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U.K.’s OFT Seeks Private Medical Market Antitrust Probe

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April 4 (Bloomberg) -- The U.K.’s private health-care market warrants closer scrutiny by the Competition Commission, the country’s initial regulator of antitrust issues said following a review.

Patients and doctors lack easily comparable information on the quality and costs of private medical services, which may undermine competition between private providers and the state-run National Health Service, the Office of Fair Trading said in a statement today.

There are only a limited number of significant private health-care providers in the U.K. Some of those providers can impose price increases or set other conditions if an insurer plans to open its network to another medical operator, impeding competition, the London-based OFT said. Some providers pay physicians to treat patients at a particular facility, which also limits competition, the regulator said.

“The private health-care market could work better for patients,” and “there are reasonable grounds for suspecting that there are features of the market that prevent, restrict or distort competition,” the OFT said.

Circle Holdings Ltd., a London-based private-hospital operating partnership, said in December that it filed an antitrust complaint in September 2010 regarding ties between private providers and insurers that prompted the OFT’s study.

Rising Costs

British United Provident Association Ltd., a private U.K. insurer and care provider known as Bupa, said it will work with the Competition Commission on its investigation.

“For too long, the cost of private health care has been rising to unsustainable levels, in large part because of a lack of competition and efficiency in the private hospital market and among consultants in private practice,” Natalie-Jane Macdonald, managing director of Bupa Health and Wellbeing, said in a statement.

More transparency is needed around decisions on where patients are referred for treatment, Nuffield Health, the U.K.’s largest health-care charity, said in a statement. The commission’s probe should be extended to examine the role of the private medical insurers, of which two hold more than 70 percent market share between them, according to the charity, which provides services to private hospital patients.

‘Golden Opportunity’

“This investigation offers a golden opportunity to get rid of some of the practices which have beleaguered the industry for years,” David Mobbs, chief executive officer of Nuffield Health, said in a statement. “The issues are complex, but if resolved the industry will flourish.”

Under a new law, NHS hospitals can increase capacity for private patients, who pay their own bills or have private insurance, to 49 percent from 3 percent. The Health and Social Care Act may also attract more private companies to help local doctors’ practices manage their new responsibilities as procurers of services.

The private sector accounted for about 16 percent of U.K. health-care spending in 2009, according to the Organization for Economic Cooperation and Development in Paris.

“The private health-care sector is likely to continue to be of growing importance to the nation’s population and economy, and so it is important that the market works well,” OFT CEO John Fingleton said in the statement. “Yet private patients and their GPs face difficulties selecting private health-care providers on the basis of quality or value for money, and this may ultimately result in patients paying higher prices, or receiving lower quality care.”

The OFT performs initial studies of antitrust questions in proposed takeovers as well as market-dominance issues. The Competition Commission has the power to block transactions or order a halt to anti-competitive practices. The U.K. plans to merge the two regulators.

To contact the reporter on this story: Kristen Hallam in London at khallam@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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