Competition watchdog orders sell-off of nine private hospitals

The Competition Commission has ordered the sale of nine private hospitals, including London Bridge and Princess Grace, in an effort to smash the market dominance in Britain’s £5 billion private healthcare industry.

The watchdog, chaired by Roger Witcomb, said “many private hospitals face little competition” leading to “higher prices for insured patients”.

It also condemned operators for offering incentives, such as payments or free secretarial support, to encourage consultants to refer their patients for treatment or tests at particular hospitals.

American giant HCA, which is the world’s largest private hospitals group, must sell London Bridge and Princess Grace hospitals, while South African-owned BMI, which has 66 UK hospitals, must sell seven.

The BMI hospitals that may have to be sold include Clementine Churchill in Harrow, and Cavell and Kings Oak, both in Enfield.

The ruling will also have implications for NHS hospitals that have private wings, such as UCLH and St Mary’s, whose Lindo Wing saw Kate Middleton give birth to Prince George last year. The Health and Social Care Act removed the limit on private profits being earned by NHS trusts, paving the way for more “private patient units”.

But the CC’s decision is a significant retreat from its original determination, made in August, that BMI, HCA and Spire Healthcare sell off up to 20 hospitals.

It said the three firms made “excess profits of between £519 million and £579 million” between 2009 and 2011 and found patients were paying about £200 million a year too much for private medical insurance.

Despite the CC’s climbdown, BMI and HCA published angry responses to its ruling. Stephen Collier, chief executive of BMI Healthcare, said: “The commission has still simply not grasped how the market for private healthcare works.”

He dismissed the CC’s estimate of the cost of a new private hospital bed being £400,000, claiming “the reality, as proven by recent builds, is more than twice that. [The CC] has massively undervalued the investment required to provide high-quality private healthcare, seriously suggesting that hospitals should be valued as if they stood in farmers’ fields.”

HCA also published a vociferous attack on the decision, suggesting the CC’s final ruling in April is likely to be challenged in the courts.