Watchdog in a move to bring down the costs of private health insurance

Competition Commission orders the sale of nine private hospitals, including London Bridge and the West End’s Princess Grace

Private healthcare insurance, like gas and electricity, only ever seems to go up in price in huge increments. And, like the big energy companies, those who charge the final bill – the likes of Bupa – make great play of blaming their suppliers when the customers complain.

So it was that the medical insurance industry called in the Competition Commission to investigate why it was that the relatively small number of major private hospital operators were charging increasingly high fees for treatment.

They claimed monopolistic behaviour was to blame and was driving up claims costs and, ultimately, premiums for policyholders. The Competition Commission yesterday agreed, estimating the lack of competition was leading to overcharging and excess profits of £173m to £193m a year by the three biggest players in 2009 to 2011.

It ordered two of the big three to sell a total of nine clinics where no nearby competitors were operating. HCA has to sell two in central London, and BMI seven in the capital's outskirts, the Home Counties and the North-West of England. Spire, which had initially been told to expect to make some disposals as well, got the all-clear.

Commission chairman Roger Witcomb said: "Requiring operators to sell hospitals is a big step and we have focused on those areas where a sale will be effective in increasing competition – where a single operator owns a cluster of hospitals which face little rivalry."

So far, so simple. But the insurers pointed out a few more subtle practices they said were driving up prices: notably the way consultants and surgeons – those celebrity stars of the healthcare business – were induced to send their patients certain hospitals' way.

The techniques were subtle, but effective: hospitals might offer discounts for using their consulting rooms, the services of medical secretaries could be offered at knockdown prices. In some cases, most notably at the Circle group, they were offered shares in the hospital business, in others, cash incentives.

In some cases, there were even exclusivity agreements in place, leaving a smaller pool of specialists available for rival clinics, driving prices up even further.

The commission has not banned such inducements entirely, but will cap their monetary value at £500 a year and insist on full disclosure. The equity ownership idea survives, although exclusivity agreements have been banned.

Predictably, HCA and BMI were not best pleased. BMI chief executive Stephen Collier said the commission had failed to understand the market, describing its recommendations as "bizarre". He said the forced disposals would not lower costs as there was already adequate competition.

At HCA International, Mike Neeb, the chief executive and president, said: "The provisional recommendations are plainly wrong. The CC's own report acknowledges there are nearly 50 competitors in Greater London. Our ownership of these hospitals encourages competition and drives a higher standard of care among hospitals in the UK."

But, privately, other hospital operators accept the changes will lead to lower prices within a few years, or at least, slower inflation. Hospital groups have until 6 February to respond to the recommendations.

How the cookie crumbles for the Big Three


Turnover £821.5m

Debt £434m

£44m financing costs

Losses £69.6m

Boss's pay £434,000


Turnover £296m

Debt £196m (owed to parent company In US)

£13m finance charges

Pre-tax profit £60.4m

Boss's pay £1.9m


£739m turnover

£2.1bn debt

£190m finance charges (£81m to owner Cinven and management)

£188m loss before tax

Source: Annual UK accounts filed at companies house

Suggested Topics
Arts and Entertainment
On set of the Secret Cinema's Back to the Future event
filmBut why were Back to the Future screenings cancelled?
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
No Devotion's Geoff Rickly and Stuart Richardson
musicReview: No Devotion, O2 Academy Islington, London
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride