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Private practice competition law: doctors warned they face jail or hefty fines if anti-competitive

Private medics could face up to five years in prison or a substantial fine if they breach competition law, warns a campaign by the Competition and Markets Authority (CAM).

It follows a £382,500 fine imposed on the Consultant Eye Surgeons Partnership (CESP) Limited in August 2015.

CESP Limited infringed competition law when it recommended its members refuse to accept lower fees offered by an insurer and charge insured patients higher self-pay fees.

The organisation, which represents 37 limited liability partnerships (LLPs) and their 200 consultant members, also fell foul of the law when it circulated amongst its members detailed price lists for ophthalmic procedures such as cataract surgery to be used with insurers. These collectively set prices did not pass on lower local costs (such as cheaper hospital fees) and made it harder for insurers and patients to obtain lower prices.

CESP Limited was also found guilty because it shared consultants’ future pricing and business intentions, such as whether to sign up to a private hospital group’s package price, which enabled members to align their responses.

The CMA has now published an open letter to private doctors and sent warning letters to the Limited Liability Partnerships which were members of CESP.

It advises private doctors to carefully consider how they interact with their competitors and in particular to ask whether they co-operate with them and discuss matters such as pricing. All doctors should check the guidance on the CMA’s website to ensure they are complying with the law.

The CMA says: “Competitive pressure helps keep fees from inflating or becoming unjustifiably expensive. Attempts to remove this pressure can be illegal under competition law.”

It warns that in the most serious cases businesses or doctors found to be in breach of competition law risk fines of up to 10% of turnover, while individuals could suffer up to 5 years in prison and disqualification from acting as a director.

The CMA has published additional advice to help practitioners, including a 60-second summary, to help them understand competition law and why it is in the best interests of themselves and their customers to comply.

Ann Pope, CMA Senior Director, Antitrust, said there was a worrying lack of knowledge about competition law, and the penalties that can be imposed for breaking it, amongst doctors. “In cases where practitioners are acting anti-competitively in their private work, patients can ultimately suffer as they can end up paying more to receive treatment, either directly or via higher insurance costs.”

The Federation of Independent Practitioner Organisations (FIPO) is also helping to spread awareness of competition law risks amongst the medical profession.

Geoffrey Glazer, FIPO Chairman, said: “The CESP ruling carries important and far-reaching implications for all consultants working in the independent sector. As a consequence, we have taken this opportunity to reassert our commitment to competition law compliance and to remind consultants of their obligations under competition law.”

The CMA advises that you can’t:

– Coordinate with your competitors in order to keep prices at a certain level.

– Agree with your competitors to charge a fixed price or a mechanism for setting prices.

– Agree to share markets (such as particular places) or customers between you and your competitors.

– Discuss with your competitors your future commercial plans, including how you intend to respond to pricing initiatives or tender invitations.

What you can do:

Competition law does not prohibit working together in groups nor collaborating on sharing knowledge around clinical practice and making referrals based on objective reasons/clinical need. However, if you wish to collaborate in a way that for example involves sharing commercially sensitive information then you should ensure it meets the test for an exemption.

The law allows such collaboration provided that it contributes to improving production or distribution or promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

– Impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives

– Afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

FIPO has published two documents on aspects of Competition Law:

Consultant Fee Setting and Information Exchange, available here

Annex 1 – Competition Law Affecting LLPs, Companies and Sole Traders available here

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