Watchdog said private hospitals face being sold and perks for doctors banned under plans to tackle the issue, which is increasing insurance premiums for patients
The cost of private health care in the UK is rising due to a lack of competition, a watchdog has ruled.
Private hospitals face being sold and perks for doctors banned under plans to tackle the issue, according to the Competition Commission.
The Commission uncovered 101 private hospitals across the country which face little competition, which are driving up insurance premiums for patients in the £5.5 billion private healthcare market.
The watchdog ruled almost 20 hospitals may have to be sold, and also signalled an end to doctors earning incentives for directing patients to particular private hospitals.
The three biggest private hospital groups, Spire, BMI and HCA, came under fire for reaping high profits in recent years. The Commission said their market dominance caused “consumer detriment” of £173 million to £193 million a year between 2009 and 2011.
Smaller private hospital groups and insurers such as Bupa and Axa welcomed the measures. Bupa Health Funding called it “good news for patients and private healthcare”.
Circle, which has two private hospitals in Bath and Reading, said the ruling vindicated its concerns over the “monopolistic behaviour” of big private hospital providers, and called for heavy fines.
But larger hospital groups were defiant, insisting concerns over profits ignore massive investment in technology and patient care.
About 80% of private hospital patients are funded by insurance premiums, typically paid for by employers.
The regulator found new players rarely enter the private hospitals market due to high costs, the response from existing operators and flat demand.
That means a lack of competition in many local areas – forcing insurers to use the incumbent private hospital and driving up insurance premiums for all patients. Patients who fund their own care are also hit with higher charges in areas with little competition, it said.
The Commission found HCA charges significantly higher prices to insurers than other operators, with BMI the next most expensive for insurers.
It also found private hospitals offer access to resources and perks such as cash to consultants to encourage them to use their facilities and refer patients. The watchdog said this could tempt doctors to run excessive tests or consultations.
Its shake-up will ban hospital groups from offering these incentives to consultants.
Operators will also be prevented from using their dominance in a local area as leverage in negotiations with insurers.
Private hospitals could be barred from further tie-ups with NHS hospitals in areas where there is little competition, it said.
They will also have to give more information on quality, fees and services.
The watchdog did not pinpoint where hospitals will have to be sold, except in London where dominant player HCA – which has eight hospitals in the capital – faces weak competition.
The Commission released its provisional findings after starting its probe in April last year, when the Office of Fair Trading referred the sector for investigation.