The Competition and Markets Authority (CMA) is reducing some of its demands on private healthcare providers and practitioners to address lack of competition and consumer detriment issues in the market.
However it will still require greater transparency and clarity from healthcare providers and clinicians on the cost and quality of treatment and will ban or restrict certain benefits and incentives used by hospital groups to encourage doctors to use their facilities.
It will also introduce a review process to the management and operation of NHS private patient units (PPUs) by private hospital groups.
The two year long review of the private healthcare market was initiated by the Office of Fair Trading which then referred the market to the stronger Competition Commission (CC).
In August it found that a lack of competition in the market had cost policyholders at least £173m a year between 2009 and 2012.
In January the CC published its provisional remedies which included the requirement of two hospital groups to sell off nine hospitals – two by HCA in central London and seven by BMI Healthcare around the country.
The CMA (which came into full operation yesterday following the merger of the OFT and CC) has now dropped all demands on BMI Healthcare and added another option for HCA – to sell either the London Bridge and the Princess Grace hospitals or the Wellington hospital including the Platinum Medical Centre.
CMA private healthcare inquiry group chairman Roger Witcomb said: “These are measures which will bring changes across the country. The sale of HCA hospitals will significantly increase competition in central London, in particular by allowing the insurers to offer corporates and individual policyholders a comprehensive alternative to HCA.
“We’re also introducing measures which will improve competition across the whole market and ensure private patients get a better deal. Greater information on the performance of hospital operators and of consultants as well as consultants’ fees will allow patients to make far better informed choices about what they are paying for, when deciding which hospital and consultant to choose for their treatment. A more transparent market with patients actively making choices will drive hospital operators to compete on the things that matter to patients.
“Equally we are going to restrict incentive schemes that encourage patient referrals to particular private hospitals – again so that the advice given by consultants is driven solely by the merits of individual facilities,” he added.
Whitcomb explained that HCA's market dominant position in central London had allowed it to charge far higher rates than other providers, however he said this position was not so obvious outside the capital.
“Outside central London the effect of weak local competition on prices charged nationally to insurers is less clear. The volume of evidence was huge and we carried out a very detailed analysis, but it was ultimately not possible to extract a consistent picture from it,” he said.
“Having considered the analysis carried out after provisional findings, two members of the Inquiry Group decided they could no longer be confident that local concentration outside central London had led to higher prices for insured patients – and so the Inquiry Group has not ordered the sale of hospitals outside central London.
“Opening up this market to greater competition is not easy because there are high barriers to entry. High costs and long lead times mean that new competing facilities are not going to spring up easily. What we have done is to tackle some of the other barriers which can prevent a new operator getting a foothold in a particular area and to focus on measures which will improve things for patients in all areas of the country,” he added.
The CMA’s remedies package in summary is:
- a restriction or ban on certain benefits and incentive schemes provided by private hospital operators to clinicians. Greater transparency is a key requirement together with banning or restricting those benefits and incentive schemes which are likely to have the greatest influence on clinicians advising patients,
- a combination of measures to improve the public availability of information on consultant fees and of information on the performance of consultants and private hospitals,
- the divestiture by HCA of either the London Bridge and the Princess Grace hospitals or the Wellington hospital including PMC,
- measures to ensure that arrangements between NHS trusts and private hospital operators to operate or manage a PPU will be capable of review by the CMA. The CMA will be able to prohibit arrangements which it decides substantially lessen competition in the relevant local area.
