Private hospital costs higher in areas with less competition

Many private hospitals face little competition in their local areas, leading to higher private medical insurance premiums and charges for patients, initial findings from the Competition Commission (CC) have concluded.

The provisional findings of the commission’s investigation into privately funded healthcare schemes has identified some 101 private hospitals that face little local competition.

Some of these, the commission argued, were in clusters under common ownership of one of the major hospital groups, such as BMI, Spire and HCA.

The commission also highlighted incentive schemes that “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”.

Some 80% of private patients funded their treatment through private medical insurance companies, often paid for by employers.

“The prices charged by operators to insurers are set nationally, but the CC believes that the lack of competition in many local areas, where insurers will have little choice but to use the local operator, results in higher premiums for all patients. Self-pay patients also face higher charges in areas with little local competition,” it concluded.

The private healthcare market was referred to the commission by the Office of Fair Trading in April, and the CC is due to publish its full report by or before next April.

While BMI, Spire and HCA all disputed the commission’s take on the market, insurers by and large were more positive, with Bupa, for example, arguing that it was potentially good news for patients if it led to greater transparency.

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