The commission reported a few weeks ago with some interesting provisional findings.
As a specialist medical insurance broker the choice of not only health insurer, but ultimately consultants and hospitals, is crucial to our clients. We hear more frequently from our clients that they were concerned that their GP referred them to a particular specialist consultant based on ‘soft intelligence’ such as hearsay about a consultant’s reputation.
Many Bupa clients will find that they need an ‘open referral’ from their GP so that Bupa can discuss which consultant the patient can choose, rather than the GP. Many may argue that an insurer might be better placed and have better quality data to hand in order to discuss consultant choice with their customer. In my experience, most of our customers receive GP referrals to a particular consultant which can cause problems with the insurer should this particular consultant not be authorised.
It seems that GPs and patients lack the information they need to make informed decisions on consultants or hospitals for patient referrals.
The OFT surveyed 400 GPs and found that most believed their information needs on private healthcare facilities and consultants were not being met, in terms of both quality of care and pricing.
So, while my customers may take their GPs’ advice as the last word, there is doubt, possibly even in their own GPs’ mind, that they have the right information to choose for their patient.
The report also highlighted the importance of the GP’s role in the patient pathway. Three-quarters of GPs surveyed told the OFT they thought they were the most important influence on a patient’s choice of hospital or doctor. It is a real concern that only a small minority of consultants offer their patients a choice between their main private hospital and another facility.
Although private hospital groups publish information online, the OFT felt that this was “too variable to compare easily”. It also said that consultant-level data was “largely absent” so that patients relied on their GP’s recommendation. The NHS publishes comparable data about hospitals on the NHS Choices website and the private sector is nowhere near this level at present.
The OFT report in December 2011 described the tactics used by insurers to control costs as “blunt and potentially distortive policies” but concluded that insurers had little alternative given the absence of transparency on quality of care and fees. It also emphasised the role of ch
The OFT described the tactics used by insurers to control costs as “blunt and potentially distortive policies” but concluded that insurers had little alternative.Clearly insurers do play a major role in the market bearing in mind that PMI is the main funding source for private healthcare providers (62 per cent), followed by NHS-funded patients (23 per cent) and self-pay patients (15 per cent), according to the OFT.
Interestingly most managing directors I speak to tell me that they chose their consultant based on a conversation at the golf club, or such like. My clients generally have no idea how to choose the right consultant or hospital and the only information they have is how an acquaintance faired with their operation with that consultant.
The OFT also highlighted that in a “significant number of instances” consultants were failing to provide patients with fee estimates before they underwent treatment. Its survey of 400 consultants found that less than half of consultants provided a fee estimate at the first consultation while GPs told the OFT they rarely or never knew how much the fee would be for a first consultation.
Although some insurers, Bupa in particular, claimed to have unparalleled data on hospitals and consultants, PMI providers admitted to the OFT that they did not have enough information on quality of care by consultants. Most insurers were unable to advise patients beyond information on a consultant’s specialty and location.
In April 2012 the OFT referred the market for privately-funded healthcare services in the UK to the CC for further investigation. We had expected this decision following the OFT report which led to a public consultation and closed in January 2012.
It is not the first time that regulators have looked into competition in private healthcare. Back in 1994 the Monopoly and Mergers Commission noted that consultants held a strong position in the UK private medical services market and that there was little evidence of price competition between them. One of its conclusions at the time was that “the countervailing power of the insurers is of crucial importance”.
The OFT felt that the private healthcare market “could work better” for patients, and that there were “reasonable grounds” for suspecting that there were features of the market that prevented, restricted or distorted competition. The report seemed to be welcome by insurers as it moved the spotlight over to the providers.
Although the CC has until April 2014 to present its final report, the main provisional discovery is that competition between healthcare providers could be improved. The main reason is that there are not enough healthcare providers to generate competition, and the barriers to entry are very high. The potential impact of this is that insurers’ premiums are pushed higher. The barriers to entry are high mainly due to the fact that the healthcare providers have too much power. They can raise prices for treatments or set other conditions if an insurer wants to recognise a new entry in a particular field.
It also identified a lack of transparency between healthcare providers and consultants and found that consultants needed to publish their fees more clearly. The absence of information weakens competition and means that patients, GPs, and insurers cannot make informed choices.
Healthcare providers give incentives to consultants in order to get them to refer patients. Much evidence has been submitted to the CC with Bupa and Axa PPP in particular providing evidence that were said to cause harmful effects. The conclusion is that incentives do affect consultants’ choices of hospitals for their patients, but whether this is to their detriment is unclear and I hope we will hear more about this in their final report. Certain healthcare providers may have to sell some of their hospitals in order to encourage competition
Certain insurers such as Axa and Bupa have sent statements to us supporting the CC’s findings. Currently the report appears to be scrutinising healthcare providers while PMI providers have been left untouched, understanding that premiums were increasing largely due to the lack of competition. Hospitals would disagree, citing that their charges have not increased as fast as PMI premiums.
There is no doubt that this is a complex issue but the report can only be a good thing if it pushes for greater transparency and better outcomes for patients. I am not confident that the end result will be that premium increases will slow down but if we can unravel the tangled web of the interrelationship between GP, consultant, hospital and insurer then this can only help the end user – the client.
Debbie Kleiner-Gaines is managing director of Best Health Business
Key Points
Choice of not only health insurer, but ultimately consultants and hospitals, is crucial to clients.
The OFT report described the tactics used by insurers to control costs as “blunt and potentially distortive policies”.
The OFT felt that the private healthcare market “could work better” for patients
