CMA: Competition problems still need addressing in private healthcare


The Competition and Markets Authority (CMA) has provisionally found that a lack of price competition is 'harming customers' after re-examining private healthcare in central London.

In its provisional findings report published today, the CMA has said that private hospital group HCA's large market share, combined with high barriers to entry and expansion in central London, result in HCA facing weak competitive constraints.

This has led to to HCA charging higher prices to private medical insurers than would be expected in a well-functioning market, the CMA said. 

This is in addition to the adverse effect on competition for patients who self-pay in central London, which the CMA identified in its original report and which was not quashed by a Competition Appeal Tribunal (CAT) earlier in the year. 

A HCA spokesperson said: "We note the new and alternative remedies in the CMA's provisional findings. Since this process began, over three years ago, London's private healthcare market has continued to grow and diversify.

"Recent investments by the Cleveland Clinic and VPS in large new facilities, and Spire's plans for a new central London hospital by 2018, are yet further signs that London offers an open, accessible and competitive market".

Potential remedies

The CMA is consulting on possible remedies to address the concerns it has identified as follows: 

• the divestment of one or more hospital(s) by HCA
• HCA allowing competitors access to one or more of its hospital(s)
• preventing further expansion by HCA in central London

In April 2012, the Competition Commission, a predecessor body of the Competition and Markets Authority (CMA), started a market investigation into private healthcare. This reported in April 2014, immediately after the establishment of the CMA.

The report concluded that certain features of the markets for privately-funded healthcare services were leading to an adverse effect on competition.

The CMA required HCA, the largest private hospital operator in central London, to sell one or two of its hospitals.

HCA appealed to the Competition Appeal Tribunal which in January 2015 set aside part of the CMA's findings and sent the case back to the CMA to reconsider.

The remittal was made after HCA identified errors in the insured pricing analysis during its appeal, which The CMA revised and consulted on through the publication of a working paper on 11 June 2015.

Following its fresh investigation, The CMA will consult on its provisional findings and potential remedies before publishing a final report in March 2016.

Roger Witcomb, chairman of the Private Healthcare Market Remittal Group, said: "Following a long and thorough re-examination of the issues remitted back to us by the Competition Appeal Tribunal we have provisionally concluded that there is still a competition problem that needs addressing.

"We will now consult widely and listen carefully to all responses to our provisional findings and potential remedies before we publish our final report."

Insurer view 

In a statement, private health insurer AXA PPP healthcare welcomed the CMA's re-investigation saying: "We are encouraged by the direction that the remittal investigation is taking, which is largely consistent with our experience of how the market operates in practice.

"We look forward to continuing to support the work of the Competition and Markets Authority as it brings the remittal investigation to its conclusion in the interests of consumers across the market."

Meanwhile, Alex Perry, general manager, Bupa UK Customer said: "This is good news for our customers, who have been paying for the lack of competition amongst hospitals in Central London. Divestments by HCA are needed to fix this. In fact the CMA need to go further than they are currently suggesting, and we hope to see stronger solutions on the table as the process continues.

"The private health insurance market is not growing and we need action to deliver better value, quality and transparency for customers, to make private healthcare more affordable for more people. Without this, more strain will be put on an already overloaded NHS.

"We will continue to engage positively with the CMA on behalf of our customers and continue to campaign to improve the quality and affordability of private healthcare."

Private healthcare reforms so far: 

The CMA has already brought in a number of changes in the private healthcare market as a result of the initial investigation including:

The appointment of the Private Healthcare Information Network to provide independent information for private patients on healthcare performance and fees as required by the CMA's final report. 
• A crackdown on benefits and incentive schemes provided to referring clinicians by private hospital operators.
• The ability for the CMA to 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




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