Knowledge & Insight

Competition regulation in the private healthcare sector

Fri 8 August 2014

As a growing proportion of the UK population accesses private healthcare facilities, so the operations of the sector’s largest providers have increasingly come under the microscope of the competition authorities. Following a lengthy investigation in 2013, the Competition Commission ruled that the market influence of the three largest providers, HCA, BMI and Spire, made it difficult for rivals to compete effectively, resulting in artificially inflated fees for patients and their insurers.

A case for increased competition?

Not surprisingly, this view has been strongly opposed by industry leaders, and with considerable effect, because earlier this year, in a reversal of the CC’s earlier ruling, the Competition and Markets Authority (which has subsumed the responsibilities of the Competition Commission) dropped the order for BMI Healthcare to sell off 7 of its 66 hospitals in the UK. The aim of the original order was to increase competition in the sector, with the ultimate objective of driving up standards whilst placing downward pressure on pricing. But the industry has defended its position by saying that increasing competition would not deliver lower prices because fees reflect the costs of provision and do not include excessive profits associated with a monopoly position.

Balancing the needs of investors and patients

The healthcare providers appear to have won this round, but the message from the competition authorities is clear – they are concerned that prices for patients are too high, and that this is a direct result of limited competition in many regions throughout the UK. So the challenge facing the private healthcare sector is a complex one, and in order to meet it successfully , firms must attract and retain talented leaders with the ability to achieve revenue growth and maintain high standards of patient care, whilst avoiding large fee increases.

Private healthcare firms must act responsibly

The private healthcare market is perhaps unique in that commercial goals and business performance are not always the most important indicators of success. And pricing and profitability must not be allowed merely to reflect market conditions, particularly if that marketplace comes to resemble a monopoly. Firms must be able to demonstrate that prices reflect not only the quality of care, but also investment in new equipment and facilities, and they must take care not to utilise any measure of monopoly power, even if they find themselves in a position to do so.

Private healthcare executive search

To meet these challenges, the industry requires leaders of rare talent, people with the strength to make bold decisions, to represent the needs not only of their shareholders but also their patients, and to play a responsible role in the evolution of this highly dynamic marketplace.

Identifying and attracting such talent requires the services of a true specialist. Stone Executive is an experienced private healthcare executive search firm with a proven ability to identify, engage and attract the brightest talent in the business. Our seasoned private healthcare headhunters are experts in private healthcare executive recruitment, and boast a professional network that encompasses the sector’s leaders players and niche providers.

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