Lack of Private Hospital competition forces private patient charges higher

Author - Mark Tomlinson

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Lack of Private Hospital competition forces private patient charges higher

The Competition Commission published the provisional findings on the Private Healthcare market last week and found that many private hospitals have little competition in several areas within the UK.  This leads to higher charges for private patients than would otherwise need to be the case and therefore is pushing-up the cost of private medical insurance premiums.

In addition, the commission has also highlighted Private Hospital incentive schemes to encourage Consultants to choose particular providers for diagnosis and treatment. This, coupled with limited information on the private hospital performance, and indeed consultant performance too, places further restrictions limiting competition.

Over 100 hospitals are considered to be in this position of limited local competition.  Many of these are in common ownership, often in small geographic groups, under several key players (named in the report as BMI, Spire and HCA). As there are high costs of setting-up a hospital, new entrants, or expansion into other regional locations, are both fairly uncommon. This is not believed to be helped by an expectation of local responses from current hospital operators.

As most private patients (around 80%) pay for private treatment with private medical insurance companies (such as my own company WPA) such a lack of competition in some areas is believed to drive higher premiums – although self-pay patients will of course also expect to be paying higher charges in these areas.

As a result, the publication included some possible remedies, initially for industry consultation, on measures expected to improve competition. These proposed measures include:

·         private hospital operators being required to sell hospitals where their ownership of local hospital clusters               drives significant market power

·         a ban on Consultant incentive schemes

·         stopping ‘bundling’ (i.e. a hospital operator responding to a loss of business in one area by a national raising           of prices)

·         measures to ease entry into the private hospital arena

·         better information being made available on prices, and quality, for patients

I know WPA looks forward to the report being finalised and the measures taken as a result allowing an even better deal for Private Medical Insurance (PMI) Policyholders (and as a not-for-profit provider, WPA is confident that our policyholders will be able to see the full benefit quickly as the marketplace changes over coming months and years).

Anyway, that’s enough of this – I have to go off to the CAP Business Club weekly meeting – it’s the best way to start my working week!