Currently, at the national level, both private hospital ownership and the provision of private medical insurance (PMI) are highly concentrated with the five main hospital groups accounting for approximately 70 per cent of privately funded healthcare revenues in the UK. Last year, a complaint by Circle Partnership – an employee owned private hospital group – prompted an extensive review by the Competition Commission into the state of the UK private healthcare market and the value offered to its patients.

The initial investigation, published in August 2013, concluded that patients were losing out on competitive pricing due to lack of competition and high barriers to entry. This judgement didn't go down well with private providers and since publication, the situation for these companies has improved slightly as the Competition Commission revised its stance and removed some rather unpopular recommendations such as a cap on charges and increased transparency. But divestment remains on the table.

So has private sector health become a victim of its own success? Chief executive and president of the world's largest private healthcare company - Hospital Corporation of America (HCA) - Mike Neeb clearly thinks so as the Competition Commission insists he divests two London based hospitals, representing 30 per cent of UK revenues. While HCA stand to lose the most, should this forced divestment go ahead, they are not the only company to receive this news. BMI healthcare, the owner of 70 hospitals across the UK and employer of over 10,000 staff are also under pressure to divest 7 hospitals in various local markets.

Those under pressure to divest vow to resist until the bitter end using, if necessary, the Appeals Tribunal – where a number of Competition Commission decisions have been overturned. The majority of private healthcare providers, however, welcomed the measures to increase competition. Perhaps unsurprisingly, Insurers and smaller private health providers are strongly in favour of all measures and imply that more can be done to break the monopoly of the private heath market which they argue is costing patients as much as £200 million extra per year. They believe patient value for money can be improved through increased transparency measures and the reduction in negotiating power that large private healthcare providers have with medical insurers.

The prevailing view is that companies (UK and foreign) are queuing up take on attractive investments like private hospitals, but the question remains: will a change in ownership lead to a better deal for patients? BMI and HCA argue 'No'. They consider that the original analysis is flawed as it underestimates the level of investment needed to install, operate and maintain world class health facilities. They also go a step further implying forced divestment sends a message to investors that the UK punishes success.

The assumption is that changing hospital ownership will lead to increased competition. In some areas, however there is no guarantee that this will be the case and indeed may simply result in a change in who owns the monopoly. Furthermore, there is an assumption that increased competition will result in price adjustments for end users – the patients. Whilst ownership may change the specific challenges faced by the hospital will not, so guaranteeing patient benefit is difficult. Even more so when you factor in insurers willingness to adjust premiums in line with cost of care.

So is the prescribed injection of competition justified? There are merits to both sides of the argument, but obtaining conclusive evidence either way is a difficult and time consuming process. What is clear is those involved are in it for the long haul – factoring in the inevitable appeals process – and a willingness to dedicate significant time and money to fight their corner. Ultimately, whatever the outcome of the Commission's final report in April, the prospect of increased competition in the short term appears unlikely.

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