On Air Now

Listen

Listen Live Now » 106.1 FM Lansing, Michigan

Weather

Current Conditions(Holt,MI 48842)

More Weather »
64° Feels Like: 64°
Wind: ESE 6 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Today

Partly Cloudy 74°

Tonight

Mostly Cloudy 59°

Tomorrow

Scattered Thunderstorms 83°

Alerts

UK competition watchdog says private patients pay too much

By Paul Sandle

LONDON (Reuters) - Private healthcare patients in Britain are paying too much because of a lack of competition, the country's market regulator said in a ruling that could lead it to force some operators to sell hospitals.

The Competition Commission (CC) said on Wednesday it had identified 101 private hospitals that faced little local competition, some of them in clusters owned by one of the major hospital groups BMI Healthcare, Spire and HCA International.

It could force operators to sell some hospitals in areas where they dominated, it said, adding that it had pinpointed about 20 such sites.

Asked about the discrepancy between the two figures, a commission spokesman said many areas had local monopolies or duopolies, so forcing sales would make no difference.

The state-run National Health Service (NHS) is by far the leading provider of treatment in Britain, where the market for privately funded healthcare was worth 6.4 billion pounds ($10 billion) in 2011, according to consultants Laing and Buisson.

The major private hospital groups denied the assertion that they made excessive profits from their dominance of the market, But Bupa, one of the insurers which fund most private treatments through employee-medical insurance schemes, welcomed the report.

Mark Jackson, special adviser at advisory and restructuring practice Zolfo Cooper, said forced hospital sales would create uncertainty for lenders and investors in the sector which was already under pressure from a decline in the take-up of private medical insurance and an increase in lower-margin NHS work.

The CC said that the major health insurance groups, Bupa and AXA PPP, did not have the power to fully offset the dominance of the big private hospital groups.

Presenting the provisional findings of an investigation into the sector, it said this dominance raised insurance costs for all private patients because premiums, often paid by employers, are set nationally.

"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," said Competition Commission chairman Roger Witcomb.

"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."

HCA CHARGES HIGHEST

BMI, partly owned by South Africa's Netcare and private equity group Apax Partners, is the biggest private operator, with 69 hospitals, while Spire, owned by private equity group Cinven, owns 38.

HCA International, owned by U.S. group HCA Holdings Inc, charged significantly higher prices than other operators, the CC said, even allowing for higher costs of running its six London-based hospitals.

The three operators also faced little competition from new entrants in the market because of the high costs of setting up a hospital and flat demand for private healthcare services in recent years, it said.

The top five healthcare providers, which also include Ramsay Health Care UK and Nuffield Health, accounted for about 77 percent of the market by revenue in 2010, according to a 2011 report by the Office of Fair Trading. Smaller providers include Abbey, Aspen Healthcare, The London Clinic and The Horder Centre.

BMI said it disagreed with many of the findings of the investigation, and said it did not "hold the whip hand" in its relationship with insurers.

"We reject absolutely any assertion that BMI Healthcare and its hospitals exercise market power or that we make excess profits at the expense of patients," Chief Executive Stephen Collier said in a statement.

"The vast majority of BMI's 69 facilities, in a UK market with over 500 rival facilities, face very significant local competition from other private hospitals and, increasingly, from the NHS."

HCA International said it was disappointed in some of the findings. "London has witnessed a strong record of new entry and expansion of private health providers in recent years, demonstrating that barriers to entry are low," it said.

Spire disagreed with the CC's view that its hospitals faced little competition, made excess profits and had a disproportionate bargaining power over insurers.

"We believe these findings, and the remedies proposed, are based on an unrealistic assessment of the markets in which we operate and the level of investment necessary to operate a high-quality hospital," Chief Executive Rob Roger said in a statement.

But insurer Bupa said the findings were good news for patients.

"By tackling the lack of competition that has damaged the sector for too long, the Commission has understood the need for strong action and has put patients first," said Damien Marmion, managing director of Bupa Health Funding.

The Competition Commission's consultation is open until next month and a final report will be published by April 2014.

(Editing by Mark Trevelyan and Louise Heavens)

Comments