Buy now, pay later medical loans on rise as desperate patients go private amid NHS backlogs | Private healthcare

Patients who face long NHS waiting lists and cannot afford to go private are being encouraged to sign up for “buy now, pay later” (BNPL) deals and other personal loans to cover the costs of basic healthcare.

The deals allow people to spread payments over months or years in exchange for rapid access to treatments and tests, including MRI scans, X-rays and routine surgery.

In some cases, firms appear to be aiming their marketing at those desperate for help and low on cash, offering “quick and easy” approval with “immediate” access to funding, the Observer has found.

One diagnostics firm, MRI Plus, promotes BNPL plans for MRI scans. “Why wait in pain? Slash your waiting time for treatment on the NHS … Book now and pay later with Klarna,” it said in a recent newspaper ad. Patients can delay payment for 30 days or split it into three interest-free instalments.

Chrysalis Finance, which works with major private hospital groups including Circle and Nuffield, offers “quick and easy” personal medical loans from £1,000 to £25,000. The BNPL alternative lets people spread payments for services, such as hip replacements, over a longer period – up to five years – with yearly interest charged at 14.9% between 24 and 60 months, and zero-interest options for shorter payment plans.

On social media, Chrysalis says its “simple” process means people can be approved “within seconds”, describing it as being “as easy as 123”. Its other posts appear to be aimed at people who cannot afford treatment upfront. “Have you been waiting for an operation for a long time but do not have the funds lying around?” a recent Twitter post says. Another features a photo of a woman smiling, captioned: “That feeling when you get an almost instant decision for your loan…”

Scan.com, which offers MRIs, CT scans, ultrasounds and X-rays at 150 centres nationally, is offering an interest-free BNPL option via PayPal. Dr Lizzie Tuckey, managing director, said about 5% of customers used payment plans to buy scans, which started at £350. The company also sees increases in purchasing trends near pay day. “We’ve seen more dramatic changes recently because people are feeling the mortgage pressure, and the cost of living pressures,” she said.

The companies say the loans and BNPL plans are ethical, interest-free options that help people manage their finances. Such deals have long been offered in-house by private hospitals for treatment such as cosmetic surgery and dental work, and BNPL is available in many other retail sectors.

But debt campaigners and health experts are concerned that NHS backlogs could force people to use the deals in desperation.

David Rowland, director of the Centre for Health and the Public Interest thinktank, said: “Policymakers need to be aware of how the underfunding of the NHS is pushing unsustainable healthcare costs back onto individuals, potentially increasing their indebtedness. It’s a slippery slope,” he said.

Research by the StepChange debt charity has found that nearly half of people with a BNPL loan had trouble keeping up with household bills and credit repayments, while 17% met the charity’s definition of being in severe financial difficulty.

In some cases, customers face late-payment fees and risk damaging their credit rating or being referred to debt collectors. While traditional loans are regulated by the Financial Conduct Authority, interest-free loans repaid in less than 12 months – including BNPL products – are exempt.

For patients, having access to credit amid the current NHS backlogs can be the difference between enduring months of pain and angst or not.

NHS England figures show that at the end of May 2023, a record 7.47 million people were waiting to start routine hospital treatment. More than 409,000 had been waiting six weeks or more for key diagnostic tests.

Anusha Stribbling, 25, a charity worker from Peckham, south London, paid £760 for two scans after suffering abdominal pain and facing challenges accessing diagnostic tests on the NHS. She said the results helped her GP rule out other conditions and led to her being diagnosed with hypermobility.

Stribbling said financial pressures meant she used Klarna to pay for essentials at the time of the scans, and that she would use credit to pay for treatment in the future “without question”. “A lot of people are doing it out of desperation,” she said.

Ian Keys, 70, from Shepton Mallet, Somerset, said he had “never gone private before”, but that “severe pain” and NHS delays led him to take out a bank loan for an £11,000 hip operation in November 2022. “If with a little bit of cutting back elsewhere you can pay the costs of it, it’s a no-brainer in those circumstances,” he said.

Klarna said BNPL was an interest-free credit option that was a fairer, low-cost alternative to credit cards. It said new lending decisions were made before each transaction and that fewer than 1% of customers did not pay back the money they owed, with restrictions put on the accounts of those who missed payments “to stop debt from building up”.

“If the availability of Klarna allows someone who can afford it to spread the cost of an important medical scan over three months, which identifies a condition early on, then that’s a good thing,” a spokesman said.

MRI Plus said it offered low-cost scans that helped people get “timely access” to potentially life-saving care. It added that the 4% of customers who used its BNPL option had all passed affordability checks and that it was committed to their “financial wellbeing”.

Chrysalis said it did not offer any unregulated BNPL products and was a “responsible lender” that only approved loans to “people who can demonstrably afford the monthly repayments”. “Every application … undergoes robust checks for creditworthiness and affordability … in the same way as with other large-scale regulated lenders. This enables an often-immediate decision,” a spokesperson said. The firm said social media posts claiming its loans were “quick and easy” were accurate and that the posts had only been shared on its own feeds, where people could choose to engage with them.

PayPal said its “pay in three” deals were interest-free loans “designed to offer customers more choice and flexibility”, which carried no late fees or other charges. “We believe in responsible lending … and encourage people to not purchase items they cannot afford,” a spokeswoman said.

The Department of Health and Social Care said it was working with the independent sector to expand diagnostic capacity across the country, offering tests and scans for patients “quickly, closer to home, and free at the point of need”.

The promotion of finance options for healthcare comes amid a sharp rise in people self-funding private treatment in the UK.

David Furness, director of policy at the Independent Healthcare Providers Network, said “self-pay grew really considerably after Covid”, from about 50,000 admissions per quarter to 70,000. He said the sector was “seeing growth in all areas”, from “joint replacements, cataracts and cancer care” to diagnostics.

Jim Easton, chief executive of the Practice Plus group, said about half of patients using its services were people who hadn’t gone private before. “They are people with middle-income jobs who are worried that they or their mum needs a hip replacement,” he said. He described the offer of payment plans as an “ethical” financial tool that helped people spread the costs “they would’ve paid anyway”. “We want to make sure we’re not encouraging people into debt,” he said.