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Competition intensifies in London's private healthcare market

Back in 2012, the Competition Commission, a predecessor of the Competition and Markets Authority (CMA), started a market investigation into the private healthcare market. One of the key areas of focus was the level of competition in the London private healthcare market. The CMA required HCA International Limited, the largest private hospital operator in central London, to sell one or two of its hospitals.

HCA appealed the decision. Subsequently, the CMA acknowledged shortcomings in its analysis and requested the Competition Appeal Tribunal to review the findings. The CMA then confirmed that there were "adverse effects on competition" ( AEC) in the market for private healthcare in central London and that "HCA’s prices are higher than would be expected in a well-functioning market."

The CMA considered a number of possible remedies, including its original remedy of the divestiture of hospitals by HCA, but concluded that "there were no further remedies, beyond those already put in place, which would be both effective and proportionate."  HCA was off the hook and the sale of its hospitals was dropped.

The CMA commented that  the "real prospect of new entry into the market adding greater competition over time, mean that we believe divestiture is no longer a proportionate remedy".

New entrants to the London market

The CMA's "real prospect" is now becoming reality. A spate of developments will bring a new level of competition in the London market.

The Cleveland Clinic has now submitted its plans to Westminster City Council to operate a 205-bed private healthcare facility at 33 Grosvenor Place, near Buckingham Palace. Cleveland Clinic is an international healthcare brand, operating a 165-acre main campus in Cleveland, USA, nine regional hospitals in Ohio, Florida and Nevada and international facilities in Canada and UAE.

According to the planning application, the new development will comprise 205 beds and eight operating theatres in the six-story, 198,000-square-foot office building in central London. The facility will focus on general surgery, cardiology and neurology. There will not be an emergency care service.

Not to be outdone, Spire Healthcare is believed to be acquiring a site for a 130-bed hospital in London — its first in central London — which it hopes to open by 2018.

Challenges from the Middle East

Another entrant to the London market will be from Abu Dhabi-based VPS Healthcare,  founded by Indian doctor and entrepreneur Dr Shamsheer Vayalil, with a network of hospitals, pharmacies and medical support services across the Middle East and India with over 7,500 staff.

The group has acquired the Royal Masonic Hospital in Chiswick and plans to create a 150 bed facility, supported by 2,000 staff. The hospital will specialise in cancer treatment, and aims to be the first private facility in the UK to offer proton beam therapy – a type of radiotherapy that attacks cancer cells with less damage to surrounding tissues than conventional radiotherapy.

The  proton beam therapy  market is certainly getting busy. CircleHealth has partnered with Advanced Oncotherapy to open a proton beam cancer therapy unit in Harley Street next year, and Proton Partners International aims to open three private proton beam centres in the UK in 2017.

Will demand meet the supply?

So, we're going to see some significant increases in supply on the London market in the near future. Will this mean greater competition? Or are the new entrants seeking to take a share of increasing demand for private care in London?  A significant driver for the new developments is to meet the demand from both UK and international patients seeking tertiary care for complex diseases.

In the medium term, we may see the CMA's "prediction" coming true. HCA will certainly be under threat from the new entrants. Market forces rather than CMA rulings are likely to sort out the competition issue in London. 

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About the author

Keith Pollard is CEO of Intuition Communication, an online publisher in the healthcare sector that operates market-leading web portals such as Private Healthcare UK, the Harley Street Guide, HarleyStreet.com and Surgery Door. Intuition is also active in the online medical travel sector through Treatment Abroad, International Medical Travel Journal and DoctorInternet, the Arabic medical tourism portal. View www.keithpollard.com for my full profile.

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