Circle complains to OFT about 'ludicrously unfair' networks

Private hospital groups in the UK are operating local monopolies to keep new entrants out of the market, with detrimental consequences for patients with private medical insurance (PMI), according to Circle. The social enterprise, which operates six private clinics in England, has now lodged an official complaint with the Office of Fair Trading (OFT).

Ali Parsa, a managing partner of Circle, told Health Insurance that network agreements between the main private hospitals groups and insurers were designed to keep new entrants away from the market.

"You have a monopoly in the vast majority of the UK private market," he said. "So the question is should we have a duopoly or monopoly of providers? Let patients choose which hospital they want to go to. Our costs in all hospitals are significantly lower than the hospitals we compete with. Most insurers agree with me. We are in their network and they do not think networks are necessarily the right way to go forward."

He continued: "With the exception of Circle there has never been any new entrant to the market for a very long time. Is that incidental or structural?

Most of the main private medical insurers in the UK have agreements with private hospital groups under which policy-holders will be directed to them rather than having a full choice of providers, although policy-holders can choose to pay a higher premium to enjoy full choice. Parsa claimed that private hospitals' negotiations with insurers were determined by the fact that they were "sitting on a very high cost base" after paying too much to acquire hospitals before the recession.

"They paid over the nose for the monopolies they are now trying to protect," he said. "As a result patients and customers need to suffer unnecessarily high prices to pay for their mistakes. Let them all go to the wall and new entrepreneurs come in."

While Parsa confirmed that most insurers do now recognise Circle, he said the group had taken the decision to contact the OFT after realising that "we should never have gone through this nonsense", describing it as "completely unfair and anti-competitive".

"It is ludicrously unfair and somebody needs to raise this," he said. "We do not directly benefit from it [approaching the OFT] but now that it is behind us we are a social enterprise and we do what we think is right rather than what might be beneficial in the short-term and this is the right thing."

He predicted, however, that any ruling of the OFT might prove incidental, given the focus on choice within the NHS.  

"If you are an NHS patient today you can go to any facility you wish to go to," he said. "If you are a PMI patient you do not have that choice if you are part of a network."

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