OFT expected to focus on "network agreements"

The Office of Fair Trading is to launch a probe into the £5.5bn private healthcare market following concerns about whether it is "fully competitive," it announced yesterday.

Sonya Branch, OFT senior director of services and public markets, said: "We are keen to establish whether patients and buyers of private healthcare services, including the NHS, are getting the full benefit of choice and competition.

"As this is a complex area, we want to engage with providers, patients and government first to ensure that we identify and focus on the correct issues prior to launching the market study in 2011."

The Telegraph this morning reported that the OFT is expected to focus on so-called "network agreements", where insurers link-up with individual private healthcare groups.

According to the OFT, insurers account for 61% of business for private hospitals and clinics, with NHS-funded patients 23% and self-pay consumers 15%.

The NHS's contribution has more than doubled in the past four years as it issues contracts to private providers for certain treatments. However, five insurers – including Bupa, Axa PPP Healthcare, and Aviva – still dominate the market and account for 80% of the private medical insurance sector.

Circle, the employee-owned health care group, complained to the OFT in September over "alleged anti-competitive agreements" between health care providers and insurers.

Bupa said it would support the study, according to City AM. “Competition in the private healthcare market is good for our customers,” said Dr Natalie-Jane Macdonald, managing director of Bupa Health and Wellbeing.