Competition Commission: Private patients pay too much

 
Medical team operating Many private hospitals face little competition locally, the Competition Commission says

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Most patients in UK private hospitals are paying more than they should for treatment because of a lack of local competition, an inquiry has found.

More than 100 private hospitals around the country are in areas with little rival healthcare provision, says the Competition Commission (CC).

Many of these hospitals are owned by three major groups, the CC said.

It said the buying power of health insurance firms did not offset the hospitals' strong position.

About 80% of private patients fund their treatment through medical insurance, which is often paid for by their employers.

Although prices charged by operators to insurers are set nationally, the commission said it believed that the lack of local choice pushed up premiums for all patients, because insurers had no option but to use the local hospital.

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The commission's proposed reforms seem designed to give the insurers more muscle”

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"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 the commission's 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."

'Market power'

Hospital groups BMI, Spire and HCA had been "earning returns substantially and persistently in excess of the cost of capital", the commission said.

The two biggest health insurance firms, Bupa and AXA PPP, had achieved "significantly lower prices than the smaller insurers" and had "some countervailing buyer power, Bupa more than AXA PPP".

"However, no insurer has countervailing buyer power that can fully offset the market power of BMI, Spire and HCA," the commission's provisional findings said.

The commission recommended moves to make more information available about the quality of hospitals' services and the level of fees charged by consultants.

It also suggested that operators owning a cluster of hospitals in one area should have to sell off some of them.

Responding to the commission, BMI said its findings were "based on flawed analyses of the reality of providing high quality private healthcare".

"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.

"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."

Spire chief executive Rob Roger said the findings were "based on an unrealistic assessment of the markets in which we operate", while HCA said it was "disappointed that quality of clinical care and investment in innovation seems to have been ignored by the Competition Commission".

For its part, Bupa welcomed the findings as "good news for patients".

Managing director Damien Marmion said: "Millions of people with health insurance rightly expect high-quality healthcare for an affordable price.

"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."

 

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  • rate this
    +4

    Comment number 138.

    Standard UK business practice, rip off, cheat the customer. From banks cheating people of their interest, introductory offers, lies over discounted furniture pricing, complicated utility charging, price point what the market will bear pricing, to biscuit packets suddenly having less in them. UK business is largely based on cheating people. Why would they treat the sick any better?

  • rate this
    +1

    Comment number 137.

    Competition works well for consumables e.g. Samsung, Apple, HTC etc battling it out to produce the best new mobile. If people don't want to buy these products then they won't and so the companies have to be genuinely competitive.

    It doesn't work with captive markets like utilities, transport to/from work or healthcare. All we end up with is x different providers all at the same price.

  • rate this
    +4

    Comment number 136.

    Very often the only difference between private health care and a well run NHS hospital is a private room and better food. The same specialists serve both. So the best source of new competition to private health care would be the NHS offering a "club class" room versus a free "economy" room and tapping a new revenue stream.

  • rate this
    +1

    Comment number 135.

    Why is this news? Any private company can charge what they want for goods / services. If you don't want to pay the advertised fees, go somewhere else, or use the NHS.

  • rate this
    +2

    Comment number 134.

    British doctors are amongst the highest paid in the world. We do not get value for money from the BMA - the most powerful trade union in Britain.

  • rate this
    +2

    Comment number 133.

    My parents retired and live in France and, as the 'natives', my mother is 50% funded by the French Government due to income and the rest via health insurance. My father, who has a heart condition, is totally funded by the Government. Everyone gets the same treatment at the same hospitals and that is excellent. Two bedded rooms with en suite and annual health checks from their GP.

  • rate this
    +1

    Comment number 132.

    90 Ingvar_Gunnarsson

    Comment 82 was referring to the major utilities and services such as transport systems, energy supply, internet provision, education, policing, probation, prisons and health. These are areas where the state has a role in delivering fairly with a strategic overview.

    Commodities such as food, electrical goods, DIY, furniture, cars are best provided by the free market.

  • rate this
    -1

    Comment number 131.

  • rate this
    +2

    Comment number 130.

    It has nothing to do with competition and everything to do with privatisation.

  • rate this
    +1

    Comment number 129.

    @99. I'm probably rich by your definition but paid 58% in tax & NIC last year. Nobody gave me anything & I don't want them to. I'm taxed on everything I earn as it should be. By the by. The top 13% of tax payers contributed 60.8% of all income tax in the last fiscal compared with 56.4% in the prior year. We thereby contributed more - some tax giveaway!

  • rate this
    +12

    Comment number 128.

    It's the prime moral argument against private medicine.

    The sufferer is always at a disadvantage in the contract.

  • rate this
    +4

    Comment number 127.

    Not a surprise at all

    This is modern Britain where we pay higher for everything, get less services and elect Governments which are in the pocket of big business.

    So this is just to be expected.

    The only thing the Government will take from this is an indication to dismantle the NHS further call it "competition" and end up with a "big few" cartels like everything else they sell off.

  • rate this
    -28

    Comment number 126.

    Doubtless this forum will fill up with stout defenders of unreformed public provision for whom the NHS has become a state religion. I hope they have a nice day.

    What the anti-profit brigade don't see (plus ca change) is that the Commission is not against profit. It's simply arguing for more competition to improve the service and reduce premiums for consumers - exactly how the market should work.

  • rate this
    +28

    Comment number 125.

    The private medical system is scandalous. Consultants/doctors are paid to train with our taxes under the NHS. They work their way up the ladder, then do an odd day or two in the NHS hospital for full salary and pension prioritising private patients yet still using NHS hospital rooms and theatres. They make themselves rich at NHS patient expense. There should be no private appointments in NHS.

  • rate this
    +2

    Comment number 124.

    I get free private health insurance at work, I only pay the income tax as it's a taxable benefit. It has gone up by so much that it's no longer worth it so I've canceled it, now using NHS. But the NHS now seem to be set up just to generate queues so long that people give up. I had to wait in a queue to get into a queue to be told my urgent operation on severed a nerve had been put off for 5 days.

  • rate this
    +8

    Comment number 123.

    @76 "One supplier lowers prices, the others have to follow.
    If not, the supplier with the lowest prices will monopolise the market."

    Healthcare does not follow these principles. Cost of entry & (necessary) regulation mean that suppliers are limited. Most medical treatments are not elective - I won't postpone chemo until the price comes down. It ends up working like a cartel

  • rate this
    +2

    Comment number 122.

    @77.Mucker
    The problem with UK Capitalism is that the taxpayer still gets hammered for the "subsidization" of those private companies who are trying to maximize profit.

    Profit do not necessarily go to shareholders but where subsidies are involved (like railways) it is as if taxpayer pays shareholders.

    Profitization is one reason why medicines and healthcare cost so much. (Integral part of NHS)

  • rate this
    +5

    Comment number 121.

    Able to post so often today as just given up. Will be leaving medicine and surgery altogether to open a completely unrelated small business. Nothing is worth the hell that both NHS and private surgery have become. The NHS is an unspeakably abusive employer. Intrusive regulation, vexatious complaints and rampant litigation wear you down. The costs of "malpractice" insurance are crippling. Tax etc..

  • rate this
    +2

    Comment number 120.

    "earning returns substantially and persistently in excess of the cost of capital"

    They are not state run, so therefore do not have to run at a loss in order to appease the people it probably doesn't affect

    The BBC just has to put the headline "private healthcare" and the bait is taken

  • rate this
    +3

    Comment number 119.

    28. Laud Sprowston

    Private medicine should be outlawed it gives preference to the rich. The NHS should serve everyone.

    ---

    Nice theory but the NHS isn't uniformly good. I live in Bucks which may be an "affluent" area but I am not a rich man.
    The NHS here got none of the Labour spending spree, Wycombe A&E was shut down.

    I had to spend most of my savings on private care to fix my sinus problems.

 

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