The Co-operation and Competition Panel has advised, for the first time, that a merger between two rival providers can go ahead, because the potential benefits outweighed the reduction in patient choice.

It recommended today that the Secretary of State approve a merger between Oxford Radcliffe Hospitals and the Nuffield Orthopaedic Centre.

The panel decided there were benefits to patient care from allowing the trusts in Oxfordshire to combine, citing “improved out-of-hours care at the Nuffield Orthopaedic Centre, improved medical research, private finance initiative cost savings, and optimisation of estate across the merged organisation”.

It said: “None of these benefits in isolation would have been sufficient to outweigh the costs we identified, but taken in the round they are likely to be realised within a reasonable period following the merger, have a degree of longevity and impact upon patients across a wide area as well as taxpayers in general.”

The nearest acute hospitals to a merged Nuffield/Radcliffe trust are 30 and 40 kilometres away, the report said.

CCP director Catherine Davies said: “This is the first case where the panel has accepted that the benefits from a merger outweigh a reduction in patient choice and competition.

“The merger’s particular combination of benefits, many related to the close proximity of the two organisations, was enough in this case to swing the decision. It underlines that our approach is always focussed on the best overall outcome for local patients.”

The case is the second acute trust merger the CCP has looked at.

Last month the advisory panel gave the go-ahead to a merger between Winchester and Eastleigh, and Basingstoke and North Hampshire hospital trusts.

In that case it found the merger would not diminish patient choice, as each site had potential competitors nearby.

Although the Nuffield decision does not set a legal precedent, it will be interpreted as a positive sign for trusts looking to take over services which might be their only competitor in more rural areas.

The government has said it plans to put the Principles and Rules of Co-operation and Competition –on which the CCP bases its decisions – on a statutory footing.

The report said that, when it became clear Nuffield was not going to achieve FT status on its own in 2008, the strategic health authority commissioned PricewaterhouseCoopers to look at merger options for it.

As well as Oxford Radcliffe, the consultants suggested Basingstoke and North Hampshire, Royal Berkshire and the Royal Orthopaedic Hospital as potential partners.

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