OFT to investigate private healthcare market

The Office of Fair Trading is to examine the private healthcare market amid concerns that competition and patient choice are being stifled.

The government body said its initial research suggests the £5.5bn market might not be working well for private healthcare patients.

The OFT will explore four areas of concern including the existence of any restrictions on the ability of consultants to practice; the concentration of private providers and whether this limits competition; barriers to preventing new providers; and how consumers access and assess information, and exercise choice.

Doctors’ representatives welcomed the study. They’ve campaigned against private medical insurers’ use of preferred provider networks and fixed fee schedules which they claim compromise patient choice.

The BMA recently wrote to the OFT challenging PMIs’ attempts to impose fixed fee schedules.

The letter, from Mr Derek Machin, chair of the private practice committee, called on the OFT to consider “the legitimacy and purpose” of BUPA’s benefit maxima and AXA PPP’s schedule of published fees - which outline the maximum fees which new consultants can charge for certain services and procedures.

The practices of PMIs were recently questioned in the House of Lords and this followed a Financial Ombudsman report which suggested the number of complaints it received about PMI had increased by 27% in the past year.

Mr Geoffrey Glazer, chairman of the Federation of Independent Practitioner Organisations, said: “We look forward to the results of the study which we hope will benefit patients by ensuring that they maintain the right to choose both the consultant from whom they receive treatment and the hospital in which they are treated without discrimination and loss of reimbursement.

“Complete transparency from the insurers regarding their terms of cover is essential.”

Dr Simon Peck, AXA PPP healthcare’s head of provider audit and information, said the insurer also welcomed the review. “Our published fee schedule acts in our customers’ interest as it allows us to combine providing a fair reimbursement for doctors with being able to offer a guarantee that their fees will be met in full without exposing us or our customers to the risk of excessive charges,” he said.

However, it’s believed the OFT’s main interest will be the increasingly important role private healthcare providers are playing in delivering NHS services.

Its figures suggest that insurers account for 61% of business for private hospitals and clinics, with NHS-funded patients 23% and self-pay consumers 15%. The NHS’s contribution has more than doubled in the past four years. However, the market is still dominated by a small number of large companies.

OFT will be interested in so-called “network agreements”, where insurers agree link-ups with individual private health care groups.

Circle, the employee-owned health care group, complained to the OFT in September over “alleged anti-competitive agreements” between healthcare providers and insurers.

Dr Natalie-Jane Macdonald, managing director of Bupa Health and Wellbeing, commented: “Competition in the private healthcare market is good for our customers. We will support the OFT’s market study and respond to the consultation that has been announced today.”

The study will be formally launched in spring 2011 but the OFT is seeking views on its potential scope.

Sonya Branch, OFT senior director of services and public markets, said: “We are keen to establish whether patients and buyers of private healthcare services, including the NHS, are getting the full benefit of choice and competition.”

Comments can be submitted to privatehealthcare@oft.gsi.gov.uk by 1 February 2011.

Tags: Private practice, Privatisation