Competition Commission says no to FT merger

In provisional findings published this morning, the commission has ruled a merger between Royal Bournemouth and Christchurch Hospitals Foundation Trust and Poole Hospital Foundation Trust would lead to a substantial lessening of competition in 58 services including maternity and accident and emergency.

Announcing the findings, commission chair Roger Whitcomb said the group examining the merger had been unconvinced by the trusts’ argument that the actual level of competition between them was small when examined at sub-specialty or treatment level and in light of the number of shared consultants.

Instead the commission’s analysis found the trusts competed on activity which accounted for between 60 and 70 per cent of income. It had concerns about competition in services accounting for between 20 and 30 per cent of the revenues of each trust.

The commission also rejected the argument that without a merger Poole Hospital was likely to fail and exit the market.

The report said: “Based on our analysis of the financial situations of RBCH and PH and our analysis of the manner in which the Monitor failure regime (including the special administration process) operates, our provisional conclusion is that, without the merger, neither party would have exited the market.”

Mr Whitcomb said the changes introduced under the Health and Social Care Act and likely strengthening of the payment system meant competition on factors such as such as clinical outcomes, waiting times, accessibility, quality of care and location of services would increase in future.

He said: “This is the first NHS merger which we have looked at and whilst we are conscious that there are important aspects of the NHS that distinguish it from other sectors, health policy has for some time been that patient choice has an important role in incentivising hospitals to maintain and increase quality. The fact that they stand to gain or lose from patients voting with their feet is important.

“Our concern is that this merger would weaken this incentive across a wide range of the hospitals’ activities and remove one important driver of healthcare quality.”

Under the commission’s procedures it can allow a merger where there is a substantial lessening of competition if there are “relevant customer benefits” that outweigh the loss of choice. It also has the power to propose “remedies” which would mitigate against the loss of competition.

However, in this case the commission has concluded there is no appropriate remedy other than “prohibition” of the merger.

The commission says it will consider other remedies put forward by the trusts or other interested parties but notes there “appear to be significant issues of effectiveness” with other remedies proposed so far. It is also inviting views on the benefits to patients of service changes proposed as part of the merger.