Private healthcare faces investigation
Amanda Brockwell, Head of the Care Group at south coast law firm Coffin Mew LLP, says that the recent announcement of an investigation by the Office of Fair Trading (OFT) into anti-competitive practices in the private healthcare sector is likely to spark a flurry of activity in the private health market.
“In a move to ensure that patient demand and choice drive competition in the private health market, The OFT announced recently that it had provisionally decided to refer the £5bn-a-year sector to the Competition Commission for an in-depth probe,” says Amanda.
The private healthcare market is set to be the subject of a full-blown competition investigation following concerns about transparency and the dominance of five leading providers - being General Healthcare, Spire Healthcare, Nuffield Health, HCA International and Ramsay Healthcare UK.
The “big five” account for 77 per cent of the market by sales in 2010, according to the OFT.
Following an initial study in March, the OFT said there was a shortage of “accessible, standardised and comparable information” about the price and quality of private hospitals, clinics and their consultants. This hampered the ability of patients, GPs and private medical insurers to differentiate between providers and thereby drive more competition in the market, the watchdog argued.
It also said new entrants to the sector faced “significant” barriers, citing clauses that obliged insurers to consult existing providers if they wanted to allow their clients to use a new player, or to impose price rises if this recognition was granted.
Incentives granted to medical consultants to treat all their patients at one facility were cited as an obstacle too – which, pending the outcome of the full investigation, may well mean that such clauses are made unlawful.
The Competition Commission has the power to order sweeping remedies if it finds a market to be anticompetitive. In this instance, the OFT said the Commission could outlaw some contractual clauses and demand more disclosure. In a worst case scenario, punitive fines could be levied for including such clauses or otherwise acting in an uncompetitive way, so GPs and consultants may have to watch out in the future.
“The ultimate goal is to create and enforce a competitive market for the provision of private medical services – but the knock on effect may well be the reduction in medical insurance premia. What will be interesting to see is whether the big providers stop offering exclusivity deals now in contemplation of the outcomes of the investigation,” concludes Amanda.
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