Competition probe set to smash dominance of three major private hospital groups

Most private patients are paying more than they should, either for private medical insurance or for self-funded treatment, says commission inquiry chairman

A doctor uses a stethoscope on a patient (Getty Images)

A Competition Commission inquiry is set to smash the dominance of three major hospital groups, saying that patients using private healthcare have been overcharged by nearly £200 million a year.

BMI, HCA and Spire made "excess profits" of between £519 million to £579 million in 2009-11, according to the Commission's hard-hitting report published today.

They face having to sell off 20 hospitals between them in a far tougher set of findings than expected.

HCA could have to offload one or more of its eight London hospitals as the group controls more than half the capital's private healthcare market. These include Chelsea's Lister Hospital and the Princess Grace Hospital in Marylebone.

Private healthcare operators could also be prevented from offering consultants incentives to recommend patients to their hospitals. These incentives are often financial but can also include an operator providing the consultant with free secretarial support.

The inquiry chairman Roger Witcomb said that the hospital sales were more substantial than expected as the inquiry "needed to make a difference".

"The lack of competition in the healthcare market at a local level means that most private patients are paying more than they should, either for private medical insurance or for self-funded treatment," added Witcomb.

The operators reacted with fury to the inquiry's assertions. BMI Healthcare chief executive Stephen Collier said: "The Commission's belief that BMI Healthcare makes excess profits ignores financial realities such as the necessary costs of keeping our hospitals equipped with the ever more expensive technology required to meet the needs of patients, commissioners and insurers."

Although AXA and Bupa have significant clout in the private medical insurance market, this was not found to be strong enough to counterbalance the weight of the hospital operators. Dr Damien Marmion, managing director at Bupa Health Funding, said that the report was "good news for patients.

He added: "It could be the treatment required to drive better value, better quality and greater transparency for customers. Millions of people with health insurance rightly expect high-quality healthcare for an affordable price."

Circle Healthcare, a smaller hospital operator that prompted the inquiry when it complained to the Office of Fair Trading about barriers to entry in 2010, said that it had been "vindicated" by the Commission.

The operators have until 20 September to make the case why these provisional findings should not become final.