OFT refers private healthcare market to Competition Commission

clock • 2 min read

The Office of Fair Trading has referred the private healthcare market to the Competition Commission (CC) and revealed a move by the FSA, ABI and health insurers to better inform customers.

Many key findings directly impact the private medical insurance (PMI) market, including noting a power bias to hospital networks in certain areas and the hiking of fees for if an insurer proposes to add another hospital network.

The year long investigation has provisionally found a number of features that it felt, individually or in combination, prevented, restricted or distorted competition in the £5bn UK private healthcare market.

As a result of the findings the FSA will work with the ABI and health insurers to make it clearer for patients that they may face extra shortfall payments when there are limits which apply to the amount payable under their insurance policies.

The OFT's decision is provisional, pending an eight week consultation, after which a final verdict will be made.

Its key findings were:

• a lack of easily comparable information available to patients, GPs or health insurance providers on the quality and costs of private healthcare services,

• a limited number of significant private healthcare providers and of larger health insurance providers at a national level, with pockets of particularly high concentration in some local areas where private healthcare providers own the only local hospital or a 'must have' facility. This may give a degree of market power to healthcare providers in these areas, as the larger insurance providers will generally rely on them to be able to provide full national coverage to policyholders.

• A number of features combining to create significant barriers to new competitors entering and being able to offer private patients greater choice. For example, some larger private healthcare providers can impose price rises or set other conditions if an insurer proposes to recognise a new entrant on its network.

It also found private healthcare providers give incentives to consultants, such as loyalty payments for treating patients at a particular facility, which could raise barriers further.

This, it said, may mean that competition between private healthcare providers and between consultants is not as effective as it could be.

In addition, the full costs of treatment may not always be transparent for private patients.

John Fingleton, chief executive of the OFT, said: "Our provisional findings suggest that private patients in the UK don't have access to easily comparable information on quality and costs and that competition is also restricted by barriers to new private healthcare providers entering and being able to offer private patients greater choice.

"It is important that patient demand and choice are able to drive competition and innovation in this market with a view to better value for all patients.

"We have provisionally decided that these significant concerns merit a more in-depth investigation by the Competition Commission," he added.

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