Office of Fair Trading to assess private healthcare referral

Trading standards body the Office of Fair Trading (OFT) is to decide by the end of March whether or not to refer the private healthcare sector to the Competition Commission to investigate its practices.

The OFT said in December 2011 that it had provisionally decided to refer the sector to the commission but would carry out a consultation, which closes on 30 January, before making a final decision.

In coming to its decision, the OFT argued that it had found:

  • A lack of easily comparable information available to patients, GPs or health insurance providers on the quality and costs of private healthcare services. This, it argued, could mean “competition between private healthcare providers and between consultants is not as effective as it could be” or that “the full costs of treatment may not always be transparent for private patients”.
  • A very limited number of significant private healthcare providers and larger health insurance providers at a national level. On top of this, there were pockets of particularly high concentration in some areas where private healthcare providers own the only local hospital. “This may give a degree of market power to healthcare providers in these areas, as the larger insurance providers will generally rely on them to be able to provide full national coverage to policyholders,” it said.
  • A number of features combining to create significant barriers to new competitors entering and being able to offer private patients greater choice. For example, some larger private healthcare providers imposed price rises or set other conditions if an insurer proposed to recognise a new entrant on its network. “There also appear to be certain incentives given by private healthcare providers to consultants, which could raise those barriers further,” it added.

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