On 16 January 2014, the UK Competition Commission (the “CC”) outlined its proposed measures to increase competition in the £4 billion UK private healthcare industry. The measures are the result of a referral of the industry from the UK Office of Fair Trading for investigation.
The measures give teeth to a CC report published in August last year that found little competition in local areas across the UK and high barriers to entry in private healthcare. The CC believe many private hospitals face little competition in local areas and that patients and insurance companies are being overcharged as a result.
The CC has told HCA, the American owned private hospital operator, that it must put two of its London hospitals up for sale: London Bridge and Princess Gate. BMI, Britain’s largest operator, has been asked to sell 7 of its 66 hospitals. In doing so, the CC says it has focused its divestitures on areas where a sale would force competitive pressures.
The CC also indicated that it would block operators from running private patient units at NHS hospitals where there was little competition in the local area. These private patient wings are seen as more accessible to market entrants due to lower costs in running them than in building new private hospitals.
The CC’s provisional report and measures have been strongly criticised by the industry and legal challenge of the forced divestitures is expected. BUPA, one of the UK’s largest medical insurers, has however welcomed the proposed measures.
The final report on the industry is expected in March this year.