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Published 3 April 2014
The Competition and Markets Authority (CMA) has this week published its final report in the long-running investigation into the market for privately funded healthcare.
In its report, the CMA - successor to the Competition Commission (CC) - identified structural and non-structural features that, on their own and in combination with each other, could give rise to so-called 'adverse effects on competition' in the provision of privately-funded healthcare services in the UK.
Commenting on the report, Alexandra von Westernhagen, Head of the EU/Competition team at international law firm DAC Beachcroft, said: "The final report largely confirms the analysis and remedies proposed in the Provisional Decision on Remedies, although the change in divestment obligations will be the most eye-catching difference.
"In addition, the CMA has changed the scope of the information obligation imposed on private hospital operators in a number of ways. For example, while the £5m turnover threshold - below which no information obligations arise - was removed, the CMA has now specifically exempted facilities that provide consultation and treatment on an outpatient-only basis from having to provide data to the information organisation."
The structural features of the report include the existence of high barriers to entry and expansion for full-service hospitals, and weak competitive constraints in many local areas, including London. The CMA concluded these market features could lead to higher prices for self-pay patients in certain local markets, but also for insured patients for treatment by certain hospital operators, specifically HCA in respect of its provision of services in central London. The non-structural features included incentive schemes offered to consultants and a paucity of information, regarding hospital outcomes and consultant fees.
To remedy what the CMA describes as market distorting effects, the CMA has now recommended the following measures, which are largely in line with its Provisional Decision on Remedies:
In response to the CMA's findings, HCA has announced that it will seek to appeal the report with the Competition Appeal Tribunal (CAT). If the CAT upholds an aspect of this appeal, this could lead to (part of) the investigation being remitted to the CMA for reconsideration. Any further appeals against a CAT judgment can, if allowed, go forward to the Court of Appeal or ultimately, to the Supreme Court.
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