CMA private healthcare inquiry expected to rumble on despite positive findings

clock

Health insurers are supporting the latest Competition and Markets Authority provisional findings released following an appeal of its final report into the private healthcare market, despite concerns the inquiry could rumble on for several more years.

The CMA released its provisional findings report on 10 November after healthcare provider HCA appealed some of its original investigation conclusions in January 2015.

The CMA's predecessor, the Competition Commission, found in its final report in April 2014 that certain features of the private healthcare market were leading to adverse effects on competition. The CMA then decided HCA needed to sell up to two of its London hospitals.

In its provisional findings report this month, the CMA said HCA's large market share, combined with barriers to entry and expansion in central London resulted in HCA facing weak competitive constraints and this leads to HCA charging higher prices to private medical insurers than would be expecting in a well-functioning market.

The CMA is now consulting on three remedies before publishing a final report in March 2016.

While broadly welcoming the provisional findings, health insurers have expressed caution over the divestment remedy with some criticising the regulator for not going far enough.

Keith Klintworth, clinical risk director at VitalityHealth, said: "For pricing dominance of hospital groups, I am not optimistic that divestiture proposed by the CMA is going to change the London [private healthcare] market. Whoever owns London Bridge hospital owns the market in London because there is no competitor in the area."

He called the CMA extending its power to review future arrangements between private hospital operators and NHS private patient units "positive" as it would limit the "market dominance" of HCA owning those units.

"An example is London Bridge and over the road is Guys and St Thomas', which HCA administers. That was a failing that needed to be considered," Klintworth said.

Axa PPP commercial director Fergus Craig said the insurer was supportive of the divestment recommendation when it was proposed in the initial final report.

"We did have an appeal to widen [the divestment remedy] because we remain concerned about the concentration of the oncology market," Craig said.

For Bupa UK Customer general manager Alex Perry, the CMA's proposed remedies have not gone far enough.

"This [report] is good for customers, who have been paying for the lack of competition among hospitals in central London. Divestments by HCA is needed to fix this. In fact, the CMA needs to go further than it is currently suggesting, and we hope to see stronger solutions on the table as the process continues," Perry explained.

"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," he said.

Klintworth did not consider the CMA report would change the growth issues in the market. "The market has remained static for around a decade. If the market remains in a race to the bottom to get the cheapest cost and the most cost-effective outcomes without much redirecting of profits into product innovation the market will not change," he said.

"There is scope for the CMA to go further and it has acknowledged that. However, as you go further it drives up more cost in regulation."

Craig added that, despite the CMA setting its final report date as March 2016, it is unlikely the inquiry will be brought to a conclusion in the near future.

"You can bet there will be appeals against that as well. Even if HCA loses its appeal you still have another year's timeframe in which to sell hospitals. It could easily go on for another couple of years," he said.

Over 50s health insurer Saga was supportive of the latest CMA report. "We support any review that ensures fair competition and gives people access to private healthcare at a fair cost whether they access that treatment via health insurance or by choosing to self-fund," senior product manager Kevin McMullan said.

Aviva UK Health told COVER's sister title Post its stance on the CMA's work had not changed since the final report in 2014.

At that time, managing director Mark Noble commented: "The removal of market power, in London, in particular, will drive a much healthier, competitive approach to pricing, while all patients and GPs in the UK will be able to make more informed decisions on medical treatment through the publication of cost and performance data."

 

More on Group Protection

Sophie Money: How to evaluate a wellbeing strategy

Sophie Money: How to evaluate a wellbeing strategy

"Many changes are likely to be longer term"

Sophie Money
clock 15 August 2022 • 3 min read
Financial pressures top stress factor for UK employees

Financial pressures top stress factor for UK employees

New research shows

John Brazier
clock 12 August 2022 • 1 min read
Working women feel responsibility to educate young on menopause

Working women feel responsibility to educate young on menopause

According to MetLife UK research

Hemma Visavadia
clock 11 August 2022 • 2 min read

Highlights

FCA gives three-month Consumer Duty extension for advisers

FCA gives three-month Consumer Duty extension for advisers

Deadline of 31 July 2023

Hemma Visavadia
clock 27 July 2022 • 5 min read
Meet the firm turning professional athletes into protection advisers

Meet the firm turning professional athletes into protection advisers

"You're only ever as good as your last game, but your next game could be your last"

Hemma Visavadia
clock 25 July 2022 • 5 min read
The COVER Review July 2022: Protection & Financial Education, IPAW 2022 and Reviewing 2022 So Far

The COVER Review July 2022: Protection & Financial Education, IPAW 2022 and Reviewing 2022 So Far

Now available for members to watch

John Brazier
clock 20 July 2022 • 1 min read