Posts Tagged ‘Private practice’

VAT guidance implications for medical companies

By Jason Sharp - 25th September 2013 5:32 pm

New guidance suggests that supplying medical services via a company may no longer be VAT exempt.

The guidance in VAT notice 701/57 states that if you are a qualifying health professional your services are exempt when both of the following conditions are met: 1. The services are within the profession in which you are registered to practise. 2. The primary purpose of the services is the protection, maintenance or restoration of the health of the person concerned.

However, in a recent tax case (Rapid Sequence Limited) HM Revenue & Customs (HMRC) have successfully argued that locum doctors provided to NHS hospitals via a medical agency was a taxable supply (not an exempt supply). As such the medical agency should apply VAT to their invoices.

The tax tribunal found that the VAT exemption only applies to the ‘supply of medical care’ and in this case the agency was supplying staff to the NHS not providing medical care.

This is a very worrying decision as it has been suggested that this is the first case in which HMRC have successfully argued that an EC Directive overrides UK legislation to the taxpayer’s detriment.

It is very early days but the immediate concern is how this ruling affects doctors who provide services through their own company. Whilst your own company is not a medical recruitment agency, will HMRC now argue that this structure is just the same as that of Rapid Sequence Limited? i.e. the supply of staff by a company.

If you are using a company as your business trading vehicle it would be prudent to review the VAT position as a matter of urgency.

A further consequence of the decision is that businesses could be subject to VAT assessments in respect of its past supplies.

The tax tribunal actually said: “We would understand if Rapid Sequence finds this outcome highly unsatisfactory.” HMRC has accepted that the wording in their guidance is “unfortunate” and “problematic” and the tribunal commented that they hoped HMRC will view Rapid Sequence’s position sympathetically - whatever that means.

Authored by Jason Sharp at Doctors Tax Limited and should be used for general guidance purposes only.

BMI Healthcare’s response to competition review

By Stephen Collier, chief executive of BMI Healthcare - 28th August 2013 9:07 am

BMI Healthcare responds to today’s preliminary review into competition in the private healthcare sector which suggests that too many private hospitals face little competition in local areas leading to higher private medical insurance premiums and charges for private patients:

Aspects of the Competition Commission’s provisional findings announced this morning will be warmly welcomed as they bring long overdue clarity on key issues, for example the need for explicit guidance on what is permissible in incentivising consultants to work with individual hospitals. We are also glad to see recognition of the sector’s efforts to provide the transparent, comparable information which patients, insurers and commissioners need to make informed choices. However, in a number of areas the provisional findings are quite simply wrong, because they are based on flawed analyses of the reality of providing high quality private healthcare.

We reject absolutely any assertion that BMI Healthcare and its hospitals exercise market power or that we make excess profits at the expense of patients. The vast majority of BMI’s 69 facilities, in a UK market with over 500 rival facilities, face very significant local competition from other private hospitals and, increasingly, from the NHS. The Commission’s belief that BMI Healthcare makes excess profits ignores financial realities such as the necessary costs of keeping our hospitals equipped with the ever more expensive technology required to meet the needs of patients, commissioners and insurers. Without any state subsidy, sufficient economic return has to be generated by our business in order to fund these costs. In a depressed UK market, with significant spare capacity and “little or no growth in demand”, to quote the Commission, BMI Healthcare’s owners have taken nothing out of the business they bought in 2006, instead reinvesting every penny earned over and above the cost of capital back into our hospitals.

The Commission accepts that the sector suffers this low demand and spare capacity, yet now considers there are high barriers to entry for new entrants to local markets. Previously the Commission had indicated publicly that it thought barriers to entry were low, so we are keen to understand why it has shifted its position based on substantively the same evidence that led it to the opposite conclusion.

Prices for the vast majority of procedures undertaken in our hospitals are set by the NHS or by insurers, uniformly across our entire group. Less than one in seven of our patients pays for their own treatment, with their prices being set locally by individual hospitals. However, even here the Commission’s own analysis shows that there is no significant relationship between price and the level of competition each hospital faces. We will be studying the Commission’s report closely to try to understand what factual basis there is for their provisional findings on these points.

In terms of the relationship between hospital operators and medical insurers, BMI Healthcare plainly does not hold the whip hand, a point explicitly accepted in its submissions to the Commission by the second largest insurer. Networks are created and maintained by insurers, not hospital operators, and insurers use them to drive competition between hospitals for network status. Insurers can - and do - exclude hospitals from the networks they created as Bupa did by excluding 37 BMI hospitals from its networks less than two years ago, leaving the ‘delisted’ hospitals with the same high fixed costs, but with significantly reduced income, while the insurers continued to receive subscription income and send patients elsewhere. Medical inflation – and premia for private medical insurance - have been rising fast in recent years, but our prices to insurers have risen more slowly. This does not support the Commission’s provisional conclusion that BMI Healthcare has market power when negotiating with insurers.

Healthcare markets are inherently dynamic and complex, and therefore hard to regulate appropriately, particularly in competition terms. However, we are disappointed and surprised by parts of the Commission’s provisional findings, which in a number of areas seem to deviate sharply not just from our own analysis but also from the evidence the Commission itself has gathered and indeed from some of the Commission’s previously published views. Nevertheless we appreciate that these are the Commission’s initial, provisional, findings and we intend to work constructively with the Commission over the next few weeks so that its determinations – and associated remedies - do not undermine private healthcare to the detriment of those who matter – our patients.

Private patients paying for lack of competition

By Mike Broad - 9:01 am

Many private hospitals face little competition in local areas leading to higher private medical insurance premiums and charges for private patients, the Competition Commission finds.

In provisional findings on privately-funded healthcare services, the CC has identified 101 hospitals facing little local competition, some of them in clusters of hospitals under the common ownership of one of the major hospital groups, namely BMI, Spire and HCA.

To solve the problem, and increase competition, it wants to require the sales of hospitals to other operators where it can.

The CC highlights incentive schemes, which encourage consultants to choose particular private providers for diagnosis and treatment, and the lack of available information on the performance of hospitals and consultants as further restrictions on competition.

A summary of the main findings is as follows:

1. HCA charges significantly higher prices to insurers than other operators, even allowing for higher costs in London. Of the other hospital operators, BMI has consistently charged the highest price to insurers in recent years. Higher levels of local concentration lead to higher prices for self-pay patients.

2. BMI, HCA and Spire have, during the period under review, been earning returns substantially and persistently in excess of the cost of capital. Ramsay did so for some of the period.

3. There are high barriers to entry and expansion in this market in particular due to high entry and exit costs, likely response to entry by incumbents, reluctance by consultants to move activity to a new hospital and little or no growth in demand. Few firms have entered the market in recent years and entry by existing operators into new areas has also been uncommon.

4. Private hospitals offer access to resources which will make using their facilities more convenient for a clinician by, for example, making consulting rooms or secretarial services available. They may also operate schemes which provide financial benefits to consultants using their facilities. The schemes could affect consultants’ referral decisions and create an incentive for excessive diagnostic tests or consultations.

5. The two larger insurers, Bupa and AXA PPP, achieve significantly lower prices than the smaller insurers and have some countervailing buyer power, Bupa more than AXA PPP. However, no insurer has countervailing buyer power that can fully offset the market power of BMI, Spire and HCA.

6. Bupa and AXA PPP have some buyer power in relation to consultants but the CC has found no evidence to suggest that it is being exercised in such a way as to harm competition. Although the incentive is on PMIs to promote competition among consultants and maintain innovation and quality, the CC considers that PMIs, and in particular Bupa, need to ensure that their policyholders are provided with clear and accurate information about consultants.

6. Information on the performance of hospitals and consultants is not yet as good as it should be to promote effective quality competition between private hospitals and between consultants.

7. The CC has found no evidence that local market power possessed by consultants, either individually or in groups, is giving rise to competitive harm.

CC chairman and chairman of the Private Healthcare Inquiry Group, Roger Witcomb said: “The lack of competition in the healthcare market at a local level means that most private patients are paying more than they should either for private medical insurance or for self-funded treatment. The lack of available and comparable information, often less than is available to NHS patients, also makes informed choices—which could help drive competition—for these patients difficult.

“We’ve also seen the existence of a range of incentives which encourage medical professionals to choose facilities on grounds other than price and quality—and we struggle to believe these can be in the interests of patients.”

The CC’s remedies include:

- Divestiture of hospitals in areas where one operator owns a cluster of hospitals. Our preliminary analysis has identified slightly fewer than 20 potential divestitures.

- In areas with just one or two hospitals, preventing the incumbent(s) from expanding and deterring entry by partnering with NHS hospitals to operate Private Patient Units.

- Preventing hospital operators from offering to consultants any arrangements, in cash or kind, which create incentives for consultants to refer patients to or treat them at its hospitals.

- Measures to prevent tying and bundling—where a hospital operator seeks to use its position in local areas as leverage in its negotiations with insurers—by stopping hospital operators responding to a loss of business or reduction in price in one area by raising charges in another.

- Measures to improve available information on consultant fees and quality, and on the quality of individual hospital’s services.

Witcomb added: “Curing these ills and trying to get a better deal for patients is not going to be straightforward. High costs and other factors mean that new competing facilities are not going to spring up so we may look to increase competition and require sales of hospitals to other operators where we can. We will also look at ways that will stop hospital operators using local strength in one area as leverage in their negotiations nationally.

On private medical insurers he said: “We’re aware of the disquiet expressed by some patients and consultants in relation to the actions of some health insurers. To the extent that they are trying to keep premiums down and promote competition on price and quality, they are doing exactly what their customers would expect. However, companies like Bupa need to ensure that they communicate better with policyholders about what their premiums entitle them to.”

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Ten tips for doctors on growing a private practice

By Adrian Stevenson, associate of Laing & Buisson - 18th July 2013 12:12 pm

Despite the economic gloom there are many opportunities for consultants to take their private practice to the next level, says Adrian Stevenson, an associate of the independent healthcare sector consultancy Laing & Buisson.

Here are some of the top tips he will be sharing at Private Practice 2013:

1.) Medical insurance paid by companies funds the lion’s share of private healthcare but one of the fastest growing markets is self-pay. Demand is being driven by the state of the NHS and concerns about the complexity and price of medical insurance. The British are not very good at asking what private treatment costs so offering a fixed rate all-inclusive package deal is very attractive for these patients. Be clear about what everything costs. Promote price and value for money.

2.) Increasing public awareness of cancer and lifestyle-related conditions through the internet and TV shows is also driving demand for private healthcare.  Appeal to these informed patients by giving them more information and choice, publish outcomes data and offer hand-outs. Hone your communication skills, engage with patients through eye-to-eye contact and offer a welcoming environment and a good bedside manner.

3.) The private sector is brilliant at moaning about patients – don’t ever blame the customer, remember you are a retail business, people are paying for the service either themselves or through their company and they want value for money.

4.) Make sure you know who your customers are - insurers pay at least 80% of all hospital bills so make sure you know who the big players are in your area.

5.) Get insurance bills paid promptly by making sure that you understand what the rules are for reimbursement to avoid invoices being sent back with errors.

6.) Treat private medical insurers seriously as they frequently want to change the way they pay because consultants’ fees comprise 40% of claims.  The insurers are not altruistic organisations.

7.) Form a good relationship with the management team at your local private hospital as they can help you to develop your practice and ensure that your name pops up at the top of the list when there is a referral.

8.) Identify and secure new markets by checking out the trends in your specialty. IVF, bariatric surgery and cancer treatment for example are set to boom.

9.) Work with colleagues so you can provide a holistic team approach for example by combining surgical and cardiological skills.

10.) Employ marketing and PR people to promote your brand.

Adrian Stevenson is speaking at Private Practice Conference. Click here to attend.

Read more on PP at

One in six hospitals offering NHS private services

BMJ - 17th July 2013 1:14 pm

One in six hospitals in England have introduced new private treatment options this year, as cost pressures tighten restrictions on some NHS services.

A growing number of hospitals are also offering patients the choice of “self funding” for treatments and services that are subject to restrictions or to long waiting times on the NHS, such as IVF, cataract surgery and hernia repair.

These are the key findings of a BMJ investigation, which shows that in many cases treatments are offered at cheaper rates than in the traditional private sector.

Read more.

Attend Private Practice Conference to hear from experts on building private lists.

Independent hospitals strive for transparency

By Andrew Vallance-Owen - 7th May 2013 2:34 pm

The calls for greater transparency on outcomes and quality of care within UK hospitals have been steadily growing in recent years and all involved in healthcare must, rightly, get used to a far higher degree of scrutiny than ever before.

In the NHS this has taken the form of the ambitious range of patient experience and outcome measures being introduced by NHS England including the Friends & Family Test and the introduction consultant-level mortality data. This information is vital to drive better customer focus and continuous quality improvement but is also increasingly essential for patients, the GPs who advise them and commissioners.  This agenda has been given further urgency by the Francis Enquiry and the ongoing Keogh review of hospitals reporting high mortality rates.

For the independent health sector these issues play out for providers and clinicians in similar but subtly different ways and sometimes with different drivers. Another review led by Sir Bruce, for instance, was the recently published Review of the Regulation of Cosmetic Interventions. The Review discovered that this was pretty well a ‘data free zone’ and strongly recommended that all providers and consultants should, in future collect and publish outcome data on surgical cosmetic procedures.

The Competition Commission is currently reviewing independent healthcare generally following an Office of Fair Trading report which highlighted that customers lacked the timely, accurate, accessible and joined-up information necessary to enable them to make informed choices.

This is a conclusion that has been acknowledged by everyone in the sector and has helped concentrate minds on the need both for transparency and to create a system objectively to compare hospitals using the same measures as the NHS. This work is now coming to fruition as the Private Healthcare Information Network publishes its first public dataset on a new website. The initial indicators are modest –length of stay and volume data – but this will be enhanced over the summer to create a richer data set.

The issue of patient choice is more critical in the  independent sector where competition is fundamental and where there should be a real choice. PHIN data, such as comparative performance on infection rates and outcome measures including PROMs, is likely to be a major part of how independent hospitals compete in the future. The independent sector led the way with the development of the routine measurement of PROMs, surely it is now time that the sector also takes the lead on publishing high quality comparative data across all its activity, not only by provider but increasingly by consultant.

Andrew Vallance-Owen was group medical director of BUPA for 17 years until 2012 and now holds a number of non-executive roles including the chairmanship of the South West Peninsular Academic Health Science Network and the Department of Health’s PROMs Stakeholder Group.

PMIs threaten consultants with de-recognition

By Mike Broad - 2nd May 2013 10:19 am

The number of consultants in private practice threatened with de-recognition by private insurers has tripled in the past two years, a survey finds.

BMA private practice survey shows that threats over recognitions have increased from 11% in 2011 to 34% this year.

Furthermore, the proportion of consultants who set their own fees has decreased from 36% in 2009 to 26% in 2013.

Most - four out of ten - set their fees based on an insurance schedule, the research shows. A total of 22% charge fees in accordance with the reimbursement available from the insurer of the patient - more than double the proportion doing this in 2009.

Eight out of 10 consultants have been challenged by private medical insurers over their fees.

The Competition Commission is currently investigating the private healthcare market. In addition to examining issues like transparency, the dominance of leading providers and obstacles faced by new providers, it is also looking at the buyer power of insurers in respect of individual consultants.

On launch, last year, it said: “If insurers are suppressing consultant fees to a level below those which would prevail in a competitive market, this could lead to a reduction in the quality of service provided by consultants to patients and affect the incentives to innovate. In addition, there may be distortions to competition between consultants when caps on the reimbursement of fees are applied to some consultants (e.g. newer or junior consultants) and not to others (e.g. more experienced ones). In the longer term, this may result in a shortage of consultants willing to practice and in a reduction in the potential output of the sector.”

The BMA survey of 1,319 doctors suggests that the number of doctors carrying out some private practice has reduced from 60% in 2005 to 45% in 2013.

other findings include:

- 25% of respondents have an income from private practice of less than £10,000 a year.

- ophthalmology and surgery are the leading private practice fields in terms of income while emergency medicine, paediatrics and geriatrics are at the bottom of the table.

This year, the survey was sent to 7,500 randomly selected consultants across the UK.

“Doctors using NHS to push own private practices”

Telegraph - 5th April 2013 10:17 am

Sir Bruce Keogh, the Government’s medical director, admitted that some of his colleagues have been abusing the system by using the NHS to “push” their personal interests.

He admitted there is a problem after MPs complained that some NHS doctors are trying to persuade patients to pay unnecessarily for private services.

There are fears that the Coalition’s NHS reforms, which came into force on April 1, will allow even more doctors to promote their own personal business interests.

However, MPs are concerned that doctors have been allowed to abuse the system even before the new reforms come into force.

In a hearing of the health select committee, MPs warned that doctors are trying to get people to go to their own private practices rather than use the NHS for free.

Read more in the Telegraph.

Watch out for the dancing gorilla

By Dev Lall - 1st March 2013 10:38 am

It seems radiologists and basketball fans share something unexpected in common.

Namely, the inability to see dancing gorillas. A recent study by a Harvard psychologist studying inattentional blindness looked at the ability of radiologists to spot tiny features on a thoracic CT that might indicate lung cancer. They were, as you might expect, very good at this.

Except, on some of the CTs was a deliberately superimposed, out-of-place image - a dancing gorilla.

And when questioned later 80% of the radiologists said they had not seen the gorilla, despite eye-tracking scans showing they had looked directly at it.

It seems that our vitamin D - deficient colleagues (only joking, guys) are fantastic at spotting subtle indicators of disease on the CTs but miss other things that are somewhat more obvious.

The study builds upon work done in the 1990s when a similar phenomenon was demonstrated in people watching a basketball game, with the aim of counting the number of passes made by members of one of the teams.

In that study a man in a gorilla suit walks onto the court, beats his chest repeatedly then walks off, spending a total of 9 seconds on screen. Half the observers did not see the gorilla.

When you think about it, it isn’t so surprising. We have only so much computing power in our brains, and if too much is going on we miss stuff. Just think back to when you’ve been driving a car whilst having a conversation with the passenger. If something happening on the road has required more of your attention you find you’ve missed part of the conversation you were just having and have to ask them to repeat what they just said.

And the same is true with our private practices, I think.

We spend so much time attending to the ‘task in hand’ - seeing patients - that we neglect the most important aspect of any practice, which is of course the generating of more patients to see in the future.

A problem exacerbated by the fact we are far less familiar with how to get more patients than we are with treating the ones we have, so the easy option is to stick with what we know.

So this weekend, when you’re scanning through your diary for the coming week, why not spend some time considering how to grow your practice, how you’re going to get more patients?

After all, it would be a shame to miss seeing the dancing gorilla in your own practice, wouldn’t it?

Dev Lall runs The Private Practice Expert.

Only surgeons should offer cosmetic surgery

By Mike Broad - 30th January 2013 10:24 am

Only surgeons should provide cosmetic surgery and only doctors, dentists and nurses who have undertaken appropriate training should provide non-surgical cosmetic treatments such as Botox.

These are the conclusions of new professional standards for cosmetic practice released by the Royal College of Surgeons.

The guidelines state that as standard practice, practitioners should discuss relevant psychological issues (including any psychiatric history) with the patient to establish the nature of their body image concerns and their reasons for seeking treatment. They should not at any point imply that treatment will improve a patient’s psychological wellbeing.

Aimed at all doctors, dentists and nurses involved in cosmetic practice, the guidelines focus on the behaviour and competencies medical professionals should demonstrate when providing cosmetic procedures.

The standards state that financial deals such as time limited discounts should be banned and stringent psychological assessment promoted. They lay out the professional duty practitioners have to their patients, including the need to ensure they have a clear understanding of the risks of the procedure, outlining consequent aftercare and being transparent about costs from the outset.

Professor Norman Williams, President of the Royal College of Surgeons, said: “While the colleges and professional organisations involved in cosmetic practice are neither regulators nor legislators, the profession has a responsibility to provide standards to which we would expect our members to work.

“We have serious concerns that not all those who offer cosmetic procedures are adequately qualified, or that patients are getting accurate information prior to treatment. We hope these standards will feed into the ongoing review of the industry led by the NHS Medical Director, Sir Bruce Keogh, and improve quality of care for patients going forward.”

Currently certain cosmetic treatments can be administered by anyone, anywhere with no medical training.

Key points in the professional standards include:

- Practitioners have a duty to manage a patient’s expectations of how they will feel after treatment. They should not imply that patients will feel ‘better’ or ‘look nicer’, and should instead use unambiguous language like ‘bigger’ or ‘smaller’ to describe what that patient is trying to change.

- All practitioners should consider whether they should refer a patient to a clinical psychologist before proceeding with further consultations or treatments. Pre-procedure discussions should include the disclosure of relevant psychiatric history such as eating disorders and the practitioner should document any signs or symptoms of Body Dysmorphic Disorder. Psychological factors contributing to the motivation to undergo the procedure and expectations of outcome should also be assessed.

- Marketing and advertising must be honest and responsible, using only real patient photographs that have not been air brushed or digitally enhanced.

- Currently non-surgical procedures such as laser treatments or injectables can be administered by people with no healthcare qualifications whatsoever. The RCS recommends that only licensed doctors, registered dentists and registered nurses who have undertaken appropriate training should provide any cosmetic treatment.

- Only those who have qualified as a medical doctor and undertaken post-graduate surgical training should carry out invasive procedures such as breast surgery or liposuction.

Mr Steve Cannon, chairman of the working party which produced the guidelines, said: “As the majority of cosmetic procedures are not available on the NHS, we must ensure that commercial interests do not compromise patient safety. With the demand for cosmetic surgery and non-surgical treatments rising year on year, it is crucial that the highest level of professionalism is maintained amongst practitioners.”

The 2010 National Confidential Enquiry into Patient Outcome and Death (NCEPOD) report On the face of it, revealed a lack of consistent professional standards in cosmetic surgical practice. More recently, the problems with PIP breast implants exposed further shortcomings within the industry as many women were caused unnecessary distress as they struggled to track down and access their medical records to determine which implant they had received.

Mr Ian Martin, NCEPOD clinical co-ordinator, said: “In 2008 we identified poor regulation, low volume practice, and deficiencies in training. We also identified poor standards of consent and unrealistic advertisements which had tended to stress the benefits of surgery without dealing sufficiently with potential side effects. The lack of standards and systematic audit was also highlighted.

“We are very pleased to note that the Department of Health and Royal College of Surgeons are now taking steps to address these deficiencies in cosmetic surgical practice and support the report.”

Read the report here.