Richard Walsh discusses the latest from the Competition and Markets Authority (CMA) reforms on private hospitals and healthcare ahead of the January tribunals.
There has been widespread coverage that the CMA has "got its sums wrong" on forcing HCA to sell London hospitals and some have said that this will now not happen at all.
Actually the situation is much more complex and uncertain at this stage. In fact three appeals have been made against the CMA to the Competition Appeal Tribunal (CAT).The hearing for them is scheduled to take place on 19 January 2015.
First the HCA appeal. They argue that the CMA failed to put key aspects of the case for divestiture so that they could respond to them.
In particular that the CMA relied on a new analysis of the prices charged by hospital operators to PMI companies for treating patients which they had not had the chance to see before the final report came out and that the analysis is flawed.
Second they argue that the CMA's conclusion that its London hospitals are subject to weak competitive constraints rests on an arbitrary definition of the geographic market; fails to have regard to relevant competitive constraints; and relies heavily on the untested opinions of competing hospital operators and the PMI sector.
Third, that the CMA's conclusion that there are high barriers to entry and expansion in central London is wrong because it is inconsistent with the CMA's own findings that London is an attractive growth market.
Next up is AXA-PPP who want the CMA to go further in London. They point out that even following divestiture of either the London Bridge and the Princess Grace, or the Wellington and the Portland, HCA would still retain a relatively high market share in oncology, which is a key market which hospital operators and PMI insurers bargain over.
They add that the CMA excluded HCA's existing contract for a private facility at Guy's and St Thomas' NHS Healthcare Trust, scheduled to open in 2016. This new service would further extend HCA's grip on the London market.
Second they take on price setting by anaesthetists where AXA PPP had argued that the collective agreement to set common prices between anaesthetists, who would otherwise be setting prices individually, and who have a persistently high (in several cases, near-monopoly) market share distorts competition. The CMA rejected this view.
Finally we have FIPO, which represents independent consultants. They do not agree that top-up fees enable consumer choice.
The CMA decision was reached on the basis that consumer choice is not restricted by PMI companies sending their policyholders to consultants whose fees are within their caps because consumers can select consultants whose fees are above the caps and pay the top-up fees.
In their view what has actually happened is that the vast majority of consultants charge within the caps and do not offer services requiring top-up fees to be paid because of concerns about being de-registered by PMI companies.
Finally the CMA found that consultant numbers have not fallen. In fact, they say that the number of consultants in private practice has reduced and there was accurate evidence before the CMA to support this and that there is a real possibility that this trend will continue and be driven by the price caps imposed by PMI insurers.
What is more they argue that fee caps have not reduced consumer insurance premiums. The net result is that consumers have less choice of consultants with no financial savings.
So lots of decisions still to be made. But we may be heading to the end-game, subject to judicial reviews.
