OFT asks Bupa to explain changes

The Office of Fair Trading is to hold urgent talks this week with Bupa, the private health firm, after the company's decision to merge parts of its health insurance and hospital arms, writes Nic Cicutti.

Bupa's decision revives fears that it will use its dominant position in the private health care market to force some of its competitors out of business.

The shake-up comes five years after an investigation by the Monopolies and Mergers Commission. The Commission consented to Bupa's takeover of another firm's 10 hospitals on condition that the two operations were kept at arm's-length basis.

Bupa last month placed its former hospitals managing director Sue Ellen in charge of both the insurance claims and health services departments. Until then, both areas were run separately.

The Commission's intervention came at the time of Bupa's pounds 92m takeover of HCA, then the fourth largest private hospital group in the UK. Bupa, with 18 hospitals, was then the second-largest private hospital manager in Britain.

Rivals claimed that Bupa's takeover of HCA would either lead to it diverting subscribers to its own hospitals or threatening to do so in order to win lower charges from other hospital operators.

As a safeguard, when the Commission approved the deal, it asked the OFT to monitor the position in case Bupa subsequently did combine the two divisions or attempted to achieve any further increase in its share of the private hospital market.

An OFT spokesman said: "We are aware that reorganisation is being planned. We will be holding a meeting with Bupa next week so the changes can be explained to us. It is too soon to say what the outcome of the changes might be."