CMA Finalises Changes For Private Healthcare


The Competition and Markets Authority has published the final report on measures to increase competition in the private healthcare market


Published on 02 April 2014


by Competition and Markets Authority

(WireNews+Co)

London, England

The final report follows a two-year investigation by a Group of independent Panel Members at the Competition Commission (CC), which this week became part of the new Competition and Markets Authority (CMA) (see notes for editors).

The measures include a crackdown on benefits and incentive schemes provided to referring clinicians by private hospital operators and measures to increase the availability of information to patients on both consultant fees and the performance of consultants and private hospitals.

The CMA will also require HCA to sell the London Bridge and Princess Grace hospitals or alternatively the Wellington hospital including the Wellington Hospital Platinum Medical Centre (PMC). The CMA is not requiring any hospital sales outside central London.

The CMA will also be able to review future arrangements where private hospital operators team up with NHS private patient units (PPUs) and ban any that might substantially lessen competition.

The CMA has found that many private hospitals face little competition in local areas across the UK and that there are high barriers to entry. This leads to higher prices for self-pay patients in many local areas – and for both self-pay and insured patients in central London, where HCA, which owns over half of the available overnight bed capacity, charges significantly higher prices to insured patients than its closest competitor.

The CMA has also pointed the finger at incentive schemes, which encourage clinicians including consultants to refer their patients for treatment or tests to particular providers, as a problem which can lead to these referrals being driven by considerations other than quality and price. It also says that the lack of available information on the performance of private hospitals and consultants and on consultant fees means that patients can find it difficult to make informed choices which would drive competition between providers on quality and price.

Chairman of the Private Healthcare Inquiry Group, 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.

"We have found that many private hospitals face weak local competition and it is difficult for new hospitals to enter the market. For self-pay patients, for whom charges are set locally, this can lead to higher prices. Additionally in central London it is clear that HCA’s market power allows it to charge higher prices to insurers, who need to include its hospitals if they are going to provide cover for patients in central London.

"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. 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."

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.

The final report and all other information relating to the investigation is available on the private healthcare market home page. The CMA is required to publish its final report by 3 April 2014.


For more information about this press release visit https://www.gov.uk/government/news/cma-finalises-changes-for-private-healthcare

 


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Posted 2014-04-02 13:54:00