137/10    14 December 2010

The OFT today announced plans to launch a market study into private healthcare.

The study will examine the nature of competition in the market, and whether the market is fully competitive.

Ahead of the formal launch in Spring 2011, the OFT is seeking views on the proposed scope of the study.

Preliminary research undertaken by the OFT and information received from participants across the sector have raised questions about whether the market is working well for private healthcare patients.

The private healthcare market, which is currently worth more than £5.5 billion, is of growing importance due to an ageing population, improved medical outcomes and higher life expectancy. It is also important to the NHS as a result of ongoing Government initiatives which allow NHS patients to seek treatment from private healthcare providers in certain circumstances. The NHS currently accounts for almost one quarter of revenues paid to private healthcare providers.

The OFT proposes to explore four possible areas of concern:

• The level of concentration amongst providers of private healthcare at the national, regional and local levels, and whether this limits the extent of competition in the market. 
• The existence of any barriers preventing private healthcare providers from entering or expanding in the market.
• The existence of any restrictions on the ability of consultants and other medical professionals to practice.
• How consumers access and assess information, and how they exercise choice in the provision of private healthcare.

The OFT is currently seeking the views of all interested parties in order to refine and confirm the scope of the study. It is possible that, following this period of consultation, these initial areas of interest may change.

The OFT does not presently intend to focus directly on the market for private medical insurance, although aspects of this market's operation will be considered in so far as they affect the provision of private healthcare.

Sonya Branch, OFT Senior Director of Services and Public Markets said: 

'We are keen to establish whether patients and buyers of private healthcare services, including the NHS, are getting the full benefit of choice and competition.

As this is a complex area, we want to engage with providers, patients and government first to ensure that we identify and focus on the correct issues prior to launching the market study in 2011.' 

The OFT will be contacting key parties directly. Other interested parties can submit views on the market study's proposed scope by writing to the OFT by 1 February 2011. Comments can be submitted by email to privatehealthcare@oft.gsi.gov.uk or sent to:

Private Healthcare Market Study
Office of Fair Trading
Fleetbank House,
2-6 Salisbury Square
London
EC4Y 8JX
  
The OFT plans to launch the study in Spring 2011 before publishing a final report by the end of 2011.

NOTES

1. A document outlining the proposed scope of the market study can be found on the Private Healthcare market study page.
2. The Laing and Buisson Market Review 2009-10 (L&B Review) estimated that the market for private healthcare, excluding revenue from mental health hospitals and long-term elderly care was £5.6 billion in 2008. Private hospitals and clinics accounted for the largest part of the market, generating an estimated £3.4 billion revenue. Fees to surgeons, anaesthetists and physicians generated an estimated £1.6 billion.
3. According to the L&B Review, private medical insurance is the main funding source for private healthcare providers (62 per cent), followed by NHS-funded patients (23 per cent) and self-pay patients (15 per cent).
4. OFT market studies are carried out under section 5 of the Enterprise Act 2002 (EA02) which allows a market-wide consideration of both competition and consumer issues.
5. Market studies involve an analysis of a particular market with the aim of identifying and addressing any aspects of market failure from competition issues to consumer detriment and the effect of government regulations. Possible results of market studies include enforcement action by the OFT; a reference of the market to the Competition Commission; recommendations for changes in laws and regulations; recommendations to regulators, self-regulatory bodies and others to consider changes to their rules; recommendations to business; campaigns to promote consumer education and awareness; or a clean bill of health.