Private health insurance shake-up

The Competition and Markets Authority (CMA) has published its final report on measures to increase competition in the private healthcare market.

The CMA’s conclusions, released today, set out a series of legally binding actions to address the lack of competition among doctors and private hospitals, which was found to be a significant driver in increasing health insurance premiums.

Chief among the plans is a directive for healthcare group HCA, which owns more than half the available overnight bed capacity in central London, to sell key London hospitals – including the London Bridge and Princess Grace hospitals or alternatively, the Wellington hospital – to promote competition.

But unlike the CMA’s earlier proposal, it does not require the sale of any hospitals outside central London.

Private Healthcare Inquiry Group chairman Roger Witcomb said: “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 have found that many private hospitals face weak local competition and it is difficult for new hospitals to enter the market. For self-pay patients, for whom charges are set locally, this can lead to higher prices. Additionally, in central London it is clear that HCA’s market power allows it to charge higher prices to insurers, who need to include its hospitals if they are going to provide cover for patients in central London,” he said.

Witcomb said outside central London the effect of weak local competition on prices charged nationally to insurers was less clear, which was why the CMA withdrew its initial plans to sell hospitals in the regions.

The report also outlines plans to end incentive payments between hospitals and consultants, and to begin publishing information on consultants’ outcomes and fee levels to help patients make more informed choices.

Commenting on the CMA report, healthcare insurer Bupa said it was a “step in the right direction”.

Health Funding managing director Dr Damien Marmion said: “The sale of key HCA London hospitals will help to increase competition and will have a positive impact on customers in central London.

“However, self-pay and insured customers will be surprised that no action has been taken outside London where excess profit and consumer detriment has been identified by the CMA, particularly as the majority of the CMA panel believed there was sufficient evidence to justify more significant intervention.

“We’re pleased they have carried through measures to end consultant incentives schemes and require the publication of better information to patients on consultant outcomes and costs. We are ready to fund our share of the new information body for the private sector, because it will increase transparency and help patients make more-informed choices.”

He added: “Bupa will pass on any money saved from increased competition among hospital providers to our customers.”

Aviva also supported the CMA’s report, and said the market would “significantly improve in the customers’ interest, ultimately allowing more people to access the important benefits of private healthcare”.

Aviva UK Health managing director Mark Noble said: “We have been engaging with the Competition Commission throughout this thorough investigation and fully support their sensible and decisive remedies. In time, they will create a more sustainable and fairer market for all, and will engender better value for money for private healthcare customers.

“The removal of market power in London in particular will drive a much healthier, competitive approach to pricing, while all patients and GPs in the UK will be able to make more informed decisions on medical treatment through the publication of cost and performance data.”

The report follows a two-year investigation by the Competition Commission, which this week became part of the new CMA.