The efficiency of free market competition.

 

 

This is a Guardian article about a Competion Commission ruling on the monopoly enjoyed by the 5 or 6 biggest providers of private hospital care in the UK.

It is, of course, missing the real point.

In an age where ‘State is bad, private is good’, the plan is that all NHS services should be put out to tender, so that these kind of companies with their restrictive practises, monopolies, and financial inducements to practitioners, should be the main suppliers of medical services to us;  

 Jennifer Rankin 

The Guardian 16 January 2014

Private healthcare groups have been ordered to sell off nine hospitals after an investigation by competition authorities found patients had been overpaying for medical treatment.

 

HCA, the largest healthcare group in the US, has been told to sell two hospitals in central London – London Bridge and the Princess Grace. Its rival BMI faces selling seven hospitals spread across London, the home counties and north-west England.

 

The recommendations from the Competition Commission follow an investigation last year, which concluded that prices were kept artificially high by the dominance of the largest private groups.

 

The commission said the market power of the three largest firms, HCA, BMI and Spire, made it difficult for rivals to open competing services and artificially inflated prices for patients and their insurers.

 

"'We've looked hard at how we can meet the challenging task of opening up this market to increased competition," said Roger Witcomb, chairman of the private healthcare inquiry group at the commission.

 

"We're now proposing those measures which we believe will offer practical and effective ways of improving competition and ensuring private patients get a better deal. Requiring operators to sell hospitals is a big step and we have focused on those areas where a sale will be effective in increasing competition – where a single operator owns a cluster of hospitals which face little rivalry."

 

The commission, which publishes its final recommendations in late March, estimates that the three largest hospital groups made excess profits of £173m-£193m a year between 2009 and 2011, equivalent to 10% of their revenues.

 

The private health insurer Bupa welcomed the proposals as "a decisive step forward for customers and patients". But the healthcare providers vowed to fight the plans.

 

Stephen Collier, of BMI, accused the commission of failing to grasp how the market for private healthcare worked. He said: "It is a fact that BMI Healthcare's shareholders have taken nothing out of the business they bought in 2006, instead reinvesting every pound earned back into our hospital operating business.

"It is therefore bizarre for the Competition Commission to claim that we are making excess profits and need to sell seven hospitals, a remedy that will have no benefit for patients because there is already sufficient competition and it won't lower costs."

 

Mike Neeb, the chief executive and president of HCA International, said the commission was "threatening unjustified and unfair remedies". He said: "The Competition Commission's provisional recommendations are plainly wrong. The CC's own report acknowledges there are nearly 50 competitors in Greater London. Our ownership of these hospitals encourages competition and drives a higher standard of care among hospitals in the UK."

 

Around 11% of the UK population are covered by private healthcare, mostly through employer schemes. This is the lowest level for more than 20 years, according to the health analysts LaingBuisson, although demand for policies has bounced back since the economic crash led many companies to rein in policies.

 

The Competition Commission also wants to restrict the widespread payment of cash bonuses to doctors for referrals – a practice that encourages clinicians to send patients to particular hospitals.

"Opening up this market to greater competition is not straightforward," said Witcomb. "Neither patients nor GPs have enough information, either on price or quality, to make informed decisions, and high costs and demand stagnation mean that new competing facilities are not going to spring up easily."

Neil Harris

(a don’t stop till you drop production)