Jim Armitage: In pointing out how Bupa was right, commission opens a can of worms

Outlook It feels instinctively wrong to be rooting for the big guy. But in the messed-up world of private healthcare provision, that is precisely what we should be doing.

For many years, Bupa, the country's biggest provider of medical insurance, has been seeing customer numbers slide due to the unaffordability of its premiums for most people. And for many years, it has been complaining about getting ripped off by the hospitals which abuse their quasi-monopoly position.

Now, in the starkest terms, the Competition Commission has said that Bupa is right.

Despite all the muscle that goes with being the biggest health insurance company in the country – with £4.5bn of sales in the first half – it was still unable to avoid being fleeced.

You need only a quick glance at the numbers to see the impact of the racket: the backers of private hospitals are getting back more than double the cost of their investment, with that profitability increasing sharply thanks to low interest rates. The commission calculates that this means insurers – and therefore consumers – are being ripped off by up to £193m a year.

Bupa, meanwhile, is having to clamp down on paying claims in order to stem the financial impact of losing 100,000 or more customers every six months.

Little wonder, then, that private equity firms have been big backers of the sector, with Cinven in particular piling in. So confident has it been in its backing of Spire – the biggest provider in the country – that earlier this year it decided the time was right to sell and lease back a third of its properties. (Some will recall how a similar tactic helped send Southern Cross off to that corporate care home in the sky.)

Cinven was also, until 2000, a big investor in the operator of BMI Healthcare, one of the other hospital operators criticised by the Competition Commission. Nowadays BMI, and the third major named-and-shamed operator, HCA, are owned by foreign operators.

While the Competition Commission is clearly right to recommend breaking up the local strangleholds these businesses have in certain parts of the country, it must be aware of the fickle nature of private equity and foreign investors.

If they no longer feel their investments here are yielding sufficient returns (and with interest rates likely to rise in the coming years, this will become a growing issue) they may decide to scale down or pull out of the UK altogether.

Bupa really would be in trouble then. But, more importantly, given how a growing proportion of NHS work is nowadays being handled by the private sector, so would we all.

Suggested Topics
PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible