• Competition regulator’s new study indicates reducing hospital competition significantly increases harms
  • Analysis of four harm incidents across eight specialties over a two-year period
  • But Nuffield Trust chief said other factors, not competition, probably caused the effect
  • NHS last month proposed to remove CMA’s role in mergers 

Merging hospital trusts could increase mortality rates by up to 550 per cent and cause patient harm incidents to almost triple, new analysis by the Competition and Markets Authority has suggested.

The same study also identified what it described as an average cost of more than £2.5m a year to the NHS from a typical merger as a result of the harms.

How much harm and associated costs increase by depends on how many provider organisations remain in the health economy, the study found, with the greatest effect felt if a merger creates a monopoly – ie: leaves only a single hospital trust.

Nigel Edwards, chief executive of the Nuffield Trust, told HSJ the study had found a real effect, but he added: “The conclusion that says a merger will increase death rates is completely illegitimate and an over extension of the analysis because there are other factors driving this.”

The CMA said its study “contributes further empirical evidence that competition ultimately benefits patients”.

It continued: “We find a significant inverse relationship between concentration and quality. A hypothetical merger to monopoly would result in a 182 per cent increase in the number of patients experiencing harm.

“Our main estimate is that a hypothetical future merger between two geographically proximate hospitals would, on average and assuming no offsetting clinical benefits are unlocked by the merger, result in a 41 per cent increase in harm rates.

“The magnitude of the effect is significantly greater where few competitors remain post-merger, and smaller when several alternatives for patients remain. This effect is robust to a number of alternative specifications and holds also when we consider in-hospital mortality.

“If the harm rate were to increase by 41 per cent as a result of a representative merger affecting all specialties in the hospitals, across both trusts involved, this would give an additional annual cost of £2.5m per year counting only the four harm types.”

The study used a new methodology for evaluating the impact of competition, and examined rates of falls, pressure ulcers, blood clots and urinary tract infections across eight separate hospital specialties. This covered approximately 60 per cent of admissions.

It used hospital episodes statistics from 2013-14 and 2014-15 and compared harms rates in each department and trust, alongside the number of distinct organisations nearby. It controlled for patients’ age, gender, previous conditions and other factors.

Mr Edwards said: “The important policy question here is that concentration [of hospitals] leads you to the conclusion that the problem here is a competition problem.

”However, concentration is likely to be correlated to other variables which we definitely know impacts on quality such as rurality or being a teaching hospital for example.

“They have found an interesting association, but it isn’t a terribly useful guide to policy because it’s very unlikely this is a competition effect. This probably should not be used as a guide to market structure without a great deal of further research.”

In its study, the CMA accepted that healthcare regulation, the altruism of staff, and structural issues, such as capacity and financial constraints, could reduce the role competition plays in the NHS. It said a range of factors impacted on quality. It added the validity of its conclusions depended on NHS priorities and conditions in the NHS changing during the years studied.

“For example, deficits rose significantly in the years immediately following our data series, which may represent pressures on the supply side that reduce the salience of competition as a driver of quality,” the study said. “Nevertheless, our empirical work suggests that patient choice and competition between public hospitals can be an important driver of quality.”

The CMA was given a prominent role in assessing NHS provider mergers under the Health Act 2012, and in 2013 it blocked a merger of the Royal Bournemouth and Christchurch Hospitals Foundation Trust and Poole Hospital FT. 

The NHS long-term plan published last month said: “We propose to remove the Competition and Markets Authority’s duties, introduced by the 2012 Act, to intervene in NHS provider mergers.”

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