Watchdog condemns private health sector over premiums

Private hospitals face being sold and perks for doctors banned under plans to tackle weak competition which is pushing up prices for patients, a watchdog has ruled.

The Competition Commission uncovered 101 private hospitals across the country which face little competition, driving up insurance premiums for patients in the £5.5bn private health market.

The watchdog ruled nearly 20 hospitals may have to be sold, and also signalled an end to doctors earning incentives for directing patients to specific private units.

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The three biggest private hospital groups, Spire, BMI and HCA, came under most fire from the commission which said their market dominance caused “consumer detriment” of £173m to £193m a year between 2009 and 2011. Spire runs four hospitals in Yorkshire in Leeds, Wakefield, Elland and Hull, and BMI operates three in Huddersfield, Harrogate and Sheffield.

About 80 per cent of private hospital patients are funded by insurance premiums, typically paid for by employers.

But commission chairman Roger Witcomb said: “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.”

The commission found HCA charges significantly higher prices to insurers than other operators, with BMI the next most expensive. It also found private hospitals offer access to resources and perks such as cash to consultants to encourage them to use their facilities and refer patients. The watchdog said this could tempt doctors to run excessive tests or consultations. The watchdog did not pinpoint where hospitals will have to be sold, except in London where dominant player HCA has eight hospitals and faces weak competition.

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The BMI’s chief executive, Stephen Collier, said: “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 chief executive of Spire, Rob Roger, said: “We believe these findings, and the remedies proposed, are based on an unrealistic assessment of the markets in which we operate and the level of investment necessary to operate a high-quality hospital.”

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