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UK competition watchdog plans forced sale of private hospitals

Source: Reuters - Thu, 16 Jan 2014 17:24 GMT
Author: Reuters
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LONDON, Jan 16 (Reuters) - Two private healthcare groups may be forced to sell nine hospitals, mainly in London, after an investigation by Britain's Competition Commission found patients were not getting value for money.

The Competition Commission said HCA International, owned by the largest U.S. healthcare group HCA Holdings Inc, needs to sell two hospitals in central London - London Bridge and Princess Grace.

Rival BMI, Britain's largest operator with 66 hospitals, could be forced to sell seven hospitals in Greater London, the south-east and the north-west of England. BMI is partly owned by South Africa's Netcare and private equity group Apax Partners.

The watchdog said last August that it could recommend the sale of up to 20 hospitals because of a lack of competition in local areas and barriers to entry which had pushed up prices for patients with private medical insurance and those paying for themselves.

Commission chairman Roger Witcomb said requiring operators to sell hospitals was a big step. "We have focused on those areas where a sale will be effective in increasing competition-where a single operator owns a cluster of hospitals which face little rivalry," he said.

HCA International said the CC's provisional recommendations were "plainly wrong", and it would fight the ruling.

"The CC's own report acknowledges there are nearly 50 competitors in Greater London, our ownership of these hospitals encourages competition and drives a higher standard of care among hospitals in the UK," said chief executive Mike Neeb.

"To forcibly divest hospitals from successful healthcare organisations cannot be good for either patients or our economy."

BMI said the regulator had underestimated the true cost of providing private healthcare.

"BMI Healthcare and its hospitals do not exercise market power or make excess profits at the expense of patients; the Commission still fails to make any case to the contrary, fatally undermining its case for divestments," said chief executive Stephen Collier.

The Commission will consult further on the measures before it publishes its final report at the end of March.

The top five healthcare providers, which also include Spire, owned by private equity firm Cinven, Ramsay Health Care UK and Nuffield Health, accounted for about 77 percent of the market by revenue in 2010, according to a 2011 report by the Office of Fair Trading. Smaller providers include Abbey, Aspen Healthcare, The London Clinic and The Horder Centre.

The state-run National Health Service is by far the leading provider of treatment in Britain, where the market for privately funded healthcare was worth 6.4 billion pounds ($10.46 billion) in 2011, according to consultants Laing and Buisson.

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