The Competition & Markets Authority (CMA), previously known as the Competition Commission, published their report entitled private healthcare market investigation in 2014, concerning the supply of privately-funded healthcare services in the UK. The CMA concluded that there were aspects of the UK’s private healthcare market that led to adverse effects on competition (known as AEC) and took action to remedy these AECs, publishing an Order in accordance with the Enterprise Act (2002).
The Order was published in four parts, some of which came into effect with immediate effect, while others were delayed as a result of legal challenges, as well as planned further investigation. The first part of the Order concerned general arrangements and the scope of the Order. Part 2 concerned the AEC as a result of high barriers to entry and expansion for private hospitals, including within central London, where consumer prices were considered to be especially high. Part 3 concerned private hospital incentivising schemes, which encouraged clinicians to ‘refer’ patients for treatments / tests at certain facilities, for either direct or indirect rewards. Part 4 concerned the AEC arising from a lack of performance measures of private healthcare facilities, and performance measures and fees of the consultants themselves.
Part 2
The initial effect of Part 2 of the Order was a request from the CMA to the largest private hospital operator in central London, HCA International, to divest one or two of its hospitals. After an appeal to the Competition Appeal Tribunal – and the admission by the CMA of statistical errors in their initial report – further evidence was considered. The CMA felt that there was evidence of AEC in central London, with higher than expected prices, however, it was finally concluded that divestiture of the hospitals in question would be disproportionate. The Chairman of the Private Healthcare Market Remittal Group stated that central London customers were paying too much, largely as a result of HCA International’s strong market position, however, no remedies were appropriate other than the remedies provided by other aspects of the Order.
Part 3
Part 3 of the Order is now in full effect and discusses the remedies for AEC as a result of schemes that hitherto incentivised certain behaviours by consultants. In essence, transparency in all dealings is now required by law and many previous arrangements have been outlawed. Examples of previous behaviour included:
• loyalty payment schemes, whereby consultants accrued bonuses for treating patients in certain hospitals
• direct payments for ‘referrals’
• the provision of high value services, such as free secretarial services or room hire (e.g. consultation rooms)
• the payment of indemnity premiums by private hospitals for consultants
• the provision of shares in equity participation schemes
Referring consultants may still hold shares in a private facility, however, they must acquire these shares at a full market rate, and must not hold more than 5% of the financial interest or equity in the facility, nor should there be any obligation on them to treat patients in the facility. In the setting of consultants owning a stake in an organisation’s facility, the details of this arrangement – including names and the percentage stakes – need to be published clearly on the organisation’s website.
Consultants must now pay a fair market rate for secretarial services provided by private hospitals, as well as paying for the use of consultation rooms in private hospitals. Lower value services, such as the provision of free refreshments and general marketing services are not prohibited, subject to certain criteria.
Part 4
Part 4 of the Order has perhaps been the most contentious for consultants and was the subject of an extended appeal by the Federation of Independent Provider Organisations (FIPO). The final effects of the Order include the publication by individual consultants of their fees for consultations and various procedures.
In their report, the CMA noted the lack of transparency of consultant fees, which, in addition to a lack of performance measures of both hospitals and individual consultants, led to an AEC. Private hospitals now need to provide information on procedures to the information organisation, Private Healthcare Information Network (PHIN). Information required (at both hospital and in future, consultant level) for inpatients includes:
• volumes of procedures undertaken
• average length of stays for procedures
• infection rates
• readmission rates
• revision surgery rates
• mortality rates
• unplanned transfer rates
• measures of patient satisfaction (to be determined)
• certain audit information
• certain procedure-specific measures of improvement in health outcomes
Consultants need to provide to PHIN information regarding their outpatient consultation fees (either fixed fee or hourly rate), and at some point information regarding their standard fees for a large number of their procedures. The original CMA Order suggested that a consultant’s top 50 procedures’ fees would need to be delineated, however, at the time of writing it seems likely that, dependent on one’s practice, a smaller number will need to be provided. In addition, consultants are now required to provide to patients in advance with a standardised CMA-approved template letter containing:
• the estimated costs of an outpatient consultation
• details of financial interests in the medical facility of any kind
• a list of insurers who recognise the consultant
• a statement asking patients to check the extent of their medical insurance cover, if applicable
• the website address of the PHIN information organisation
Prior to further tests / procedures, anticipated costs need to be disclosed, including fees for other consultants involved in the care (e.g. anaesthetists), or at least their contact details, if not available.
FIPO has stated that they do not object in principle to the ‘fees remedy’ of Part 4, provided that the fee remedy operates within in an open and competitive fee market, free of control or distortion by private medical insurers (see below).