Out-Law News | 04 Apr 2014 | 9:54 am | 3 min. read
However the CMA report will not force private health care player BMI to sell any of its UK hospitals, despite its statement in January that HCA and BMI would have to sell a total of nine of their hospitals as part of a review designed to increase competition in the UK's private healthcare sector.
Proposed deals between the National Health Service (NHS) and private hospital operators to run a private patient unit in an NHS hospital will also be eligible for review by the CMA which will consider blocking such moves in locations where it believes there is a risk the partnership could substantially lessen competition.
In addition, the CMA will restrict or ban incentives for doctors to refer patients to particular private hospitals, and ensure patients have more information on consultants' fees and the performance of individual consultants.
In a statement issued by the CMA Roger Witcomb, chairman of the Private Healthcare Inquiry Group said: "These are measures which will bring changes across the country. The sale of HCA hospitals will significantly increase competition in central London, in particular by allowing the insurers to offer corporates and individual policyholders a comprehensive alternative to HCA. We’re also introducing measures which will improve competition across the whole market and ensure private patients get a better deal."
The final report follows a two-year investigation into the UK's £5 billion private healthcare industry started by the Competition Commission (CC), which this week became part of the new CMA.
The CMA has told US-based HCA that it must sell either the Wellington Hospital, in North London, or two smaller facilities in the UK capital – the London Bridge and Princess Grace hospitals.
The final report was described as a "surprise retreat" by the Financial Times newspaper, after the watch-dog said in August last year that HCI, BMI and Spire Healthcare could be forced to sell up to 20 hospitals across the UK. The regulator reduced that figure to nine in January - seven by BMI and two by HCA – before now declaring the final decision requiring only HCA to sell two central London hospitals.
Mike Neeb, president and chief executive of HCA International, said he was “furious and possibly a little paranoid” that it had been singled out as the only healthcare operator now required to sell, reports the Financial Times. Mr Neeb said: "HCA legally acquired these hospitals, in the case of London Bridge with explicit approval by the Office of Fair Trading, yet now after millions of pounds of investment, it is being forced to sell."
According to the Telegraph newspaper, Mr Neeb, whose company currently owns six of London's 17 private hospitals, said the watch-dog had "treated the highly complex healthcare system as a commodity market, focusing almost exclusively on price and overlooking the importance of quality. In failing to consider our investment, the mix of patients we treat, and the complex procedures we carry, the CMA has drawn inaccurate conclusions about HCA International’s pricing – something which we strongly refute and will of course be challenging." The company has 60 days to lodge an appeal against the decision.
The investigation found that although many private hospitals face weak local competition "the effect of weak local competition on prices charged nationally to insurers is less clear. The volume of evidence was huge and we carried out a very detailed analysis, but it was ultimately not possible to extract a consistent picture from it." As a result, the final report did not order the sale of any private hospitals outside central London.
The report said that opening up the local private healthcare market to greater competition is not easy because high costs and long lead times present high barriers to entry. "What we have done is to tackle some of the other barriers which can prevent a new operator getting a foothold in a particular area and to focus on measures which will improve things for patients in all areas of the country."
This includes "measures to ensure that arrangements between NHS trusts and private hospital operators to operate or manage a PPU will be capable of review by the CMA. The CMA will be able to prohibit arrangements which it decides substantially lessen competition in the relevant local area."
In addition there will be "a restriction or ban on certain benefits and incentive schemes provided by private hospital operators to clinicians. Greater transparency is a key requirement together with banning or restricting those benefits and incentive schemes which are likely to have the greatest influence on clinicians advising patients."
The report has ordered the development of a combination of measures to improve the public availability of information on consultant fees and of information on the performance of consultants and private hospitals
Jenny Block of Pinsent Masons, the law firm behind Out-Law.com, said: "This is one of a growing number of cases where the CC, now the CMA, has ultimately been persuaded to change its position both in relation to the underlying finding of a competition problem and on the scale or scope of proposed remedies. It demonstrates just how important it is to subject provisional findings to critical review and analysis, and there can be no assumption that the argument is lost at that stage, or when the provisional decision on remedies is published."