Health sector awaits ruling amid calls to split up firms

MAJOR healthcare providers are facing calls to be broken up as they await the findings of a Competition Commission (CC) investigation into the £5 billion sector.

Some insurers believe hospitals and doctors are making excessive profits and pushing up prices. Picture: PA

Some insurers believe hospitals and doctors are making excessive profits and pushing up prices, which means more pressure on the National Health Service. They are calling for the CC to take firm action to improve competition between providers, possibly including the break-up of large hospital groups that dominate the sector.

The Office of Fair Trading (OFT) referred the industry to the CC for an in-depth investigation last year after it found that it “could work better for patients”.

The OFT said some parts of the country have only one private hospital and there were “significant barriers” to new companies entering the market, which is currently dominated by five players.

The watchdog’s report found that General Healthcare Group (GHG), HCA International, Nuffield Health, Ramsay Health Care UK and Spire Healthcare account for about three-quarters of the private healthcare market.

It said that in some parts of the country such as Edinburgh, Exeter and Hull, there is only one private hospital or healthcare facility.

Insurance provider Bupa has long called for an inquiry, saying the cost of private healthcare was becoming unsustainable.

However, hospital group HCA has said that major insurers are dictating the delivery of clinical services and limiting patient choice.

Insurance industry sources argue that the market appears to be in a slow decline, with the proportion of people covered by private medical insurance at 11 per cent, the lowest level in two decades, with high costs deterring many of those who would like to be covered.

In its submission to the CC probe, HCA sought to turn attention to the behaviour of the private medical insurance (PMI) providers, which it said were “increasingly dictating the way in which clinical services are delivered”.

The company said the OFT had given little attention to the concentration of 90 per cent of the PMI sector among a handful of providers and that there was a “lack of effective competition”.

GHG has also criticised the OFT report and said the role of PMI should not have been excluded from the probe.

As hospital groups have built up their size and increased their negotiating power, the CC could take similar measures to those used in the airport sector, where it ordered the break-up of BAA.

One source said: “That sort of action would go a long way to increasing the ability of the insurance companies to negotiate good prices.”

The CC is expected to publish its findings later this month.