The private healthcare market ‘may not be working well for consumers', the Office of Fair Trading (OFT) has said.
It has called for more transparent information to be given to patients and their doctors about the quality and price of care they may undergo.
The OFT criticised consultant-provider relationships and suggested there were local monopolies of providers that could artificially raise private medical insurance (PMI) costs.
The findings are preliminary ones as part of the OFT's review of the private healthcare market.
Its key concern was ‘the lack of easily comparable information on the quality and price of different providers and consultants'.
The OFT report said: ‘From the evidence received to date, there appears to be a lack of easily comparable information that patients and/or their GPs can use to judge the quality and prices of different providers and consultants working in private practice.
‘Specifically, the OFT is concerned that a lack of comparable information may dampen demand-side competition as it reinforces patients' preferences to delegate wholly their decision-making to GPs rather than exercising more informed choices over their treatment options.
‘This lack of comparable information to support consumer choice may mean that both providers and consultants do not compete effectively on price or quality.
'It may also create a competitive dynamic where competition between providers is primarily based on attracting consultants to their facilities, for example, through the use of a variety of financial incentives,' it added.
Significantly for PMI intermediaries and providers, the Office's comments suggest hospital networks may be using their monopoly positions in certain areas to artificially increase costs to insurers.
It noted that people were keen to access private healthcare close to their homes and due to economies of scale, this often meant ‘local monopolies exist in certain areas that can only sustain one private healthcare hospital, so called solus hospitals'.
As a result, the OFT said it was ‘concerned that providers can use areas where they have local market power to distort or restrict competition in the provision of private healthcare.
‘For example, providers may use 'solus' hospitals to leverage price increases to PMIs across its network of hospitals; providers may use 'solus' hospitals to leverage recognition of their other hospitals by PMIs; or providers may use their local market power to increase barriers to entry.'
And concerns were raised about the relationship between private hospitals and consultants.
Firstly, the absence of transparent and comparable price and quality information may mean consultants' incentives increase the cost of private healthcare without driving improvements in quality.
Secondly, that consultant incentives may prevent new providers from entering by distorting referral patterns and in some cases result in them directing a significant proportion of their patients to one facility.
So far the OFT has surveyed 400 GPs and 400 consultants and conducted in-depth interviews with 40 patients who had recently received, or are currently seeking private treatment.
It also received a large number of submissions from a range of interested parties including providers, insurance (PMI) providers, consultants, medical professionals, professional bodies and individual consumers.
The OFT will continue its review by hosting two roundtables in early September with a range of stakeholders to discuss how to address the concerns regarding information asymmetry in relation to providers and consultants.
The full report is expected before the new year.
