Inquiry: private hospitals ‘overcharge by £200m’

The provisional findings from an inquiry into the sector found that the largest three hospital operators – BMI Healthcare, HCA International and Spire Healthcare – have capitalised on weak competition, particularly in areas such as London, to negotiate policy pricing to their advantage.

The 18-page summary document stated that the big three have been subsequently making profits “substantially and persistently in excess of the cost of capital”.

But the private hospitals under fire in the probe have strongly rejected the accusation. Stephen Collier, chief executive of BMI Healthcare, said the vast majority of the provider’s hospitals face “very significant local competition” from other private hospitals, as well as the NHS.

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The probe found that 101 hospitals across the country, with many found in “cluster” groups under the ownership of big players, face little competition because the barriers to market entry are prohibitively high.

Patients are also at risk of going through unnecessary diagnostic tests and consultations because some doctors are being offered financial incentives for referrals to private hospitals, the report said.

The CC has now proposed in its report a number of possible remedies, including that such incentive schemes are scrapped, and that operators be forced to sell hospitals in regions where they wield disproportionate power.

Keith Biddlestone, commercial director of HCA International, said London in particular had seen a “strong record of new entry and expansion of private health providers” in recent years. He added: “The CC has a legal duty to ensure that any remedy is both proportionate and effective; it is difficult to understand how a remedy that would force HCA to divest hospitals in London could be justified on these grounds.”

Roger Witcomb, chairman of the CC as well as the Private Healthcare Inquiry Group, said: “We are aware of the disquiet expressed by some patients and consultants in relation to the actions of some health insurers. To the extent that they are trying to keep premiums down and promote competition on price and quality, they are doing exactly what their customers would expect. However, companies like Bupa need to ensure that they communicate better with policyholders about what their premiums entitle them to.”

Dr Damien Marmion, managing director of Bupa Health Funding, said the firm would work closely with the CC to drive improvements in the market. He added: “This is the most important potential reform to the UK’s private healthcare market in decades. The sector has been given a golden opportunity to halt the decline and to grow the market for the benefit of consumers – everyone must now work together to ensure that this chance is not wasted.”

Brian Walters, vice-chairman of the Association of Medical Insurance Intermediaries, said: “The preliminary findings of the CC come as no surprise and we hope that the proposed remedies will ultimately result in a better deal for policyholders. One unfortunate aspect of the CC inquiry is the perception that the medical insurance market itself has been under investigation. Private medical insurance formed a necessary part of the investigation into the wider private healthcare market but was never its main focus.”