Monitor and the Competition Commission to advise on NHS level playing field

Monitor and the Competition Commission have been asked to conduct a study into the private healthcare market to determine what (if any) are the barriers to entry.

The publication in April 2012 of the Office of Fair Trading’s, private healthcare market study was quickly followed by referral of that market for investigation by the Competition Commission (“CC”). Building upon the concerns of the OFT, the CC have subsequently published an issues statement outlining the seven “theories of harm” – hypotheses of possible market failures which could be preventing, restricting or distorting competition in the private healthcare market – which it will explore during the course of the inquiry. These theories are:

  • Market power of hospitals in certain local areas
  • Market power of individual consultants and/or consultant groups in certain local areas
  • Market power of hospital operators during national negotiations with insurers
  • Buyer power of insurers in respect of individual consultants
  • Barriers to entry at different levels
  • Limited information availability
  • Vertical effects

It is noted by the CC that these are theories only and their identification does not mean any conclusions have been reached on whether or not they apply.

Sitting alongside the inquiry of the CC is a request by Health Secretary Andrew Lansley for foundation trust regulator Monitor to conduct an independent review of matters affecting the ability of NHS service providers to participate fully in improving patient care. The review “Fair playing field – for the benefit of patients” will cover all types of providers, including for-profit providers, and will examine the possibility that not all providers of NHS care operate equally as well as enquiring whether measures can be taken to remove imbalances for the benefit of patients.

Matters already raised as areas for consideration in the review include corporation and value added tax, NHS staff contracts and pensions, payment systems, incumbency advantages, barriers to exit, capital costs and tendering and commissioning behaviours.

The current timetable provides for stakeholder workshops to take place during July, August, and September 2012, with Monitor's review to be made early next year and the Health Secretary's recommendations put to Parliament in March 2013. This will be followed by the report of the CC which is required to be made available by 3 April 2014.

These recent developments underline the increasing interest on the part of the regulators in ensuring a fair and competitive market for healthcare services, with the results of both reviews expected to be key factors informing Monitor’s approach to regulating competition within the NHS when its new regulatory powers come into effect.