Private Healthcare: Patients 'Pay Too Much'

An investigation by the Competition Commission (CC) has found most patients pay too much for private healthcare.

The provisional findings of the inquiry into the £5.5bn sector - dominated by three firms - could lead to the sell-off of up to 20 individual hospitals to boost competition, the CC said.

It found that a lack of choice in local areas across the UK meant patients were enduring higher private medical insurance premiums and charges for private patients.

The CC said the three major players' dominance caused "consumer detriment" of £173m to £193m annually between 2009 and 2011.

It identified 101 hospitals which it said faced little local competition, some of them clusters of hospitals under the common ownership of one of the major groups - BMI, Spire and HCA - which were found to have earned high profits in recent years.

The Competition Commission found high barriers to private market entry

It said competition was being hampered by high costs, the response from existing operators and flat demand and the lack of choice meant insurers had little choice but to use the incumbent operator - meaning higher premiums for all patients.

Patients who funded their own care were also hit with higher charges in areas with little competition, the CC concluded.

The regulator found HCA charges significantly higher prices to insurers than other operators, with BMI the next most expensive for insurers.

The CC's findings - which now go out to consultation - followed a market referral by the Office of Fair Trading (OFT).

It had discovered that some parts of the country, such as Edinburgh, Exeter and Hull, only had one private hospital or healthcare facility.

The OFT said it believed the industry "could work better for patients" and reduced choice was risking higher prices but lower quality.

The Commission ruled that incentives to doctors could also be slashed and private hospitals barred from further tie-ups with NHS hospitals in areas where there is little competition.

CC Chairman and Chairman of the Private Healthcare Inquiry Group, Roger Witcomb, said: "Curing these ills and trying to get a better deal for patients is not going to be straightforward.

"High costs and other factors mean that new competing facilities are not going to spring up so we may look to increase competition and require sales of hospitals to other operators where we can.

"We will also look at ways that will stop hospital operators using local strength in one area as leverage in their negotiations nationally.

"Although many patients don't pay directly for the services as they do in other markets, we think that greater comparable information of the sort that is available elsewhere would help drive greater competition on price and quality, potentially improving both.

"We now want to discuss which of these measures and in what form will be most effective in bringing about the change this market needs," he concluded.

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