Lack of competition raises PMI prices

A lack of competiton in the private healthcare market at a local level has led to higher private medical insurance (PMI) premiums, according to the Competition Commission.

Its Provisional findings on privately-funded healthcare services report, which sets out the independent public body’s initial findings, also found that private hospital operators have been earning returns substantially and persistently in excess of their costs.

The majority (about 80%) of private patients fund their treatment through private medical insurance companies, often funded by employers.

Although the prices charged by private hospital operators to insurers are set nationally, according to the commission the lack of competition in many local areas, where insurers will have little choice but to use the local operator, results in higher premiums for all patients.

In its report, the Competition Commission also criticised schemes where hospital groups offer incentives, such as fees for referral, free secretarial support and free consulting rooms, for consultants to treat patients at their hospitals.

A spokesperson from Axa PPP Healthcare said: “We are encouraged by the direction that the investigation is taking, which is consistent with our experience of how the market operates in practice. 

“We look forward to working with the commission on its possible remedies as it brings the investigation to its conclusion in the interests of consumers across the market.”

Dr Damien Marmion, managing director at Bupa Health Funding, added: “This is good news for patients and private healthcare. It could be the treatment required to drive better value, better quality and greater transparency for customers.

“Millions of people with health insurance rightly expect high-quality healthcare for an affordable price.

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“By tackling the lack of competition that has damaged the sector for too long, the commission has understood the need for strong action and has put patients first.”

The Competition Commission’s final report will be published by 3 April 2014. It is inviting responses to its provisional report by 20 September 2013.