On 14 December 2010, the UK’s Office of Fair Trading (OFT) announced that it is to undertake a study of competition in the UK private healthcare market. Such studies, which typically last for 6-12 months, can lead to the OFT making recommendations to government on how competition could be improved and/or a full market investigation reference to the Competition Commission (CC).  A CC market investigation lasts up to two years and can result in the imposition of wide-ranging remedies, including pricing regulation or changes to market structure.

The OFT has stated that the objective of the study is to establish whether patients and buyers of private healthcare services, including the NHS, are getting the full benefit of choice and competition. According to the OFT’s announcement, its preliminary research  and information received from participants across the sector have raised questions as to whether this is the case. The OFT has identified four possible “areas of concern”: the level of concentration amongst private healthcare providers; the existence of barriers to entry or expansion by new providers; restrictions on health professionals’ freedom to practise; and consumer choice and access to information.

Although the OFT has said that it does not intend to focus directly on the market for private medical insurance, the study is likely to include aspects of the insurance market that affect private care provision. Such aspects could include health insurers’ operation of preferred hospital networks.  Apparently, new entrants have complained about difficulties in gaining access to these networks.

The OFT is seeking views on the proposed scope of the study by 1 February 2010. It plans to commence the study in the spring and to complete it by the end of 2011. Documents relating to the study, including a ‘scoping paper’, are available here.