NHS private patient units let down by 'customer service'

This month the Office of Fair Trading triggered a Competition Commission investigation into private healthcare, citing “significant barriers to new competitors entering the market”.

The move came just a week after the passing of the Health Act, which in theory greatly reduces the restrictions on foundation trusts treating private patients.

The OFT warned that some large private providers were able to penalise an insurer with price rises if it tried to let new entrants into the “network” of hospitals its clients could attend.

Market analysts Laing and Buisson believe the exclusion of NHS private patient units from the networks of insurers Bupa and AXA PPP was likely a “key reason holding back revenue growth” over the last decade.

But Bupa Health and Wellbeing managing director Natalie-Jane Macdonald this week told HSJ the power of large hospital groups was not an obstacle to Bupa working with NHS providers.

While providers’ demands might be a problem for smaller insurers, there was “no ban on including NHS PPUs on our networks”, she said.

The issue was “that any provider has to be able to offer high standards of clinical care, excellent standards of customer service and competitive pricing,” she said. “Our ongoing surveying of our customers shows lower levels of satisfaction for members treated in NHS units compared with private units. We don’t believe this is because of the clinical care they’re receiving; it’s more the customer service aspects.”

Bupa has the largest share of the UK medical cover market, at 41 per cent in 2010, followed by AXA, at 25 per cent, according to Laing and Buisson.

Dr Macdonald welcomed the investigation, saying the “way the market operates” had restricted insurers’ ability to reduce the cost of private cover. She estimated between a third and a half of providers’ capacity was excess to demand.

“In an efficient, functioning market, you would have expected to have [private] hospital closures,” she said. But because the value of private equity-backed hospital groups was locked up in hospital assets with little reuse value, some of that “adjustment of supply to demand hasn’t taken place”.