What is this?
The CMA investigation was launched following an Office of Fair Trading (OFT) investigation in April 2012.
Why did they do this?
The original OFT investigation found the following:
- There is a limited choice of hospitals in certain areas of the country
- Groups of specialists, such as anaesthetist consultants (as an example), may reduce price competition in certain areas of the UK
- There are barriers to entry into healthcare provision (e.g. new hospitals trying to enter the market)
- There is a lack of transparency on cost and level of quality to patients, GPs and insurers which restricts competition
What did they find?
The CMA provided their provisional findings in August 2013 and these can be summarised as:
- Hospitals are providing incentives (cash and in kind) for consultants to use their facilities
- There is limited information on performance and fees for hospitals and consultants
- There are over 100 hospitals in the UK that were found to be ‘’of concern’’, where there was little local competition, with London being of a particular concern
- The largest insurers had some bargaining power against hospitals, meaning they got better prices than smaller insurers
- The insurers had bargaining power with consultants, but there was no evidence of harm to competition;
- The insurers need to communicate more clearly what customers are eligible for under their policy terms and conditions and also communicate clearly to customers the criteria in selecting consultants when they are referred to them
The CMA has released the final report in April 2014 and the proposals are:
- HCA Hospitals must sell the London Bridge and Princess Grace hospitals or alternatively the Wellington hospital (including their Platinum Medical Centre). The CMA said the HCA’s market dominance in central London had enabled it to charge far higher rates than other providers
- The CMA has demanded restrictions on agreements under which hospital groups operate private patient units in NHS hospitals
- An end to incentive schemes where consultants are provided incentives by hospitals for referring patients to their facilities
- A requirement for the collection and publication of data on the performance of private hospitals and consultants by a new information body
- Private hospitals must now ensure consultants provide fee information in a standard format as a condition of the consultant using their facilities.
House view and impact on employers
There has been a certain ‘’watering down’’ from the provisional findings to the final recommendations, as there is no demand for the divestment of hospitals outside London, with HCA only being required to sell 2 London hospitals instead of the initial 100 that were of concern. How much of this watering down is a result of lobbying by hospital groups is open to debate. HCA have also indicated they will be making a legal challenge to the requirement for them to sell their two hospitals.
However, this is an important step in providing a more competitive healthcare market in London.
The new performance and charging data which will be made available will benefit patients who will be able to make more informed decisions in regard to who treats them and where they are treated.
Ultimately, the benefits of these changes will impact the cost of healthcare insurance. As the reduction in claims costs directly reflects the price of the private medical insurance, this can only be a good thing. We particularly welcome the end of any consultant incentives and hope that hospitals will now work in the interests of their customers rather than income.