Richard Walsh looks at the upside of the CC's plans to improve competition in the PMI market.
The Competition Commission (CC) has issued potential remedies to improve competition in the private health sector. We await the results of the consultation on these, but they are broadly good news for PMI customers and very good news for potential new market entrants.
The first area it proposes act on is around weak competition. Typically, this results from a lot of private hospitals in a local area but run by one company, as in London. Or alternatively, only one or two hospitals in a locality (a monopoly or duopoly).
In London, the operator under the spotlight is HCA and the proposal is they should be forced to sell hospitals to other operators. Outside London, the companies involved are BMI and Spire. Once again, the remedy would be to force these operators to sell. In both cases, customers will gain on choice and probably on cost.
Next, the CC looks at competition between the three companies in relation to PMI insurers. Here, their concern is that when insurers switch hospitals, this causes a reduction in activity for one, that hospital group might increase its prices nationally to make up for the drop in revenue.
It is proposing that the hospital operators abandon national pricing and have pricing for each hospital, which could account of cheaper costs in some areas.
Then we move to private patient units in NHS hospitals. These are, of course, another source of competition with private hospitals themselves. Here it is proposed that the private monopoly or duopoly providers in localities will not be allowed to partner with NHS hospitals in the areas they control.
The effect of this will be to encourage new entrants to the market. For hospital consultants the concerns are fee per referral schemes, and longer-term incentives, for example equity participation schemes.
The proposal is that private hospitals would be prohibited from offering cash or other such incentives. It also plans to force consultants to put their guide prices on their websites and to give advance warning to customers of what they will charge.
Finally, we have the issue of the quality of information available about consultants and hospitals. The best source of information is the Dr Foster website which covers the public and private sector.
It includes details of all consultants but (apart from cardiac surgeons) there is no data to compare performance. Interestingly, no mention is made of the NHS Choices website. Probably because it is not much good.
That said, NHS England is committed to produce performance data on consultants in ten specialities and the Commission seize on this to make the recommendation that the same data should be available in Scotland, Wales and Northern Ireland.
It would have been better if it had identified the information consumers and insurers actually need and then require the NHS and private sector to provide it. It is going to require private hospitals to collect the equivalent data that NHS hospitals do now.
Overall, this is a welcome report that should improve choice and transparency.
Richard Walsh is a director and fellow of SAMI Consulting, www.samiconsulting.co.uk
