On 30 August 2017 the Competition and Markets Authority (CMA) cleared the merger between Heart of England NHS Foundation Trust (HEFT) and University Hospitals Birmingham NHS Foundation Trust (UHB) at Phase I. Although the CMA considered that the merger could give rise to competition concerns across 25 elective specialties, it found that these would be significantly outweighed by the expected substantial improvements to the quality of patient care. This is the first case in which the CMA has cleared an NHS hospital merger at Phase I on the basis of patient benefits outweighing potential competition concerns.
The main competitive concern in this case was the reduction of the number of competing hospital trusts in Birmingham from three to two, thereby limiting patient choice. The CMA found that in 25 elective specialty services the merger could reduce quality for patients by removing the incentives for competing trusts to attract patient referrals from each other.
In reaching its decision not to refer the merger for an in-depth Phase II investigation, the CMA relied in part on the advice of NHS Improvement, the sectoral regulator, which supported the proposed merger. The CMA was advised that the HEFT management had been unable to address difficulties that HEFT had faced in relation to governance, finances and quality of care since 2012. The appointment of UHB management to HEFT’s executive team in October 2015 had resulted in some improvements, including the introduction of substantial patient benefits such as reduced waiting times and an increased quality and safety of patient care. Absent the merger (and by extension the presence of UHB’s management at HEFT), it was likely that these improvements as well as some other longer term benefits would disappear. The CMA also found that absent the merger HEFT would be a relatively weak competitor to UHB and that both parties faced capacity constraints.