UK Competition Commission issues preliminary report

The UK competition commission has published its preliminary report on privately funded healthcare services. In summary the commission said:

“Many private hospitals face little competition in local areas across the UK, leading to higher private medical insurance premiums and charges for private patients.” The Commission also pinpointed incentive schemes, which encourage consultants to choose particular private providers for diagnosis and treatment, and the lack of available information on the performance of hospitals and consultants as further restrictions on competition.

The Commission identified 101 hospitals facing little local competition, some of them in clusters of hospitals under the common ownership of one of the major hospital groups, BMI, Spire and HCA. Entry into the private health market is rare due in particular to the high costs of setting up a hospital, the likely response from existing operators and the flat demand for private health services over recent years.

The Commission said that the two larger insurers, Bupa and AXA PPP, achieve significantly lower prices than the smaller insurers and have some countervailing buyer power, Bupa more than AXA PPP. “However, no insurer has countervailing buyer power that can fully offset the market power of BMI, Spire and HCA.”

The Commission has  published a Notice of possible remedies for consultation on measures which could improve competition, including requiring operators to sell hospitals in areas where they derive significant market power from the ownership of local clusters; a ban on some incentive schemes; prevention of ‘tying or bundling’ when an operator might respond to a loss of business in one area by raising prices nationally; possible entry enhancing measures; and the provision of better information on prices and quality for patients.

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