Healthcare competition ruling due
Tuesday 27th August 2013, 3:10PM BST.
Plans to tackle stifled competition among private hospital groups will be revealed tomorrow amid concern that prices are being driven higher for patients.
The Competition Commission will rule on boosting diversity in the £5.5 billion sector – and could force the break-up of dominant p rivate healthcare firms.
Insurers such as Bupa – which pay for the bulk of private treatment – believe hospitals and doctors are making excessive profits and pushing up prices, while new players are being blocked from entering the market, heaping more pressure on the NHS.
They are calling for the commission to take action to improve competition, possibly including the break-up of large hospital groups that dominate the sector.
The Office of Fair Trading (OFT) referred the industry to the commission for an in-depth investigation last year after it found that it “could work better for patients”. It warned reduced choice was risking higher prices but lower quality.
The OFT found that there was a lack of clear information and pricing, making it hard for insurers and patients to work out if they are getting value for money.
The watchdog also found some parts of the country, such as Edinburgh, Exeter and Hull, only had one private hospital or healthcare facility.
It warned over high barriers to entry in the sector, with some healthcare groups demanding to be consulted if an insurance company lists a new player as a provider, or pushing up prices to squeeze out new rivals.
Private healthcare firms also paid incentives to consultants which encouraged them to treat all their patients in one hospital, possibly discouraging them from using new rivals’ facilities.
Britain’s ageing and expanding population means private healthcare is increasingly important to the economy, the OFT said, with the NHS relying more heavily on private companies for patient treatment.
General Healthcare Group (GHG), Nuffield Health Hospitals, Ramsay Health Care UK, Spire Healthcare and HCA account for 70% of the market, the OFT said.
Almost 80% of UK patients using privately-funded healthcare services are funded by insurance – typically provided by their employer. The other 20% pay out of their own pockets.
The NHS is the second- largest buyer of private healthcare behind insurers.
Insurance provider Bupa – which sold its hospitals to private equity in 2007 – has long called for an inquiry, saying the cost of private healthcare was becoming unsustainable.
But hospital group HCA has said that major insurers are dictating the delivery of clinical services and limiting patient choice.
Insurance industry sources argue that the market appears to be in a slow decline, with the proportion of people covered by private medical insurance at 11%, the lowest level in two decades, with high costs deterring many of those who would like to be covered.
They say this has been spurred by the costs charged by hospitals more than doubling and those for doctors rising 65%, caused by weak competition in the market.
As hospital groups have built up their size and increased their negotiating power, the commission could take similar measures to those used in the airport sector when it ordered the break-up of operator BAA, it is argued.
“That sort of action would go a long way to increasing the ability of the insurance companies to negotiate good prices,” a source said.
Other remedies could include recommending NHS trusts do not work with dominant private healthcare firms in particular areas, plus banning big firms from squeezing out new players by hiking prices.
The commission could also force private healthcare firms to give clearer information on prices.
In a submission to the commission probe, the HCA sought to turn attention to the behaviour of insurers, which it said were “increasingly dictating the way in which clinical services are delivered”.
It argued that their strategy for managing care was “severely limiting patient choice”.
The company said the OFT had given little attention to the concentration of 90% of the private medical insurance sector among a handful of providers and that there was a “lack of effective competition”.
HCA said major insurers had a “significant negotiating advantage” since new private healthcare facilities needed to be included on networks controlled by them to be financially viable.
It also said insurers were controlling patient referrals by making their own choice of consultant used for treatment rather than leaving the decision with GPs.
Insurers had also imposed “arbitrary” de-listing on consultants, as well as pricing caps, and proscriptive requirements about patient care including the length of hospital stay, HCA added.
The commission’s provisional findings and remedies will be followed by a final report which could be published in the spring.