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
    +2

    Comment number 398.

    @ 378. Mojothechimp "NHS vastly over managed, rip 4 layers of management out then compare the costs per patient. The higher NHS costs outweight the private profits by a mile."

    Where your argument falls down is once the extraneous layers of management are removed from the NHS, the cost of treatement per patient tumbles.

    Private health puts profit before care, end of

  • rate this
    -1

    Comment number 397.

    phaemon @386
    'pensions not paid from taxes'
    At least, not twice!

    All in the end pay for everything. Whether privately or via tax, a matter for political brinkmanship, social efficiency vs. electoral bribery, a game maintained for the sole (finally illusory) benefit of those at the top (or in hope of such 'success'), all of us (or our children) to pay the price of conflict and planetary exhaustion

  • rate this
    -1

    Comment number 396.

    395. acb5
    5 MINUTES AGO
    Come on Mr Milliband, stand up and be counted - support the NHS and restrict the spread of private hospitals. It's the same consultants in the main, working in both sectors. Too much greed, as usual, driving this trend.
    --
    He would need to explain PFI's first.

  • rate this
    +4

    Comment number 395.

    Come on Mr Milliband, stand up and be counted - support the NHS and restrict the spread of private hospitals. It's the same consultants in the main, working in both sectors. Too much greed, as usual, driving this trend.

  • rate this
    +1

    Comment number 394.

    380.
    The Young Sage

    National Insurance is work & pensions, not healthcare. It covers unemployment benefit and state pension. It's not health insurance.

  • rate this
    -4

    Comment number 393.

    @Chris 383
    As a director of a small company I couldn't afford to not have private medical insurance. Time off work is money, so I need to be able to plan and prioritise, not something you can do when you receive a letter advising you will get an appointment within the next 4 months(that is you will be notified not that the appointment will be in the next 4 months)

  • rate this
    +2

    Comment number 392.

    I worked on contract in he NHS and became aware of the salaries paid to middle managers. An IT manager, not particularly senior, was paid over £108k. The only reason I know that is because I knew which pension band she was in and it was the one where salary > £108k gets 8% contribution.
    No wonder it's unsustainable. Imagine what we could do with 20% of our GDP (and climbing) - it's staggering.

  • rate this
    +7

    Comment number 391.

    389. persecuted
    Robert Peston have you examined how much the tax payer is paying the NHS? It's about £2,000 per person per year or £8,000 for a family of 4. And is no way as good as private healthcare or as cheap.
    --
    Not as good? How good is your local private A+E unit? Local private radiotherapy unit? Local private transplant clinic?

    There isn't one. Private only treat profitable illnesses

  • rate this
    +1

    Comment number 390.

    why did the head of an NHS trust that got slammed by the watchdog get a 25% payrise?

  • rate this
    -8

    Comment number 389.

    Robert Peston have you examined how much the tax payer is paying the NHS? It's about £2,000 per person per year or £8,000 for a family of 4. And is no way as good as private healthcare or as cheap. So if you want to examine poor value for money and a complete lack of competition, look no further than the NHS.

  • rate this
    +3

    Comment number 388.

    We pay more than we should for a lot of things in this country.

  • rate this
    -1

    Comment number 387.

    368.David Windsor
    ...They just decline to get it done.
    ---
    Why should they, they are not the NHS, they are obviously happy with their business model or they would implement your recommendations. What is their motivation for change, it's never going to be a philanthropic one so which model maximises their profits, yours or theirs?

  • rate this
    +4

    Comment number 386.

    372.
    JasonEssex

    No, NHS pensions are not paid from taxes. They're paid from the pension scheme that the employees and employer contributed to. The NHS pension scheme is actually in surplus and pays £2 billion *back* to the government.

  • rate this
    -6

    Comment number 385.

    What is stopping NHS reform is lack of competition, not between private and healthcare and the NHS, but between hospitals and clinics, etc.

    Maybe it's time to break up the NHS monopoly and have the different parts compete for "customers" with cheaper but better services and with a focus on there key business of helping the sick get better and keeping the well from getting sick.

  • rate this
    -1

    Comment number 384.

    Total Mass Retain

    I would love to see your facts Total Mass Retain do produce the please

  • rate this
    -2

    Comment number 383.

    Healthcare is a perk for permanent employees, mostly large companies. I run a small business so I/we can't afford it.

    If it got to affordable levels then many would buy it and take the strain off the NHS. I can't imagine how that would harm anyone, but I'm sure someone here will come up with a socialist counter-argument, however illogical.

  • rate this
    +2

    Comment number 382.

    Re 373. Dr Adam.

    Would this be these be the same NHS doctor members of the BMA who would be treating me privately under my expensive insurance ? Er, Yes. Scary !

    Maybe we should be investing more money in NHS doctors/nurses/hospitals/training rather than spending on private healthcare. Raise income tax to specifically fund a decent NHS for all ! Too many vested political interests.

  • rate this
    +4

    Comment number 381.

    You only have to look at the USA's healthcare model to see how privatised medicine gives poor value for money to it's customers. The US has the highest expenditure/capita in the world but is only ranked 37th by WHO, the UK is ranked 26th for expenditure but our healthcare system is ranked 18th.

  • rate this
    -4

    Comment number 380.

    Experience of NHS = Shocking. Lucky to be alive.
    Experience of Private UK hospitals = Excellent.
    Experience of French hospitals = Outstanding.

    Why am I forced to pay for a service that has failed me and my family more times than I care to remember?

    The NHS is not 'free' as many wrongly quote. It's only free to those who don't work or pay National Insurance (note the key word "Insurance"!)

  • rate this
    +3

    Comment number 379.

    I have relatives in the USA, and even though they have private healthcare insurance they fear getting old and sick.

    The NHS is not perfect, but when I've had treatment it has always been first class and is a tribute to all the fine people who work in it.

 

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