Britain’s biggest private healthcare provider has been spared from having to sell off seven hospitals after the new competition watchdog heavily watered down plans to shake up the sector.
The Competition and Markets Authority dropped the provisional plans affecting BMI under its final ruling, narrowing the focus of action to central London.
It is ordering US-owned rival HCA to sell one or two sites in the capital - prompting the company to pledge it will launch legal action.
An initial ruling by the Competition Commission last year had found weak competition was pushing up prices for patients in the £5.5bn healthcare market.
It said the dominance of the three biggest hospital groups, Spire, BMI and HCA, had caused “consumer detriment” of up to £193m a year.
The commission initially proposed ordering 20 sites to be sold but this was later scaled back to nine, before the final ruling, the first decision to be issued by the CMA since taking over the body’s responsibilities.
It leaves BMI, which owns 66 hospitals and treatment centres across the country, in the clear after the group had been facing the prospect of selling four sites in outer London and three others outside the capital.
Chief executive Stephen Collier welcomed the “open-minded approach” by the body and said it had reached a “sensible, measured and fair conclusion”.
But HCA has been told it must dispose of either London Bridge hospital and the Princess Grace hospital in central London - or alternatively the larger Wellington hospital, including its Platinum Medical Centre.
The firm issued a robust response, saying the decision would punish healthcare innovation and was not in the best interest of patients, adding that it “intends to vigorously challenge it in the courts”.
Mike Neeb, president and chief executive of HCA International, said it had legally acquired the hospitals, and in the case of London Bridge with the approval of the Office of Fair Trading - yet after investing millions was now being forced to sell.
“The CMA’s main allegation appears to be that HCA is too successful, too efficient, too innovative. It wants to punish HCA for that success.
“The proposed remedy sends a very disturbing signal to the market; this can only discourage future investment and innovation in healthcare, and potentially other industries, while it reduces patient access to top quality care.”
But Roger Witcomb, chairman of the CMA’s private healthcare inquiry group, said the sell-off would “significantly increase competition in central London”.
The CMA ruling also confirmed proposals that it would ban or restrict incentives for doctors to direct patients to a particular private hospital.
It will also now be able to ban the opening of private patient units (PPUs) in NHS hospitals if they fail a competition test, after concerns that in some areas they could help an already-dominant provider to deter rivals from entering the market.
Further measures will aim to improve public availability of information on consultant fees and the performance of consultants and private hospitals.
Health insurer Bupa said the report was a cautious step in the right direction, but said more action was needed to drive competition and questioned the decision not to order any hospital sell-offs outside the capital.
Dr Damien Marmion, managing director of Bupa health funding, said: “Self-pay and insured customers will be surprised that no action has been taken outside London where excess profit and consumer detriment has been identified.”