiting-list volume, and patients are increasingly choosing to go round the queue altogether, reflected in £7bn of private hospital activity and £6bn of private outpatient clinics (LaingBuisson, 2026). Meeting the commitment means spending more with the private sector, either directly on care or indirectly on transforming outpatient and elective pathways to raise productivity.

The population picture tells us where need is growing. It does not tell us which markets are worth entering. The examples that follow run from markets where all five drivers line up to markets where demand is strong and very little else is. Each has growing, unmet need. The differences between them come from policy, payment, margin and the ability to hold a position, which is where most of the investment judgement lies.

Diagnostics: unmet need, clear policy and entry by partnership

Diagnostics sit inside the elective pathway and are contracted separately for outpatients and direct access from emergency care. The capacity gap is long-standing. The UK has had fewer CT scanners per million people than Germany, France, Australia or Canada for 25 years, and the gap is wide: against the UK’s 9.9 scanners per million, Canada has around 50% more, France and Spain more than double, Germany and Switzerland roughly four times, and Australia more than seven times.

Policy has begun to catch up, slowly. DHSC expects 35% of 2028/29 diagnostic capacity to come from independent providers, with £237m committed behind 35 new community diagnostic centres, and around half of PET-CT already independently delivered with the next round live now.

Here need, policy and payer are aligned. A position, once established, is sustained by real estate, capital, referral networks and contracts. But capital on its own buys a scanner and no patients. The patients come through NHS contracts and referral routes, and an investor without either will struggle to fill the capacity it has paid for.

Source: OECD Health Statistics, medical technology availability, extracted September 2026; Eurostat for 2024 (Germany, France, Spain, Switzerland).

Dementia: a safe demand line and a balance sheet problem

Dementia care is funded differently again. Prevalence in the over-65 population rises from around 1 million today to 1.4 million by 2040, an increase of 42%. Residential and domiciliary need rise in step, requiring around 61,000 more domiciliary care recipients and 75,000 more residential care places.

For the NHS, this 1% to 2% of the population occupies 13% of beds. But most of the bill falls outside the NHS, in domiciliary care, residential care and unpaid care, funded largely by families and local authorities. There is almost no policy risk in the demand line, which is rare: need rises with age whatever the NHS decides, unlike mental health beds or ADHD assessment, covered below, where a policy change moved the market. The risk sits instead in how the business is financed.

A care home is a 30-year property asset earning thin margins, which depend on fees set largely by local authorities. A typical private equity owner holds for around five years and needs to sell at a higher value, which pushes owners towards structures that lift returns early. The most common is sale-and-leaseback: the owner sells the property, returns the cash to investors and rents the home back, with rents that rise each year. If fees fail to keep pace with wages and other costs, the operator is left paying a rising rent out of a shrinking margin. Southern Cross, then the UK’s largest care home operator, collapsed in 2011 for exactly this reason. For investors, the question is less whether demand will be there than whether the capital structure can survive a decade of fee pressure given pressure on social care. Where this intersects with policy is the amount of attention now being focused on double digit margins from PE ownership—and what it raises is the questions of

a) how could enhanced domiciliary care delay the need for entry to residential care

b) are there better natural owners of long term assets more compatible with the funding envelope

c) are there opportunities for mixed models with enhanced day care provision or private provision on top of basic state funded care?

What is driving the need

Because the data is linked at patient level, we can look underneath the segments at the conditions driving them. Cardiovascular, kidney and metabolic disease shows up in every segment of ill health, from 39% of people with a single long-term condition to 92% of those in the frailty and dementia and end of life segments. Musculoskeletal disease follows at around half that level, with obesity a common cause of both. Common mental health conditions are significant but less consistent across segments, peaking at 54% among people with severe mental illness.

For investors, two things follow. First, the conditions behind cost growth are few and well understood. Cardiovascular, kidney and metabolic disease runs through every high-cost segment, and MSK is the main driver of demand in trauma and orthopaedics, the single largest share of elective cost growth. A service that addresses these conditions is serving the part of the population that is growing fastest.

Second, the people driving cost rarely have just one condition. Most of the high-cost segments combine cardiovascular and metabolic disease with MSK, mental health or both. A service built around a single condition or a single episode will reach only part of that need. The offers most likely to hold a margin over time are those that can manage the whole patient across their conditions.

Obesity is the condition behind the cost

Obesity is the single largest driver underneath that pattern, and recorded prevalence has risen 45% in three years, from 2 million to 2.9 million people in NHS records. Our analysis puts the relative risk for people with obesity at 2.7 times for osteoarthritis, which is the main driver of musculoskeletal demand, 2.5 times for type 2 diabetes and 2.1 times for chronic kidney disease.

It also drives activity directly: three times the outpatient attendances and more than four times the bed days per person. The NHS rollout of GLP-1 medicines is rationed, and the private sector is providing it with substantial wraparound support and engagement services. With patent protection lost by 2032 and a deep pharmaceutical pipeline behind it, treatment options and prices are likely to change significantly over the next decade. In the meantime, obesity accounts for a large and growing share of healthcare activity.

Mental health beds and ADHD: when policy changes the market

The markets above make the case, with caveats attached. Two are harder, and both show what happens when need is rising, but the NHS has changed what it is willing to pay for.

2. Mental health inpatient care

Need is rising. Mental health attendances at A&E per head are up 16% over six years, a little over 2% a year. But the model of care is changing deliberately. Urgent referrals to crisis teams rose 23% in two years, and admissions to beds have fallen 50%. Since 2021, discharges from A&E to independent mental health beds are down 44% and to NHS mental health beds down 38%. This is a clear policy shift: the NHS is actively trying to remove the need for very expensive inpatient care, and it is working. Rising need for care is not the same as rising need for beds.

2. ADHD assessment

ADHD shows a sharper version of the same risk: a genuine surge in demand, followed by a policy response. Referrals are up 8.2 times since 2019 and the diagnosis queue is up 25.4 times, from 30,700 people to 780,400. Diagnoses are up 2.6 times, and the wait from diagnosis to treatment has doubled to 30 weeks. If this were over-diagnosis, fewer diagnosed people would go on to treatment. The share in treatment has not moved: 27.9% in 2019 and 27.9% now.

Private share went from 2% to 17.5%, and almost all of it went into assessment, delivered under Right to Choose with no tariff and no barrier to entry. A single payer can change those rules, and it has. The attention has been almost entirely on assessment. Titration, optimisation and lifetime monitoring are roughly eight to ten times the volume of assessment, and remain largely unaddressed, as does any significant digital or pathway innovation.

Five drivers of private healthcare investment

The five drivers do not carry equal weight, and the order matters: demand is the first test, not the deciding one.

CF’s view

Unmet need is strong and specific. The multimorbid and single long-term condition segments have added 2.5 million people in three years, driven by cardiovascular, kidney and metabolic disease, musculoskeletal disease and mental health, with obesity underneath much of it. It translates into elective demand in the services the private sector provides, and the NHS’s ability to meet it is constrained by a waiting list that has fallen only 3.6% and by capacity and productivity limits.
Policy points both ways. The commitment to the 18-week standard is sustained, and so is the capital constraint that will drive the need for private capacity. But policy moved against mental health beds and against ADHD assessment, and it can move again.
Willingness to pay is clear where policy is committed, and is rising among individuals through private medical insurance and self-pay, both to avoid long waits and to improve their own health.
An enduring margin requires more than capacity. It needs a distinctive offer, measurable productivity gains and the use of technology.
An enduring position needs all four to hold at once: demand, a capacity shortage, a distinctive offer, and the trust of whoever is paying, whether that is the NHS, an insurer or the patient.

We recommend testing every case against all five drivers in that order, and being most sceptical where only the first is strong. On that test, elective capacity, outpatient transformation and community diagnostics are the clearest opportunities today. Dementia care has the safest demand line and the hardest financing question. Mental health beds and ADHD assessment show how quickly a single payer can change the economics of a market.

To speak to our team about our Health Investing capabilities, contact us today.

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About the report

This report was prepared by Carnall Farrar’s Health Investing team. It draws on HealthStrata, Carnall Farrar’s population health platform, which uses de-identified, record-level NHS data, held under licence, for 57 million people in England. The data covers hospital, community and diagnostic imaging care over seven years, with each person’s records linked so they can be followed over time.

Costs are based on the National Cost Collection and shown in 2025/26 prices. Figures for 2025/26 A&E and community spend are estimated from historic trends, as full-year data was not available at the time of writing. Other sources, including NHS England, the Department of Health and Social Care, the OECD and LaingBuisson, are noted alongside each exhibit.

About CF

CF is a leading consultancy dedicated to making an enduring impact on health and healthcare. We work with leaders and frontline teams to improve health, transform healthcare, embed life science innovation and boost growth through investment. With unmatched access to UK healthcare data and award-winning data science expertise, our team are a driving force for delivering positive and meaningful change.

About the authors

Ben Richardson

Ben Richardson is a Managing Partner at CF, leading Life Sciences and Data Innovation. With two decades of experience, he has worked with health systems and life sciences companies globally, focusing on strategy, transformation, and development. Ben has contributed to primary care, diabetes, cardiovascular, cancer, mental health, and population health management. Since 2014, he has helped CF become an award-winning healthcare company in management consulting and data services.

Vernon Baxter

Vernon is an Associate Partner at CF, connecting leaders in private equity, healthcare and banking with the team at CF. Vernon brings extensive market intelligence to the team, who advise clients on commercial and operational due diligence, value creation and growth strategy.

Alfie Fielder

Alfie Fielder is a Director at CF, with more than a decade of experience in strategy and transformation across the NHS and social care. He specialises in productivity, system redesign, cost improvement and clinical transformation, and in building the analytical tools that help providers identify and deliver efficiencies. At CF, he works with health investors, providers and national bodies on growth strategy and operational performance.

Ellen Teesdale

Ellen is the Practice Manager for Health Investing, working to expand CF’s work and expertise into the private sector. Ellen manages the health investing practice, working with a diverse range of clients to facilitate the successful integration of innovation into healthcare systems.

Ben Wetherall

Senior data scientist at Carnall Farrar, bringing 6 years of analytical experience to our life sciences and health investing practices. Leading advanced analytics solutions from pharmaceutical forecasting models to population segmentation.