Private practice

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Competition and markets authority

What is the CMA order? 

The CMA report follows the conclusion of a two-year investigation into private healthcare.

The CMA's final order sets out its specific powers with regards to mitigating or preventing adverse effects on competition (AEC), within private healthcare.

The order will apply to privately-funded healthcare services in England, Wales, Northern Ireland and Scotland and under the order, the CMA can now take various forms of action against PPUs, private healthcare providers and referring clinicians.

 

What the CMA order means for referring clinicians

The order states that a referring clinician is prohibited from requesting, agreeing to receive or accepting, any direct incentive from private hospital providers to give preference to their facilities, when treating patients or referring patients for treatment or tests.

Equally, private hospitals providers are prohibited from offering inducements to procure referring clinicians, to give preference to their hospitals.

Private hospital providers will now be required to disclose publicly other arrangements with clinicians as required by the CMA.

For the vast majority of doctors there will be very little change to their private practice.

The aim of this remedy is to ensure that hospital providers do not offer incentive schemes to doctors that provide inducements that influence referral pathways, for example:

  • Payments to a referring clinician by reference to the number of, or proportion of patients or revenue received from patients he/she has referred, for tests or treatment at a facility of a particular hospital operator

  • An allocation of shares in an equity participation scheme, the value of which is based on the revenue received from private patients
  • Allowing a referring clinician to use services and facilities (such as secretarial/administrative service free of charge or at a discount) based on revenue received from private patients he/she has referred to facility

Private hospital providers are prohibited from entering in to an agreement, contractual or otherwise, which provides an inducement or obligation on a doctor to treat or refer patients for tests at its facilities.

 

What the CMA order means for hospital providers

Hospital providers are still permitted to provide ‘low value services’ to doctors free of charge.

This includes for example, services intended to ensure clinical safety, basic workplace amenities (such as tea, coffee and stationery), general marketing services and corporate hospitality (such as training days that are not linked to referrals). Hospital providers are required to disclose, on their websites, the type of services they offer to clinicians generally.

However for services that are deemed higher value, for example consulting rooms and secretarial services, hospital providers are required to offer these services equitably to all clinicians and charge what is ‘fair market value’. In effect, this means the ‘going rate’ for the service provided.

It will not be in the interest of providers to make these services prohibitively expensive as they will need to attract consultants to their facilities.

Clearly, where doctors are charged equally for a service, there are opportunities to shop around which may benefit some individuals.  However, we are aware that some private hospitals previously provided these services to some private practice consultants free of charge, and that this may impact on individuals ability to continue in private practice.

We would encourage doctors in this position to consider the other options available to them.
BMA members can read our setting up in private practice guidance.


What the CMA order means for private hospital operators

Private hospital operators will be required to publish details on their website about how much they charge clinicians for the above services, but this should be a general figure, rather than attributed to each individual clinician.

 

What the CMA order means for doctors in equity partnership schemes

  • You must not hold more than 5% of the financial interest directly or indirectly or any class of shares or options over any class of shares and options in the equity in any private hospital or facility
  • Must not have any obligation to refer patients for treatment or tests at the relevant private hospital
  • Any dividends or profit shares must be distributed pro rata to shareholders in accordance with their stake
  • Must not have any obligation which restricts from providing healthcare to patients within a specified distance from the relevant hospital/facility or from having a financial interest in a competitor of the relevant private hospital.

Private hospitals are required to publish on their website details of all referring clinicians practicing at that hospital who have a share or financial interest in that hospital or equipment in that hospital.

For doctors entering any future equity partnership arrangements, they must ensure that it meets the above criteria and that they pay fair market value for their stake. Members should seek independent legal advice if they are unsure if their equity partnership arrangement meets the requirement.

 

Making information available

The order established an information organisation, the Private Healthcare Information Network (PHIN).

This is to remedy the perceived lack of publicly available information on private healthcare facilities’ performance, as well as the performance measures and fees of private consultants.

 

What information should private healthcare facilities provide to PHIN?

By 1 September 2016 every private healthcare facility will be required to quarterly provide PHIN with information as regards every patient episode of all private patients treated at that facility. The facility will have to pay a fee to PHIN in the preceding calendar year to cover its costs for processing this information.

The facility will have to pay a fee to PHIN in the preceding calendar year to cover its costs for processing this information. The data provided must be sufficient for PHIN to publish information on:

  • the volumes of procedures undertaken -  average lengths of stay for each procedure
  • infection rates (with separate rates for surgical-acquired and facility-acquired infection rates)
  • readmission rates
  • revision surgery rates
  • mortality rates
  • unplanned patient transfers
  • patient feedback and/or satisfaction measure (still to be agreed by PHIN)
  • information from clinical registries and audits (still to be agreed by PHIN)
  • procedure-specific measures of improvement in health outcomes (still to be agreed by PHIN)
  • frequency of adverse events (still to be agreed by PHIN)

What information should consultants supply to PHIN? 

By 1 December 2016 private consultants will have to provide the following information to PHIN:

  • outpatient consultation fees
  • the standard procedure fee for the 50 types of procedure most frequently undertaken by the consultant
  • standard terms and conditions

What information should consultants supply to private patients?

By 1 December 2016 private healthcare facilities - as a condition of allowing a consultant to practise privately at its facility - will have to ensure consultants supply private patients with information in writing prior to outpatient consultations and further tests or treatment.

Prior to an outpatient consultation appointment being confirmed, consultants must provide to a patient the following information:

  • the estimated cost of the consultation
  • details of any financial interests the consultant may have in the facility or its equipment
  • a list of all insurers who recognise the consultant
  • a statement that insured patients should check with their insurers the cover they have
  • PHIN’s website address including a statement to be agreed by PHIN saying its website includes useful information.

Prior to further tests and treatment, a consultant must provide to a patient the following information – other than in an emergency situation this should be supplied within 2 working days following the final outpatient consultation prior to surgery:

  • a reason for the further tests or treatment
  • an estimate of the cumulative consultant cost of the treatment pathway which has been recommended.  Should include either:
  • all consultant fees charged separately from hospital fees
  • contact details for any other consultants whose fees are not included in the quote
  • for self-pay patients the total package price for treatment where the consultant has agreed this with the operator of the private healthcare facility
  • a statement of services which have not been included in the estimate – such as those resulting from unforeseeable complications. Where alternative treatments are available but the appropriate treatment can only be decided during surgery, the estimate should set out the relevant options and associated fees
  • PHIN’s website address including a statement to be agreed by PHIN saying its website includes useful information.

How will compliance be monitored and enforced?

Operators of private healthcare facilities will be required to ask every privately-funded admitted patient to sign a form confirming that the consultant has provided the above information and shall take action if there is evidence that a consultant has failed to do so.

Alternatively private hospital operators can take equivalent measures which are approved by the PHIN.

 

When will performance information be published?

PHIN will publish performance information in stages during and shall publish all such information no later than 30 April 2017.

 

Private Patient Units

The order sought to remedy the AEC which arises from high barriers of entry and expansion for private hospitals, and weak competitive constraints on private hospitals in may local markets (including central London) in the provision of private hospital operations (including NHS private patient units).

The CMA has the power to review PPU arrangements and take action if these will or may result in a substantial lessening of competition.

The CMA can take the following forms of action that it feels is reasonable to prevent this from happening:

  • Stop the PPU arrangements
  • Force the parties to terminate their arrangements with the PPU
  • Require the parties involved in the PPU to carry out remedies to ensure the appropriate provision of services
  • Accept undertakings from the parties involved as directed by the CMA to ensure there is not a substantial lessening of competition

Anyone considered by the CMA as either party to or about to enter into PPU arrangements, has a duty to provide information on this.