Private patients pay for lack of competition

 

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 Competition Commission (CC) has found. In its provisional findings on privately-funded healthcare services recently published, the CC has 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 CC has 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, namely BMI, Spire and HCA. Entry into the private health market—or expansion into other areas—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 majority (about 80 per cent) of private patients fund their treatment through private medical insurance companies (PMIs) very often paid for by employers. The prices charged by operators to insurers are set nationally, but the CC believes that the lack of competition in many local areas, where insurers will have little choice but to use the local operator, results in higher premiums for all patients. Self-pay patients also face higher charges in areas with little local competition.

The CC has also today 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.

CC Chairman and Chairman of the Private Healthcare Inquiry Group, Roger Witcomb said:

‘The lack of competition in the healthcare market at a local level means that most private patients are paying more than they should either for private medical insurance or for self-funded treatment. The lack of available and comparable information, often less than is available to NHS patients, also makes informed choices—which could help drive competition—for these patients difficult’.

 

 
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