T 0207 383 6416
E [email protected]
Review of monopoly remedies
Competition and Markets Authority
7th Floor North
Victoria House
37 Southampton Row
London WC1B 4AD
Sent by email: [email protected]
20 August 2015
Dear Sir/Madam
The Competition and Markets Authority review of monopoly remedies put in place before 1
January 2005
Thank you for the opportunity to contribute a written submission to the Competition and Markets
Authority review of monopoly remedies put in place before 1 January 2005. I enclose the BMA’s
submission.
In light of significant regulatory, technological, and legal changes since 1994 we believe that the CMA
should undertake a review of the Private medical services undertakings given by the BMA and to evaluate
the reasoning that brought into force this remedy.
We hope you find our comments helpful and look forward to engaging with you further on this issue. If
you have any further queries please do not hesitate to contact me on the details above.
Yours faithfully,
Sheridan Hammond
Head of Career Doctors, Students & Independent Medical Services Division
Chief executive: Keith Ward
Registered as a Company limited by Guarantee. Registered No. 8848 England.
Registered office: BMA House, Tavistock Square, London, WC1H 9JP.
Listed as a Trade Union under the Trade Union and Labour Relations Act 1974.
BMA submission to the Competition and Markets Authority review of monopoly remedies put
in place before 1 January 2005
August 2015
Introduction
The BMA (British Medical Association) is the voice of doctors and medical students in the UK. We are an
apolitical professional association and independent trade union, representing doctors and medical
students from all branches of medicine across the UK and supporting them to deliver the highest standards
of patient care. We have a membership of over 154,000 which continues to grow every year.
The BMA welcomes the opportunity to respond to the review by the CMA (Competition and Markets
Authority) of monopoly remedies put in place before 1 January 2005. This includes the Private medical
services undertakings (the Undertakings), which were given by the BMA on 21 September 1994 in order to
remedy the adverse effects specified in the MMC (Monopolies and Mergers Commission) report Private
medical services: A report on agreements and practices relating to charges for the supply of private medical
services by NHS consultants, referred to in Annex 1 of the CMA’s Invitation to Comment published in July
2015.
Since giving the Undertakings the BMA has not published, and annually declares that it has not done so,
“any schedule, list or notification which relates to fees charged or to be charged for private medical
services” and which are similar in effect to the ‘Private Consultant work: BMA Guidelines 1992’.
The BMA believes that there have been material changes in the operation of the markets and
circumstances relevant to the Undertakings and that the requirement to continue to give an annual
declaration is no longer required for the reasons outlined below.
Private Medical Services undertakings
The Undertakings were put in place because it was then thought that the publication of BMA guidelines
led to consultants’ charges being higher than they would otherwise have been. The MMC concluded in its
1994 report that:
“With regard to the BMA, we have identified a fact which operates and may be expected to
operate against the public interest, by reason of the particular effect adverse to the public interest
that the publication of the Guidelines enables consultants who follow them to charge fees for
private medical services higher than they would otherwise have been.” (sub-paragraph 11.120(b))
Since the 1994 MMC report there have been significant regulatory and legal changes, as well as social and
technological developments. These have considerably altered how patients, doctors, insurers and others
work, operate and understand private healthcare. In our view, it is now right to re-consider the
Undertakings.
In particular, the CMA published its final report on its investigation into the private healthcare market on
2 April 2014 and this set out a series of remedies that will ensure greater transparency in the fees set out
by consultants for private healthcare.
A major aspect of the CMA’s remedies is the establishment of an ‘information organisation’ to which
consultants and private healthcare facilities will have to provide fee information. We now know this
organisation will be the Private Healthcare Information Network (PHIN) and it will be responsible for
publishing fees on its website from 1 December 2016. With the establishment of the ‘information
organisation’ there will be a requirement brought in through the CMA’s final order for all relevant private
healthcare fees information to be publically available. In addition private healthcare practitioners will be
Page 2 of 3
required to signpost patients to the PHIN website so that they are aware of this information. Although it is
regrettable that PHIN has decided to not invite the BMA to join its Board as a non-executive director, we
nevertheless look forward to working with PHIN in making sure this new system is brought into place and
operates effectively.
Price information websites such as that to be operated by PHIN are now a feature of life that did not exist
then and that will particularly be the case with the mandatory requirement of information to be available
on a public website. (It may be noted that price comparison website remedies have been implemented as
remedies in other cases by the UK competition authorities, such as by the Office of Fair Trading in relation
to Extended Warranties – see John Lewis v OFT [2013] CAT 7.)
The BMA would also like to highlight another market change that has taken place since 1994. At that time
it was thought by the MMC that the benefit maxima was a legitimate step by insurers to carry out their
functions and that insurers were the principal ‘counterweights’ to consultants given the weak position of
patients. The benefit maxima in that context were believed to have a restraining effect on consultants’
charges as well as provide information and guidelines to patients. The latter need would appear to have
been resolved by the establishment of the ‘information organisation’. The former has also now differed in
that since then some insurers, such as BUPA and AXA PPP, have insisted that any new consultants must
agree to abide by the benefit maxima and fee schedules or face swift de-recognition. We agree with the
statement in paragraph 7.106 in the CMA 2014 report that “If extensively and rigidly applied, fee-capping
consultants could lead to distortions in competition and to reduced consumer choice. Fee-capping … has
the potential to increase the disincentives on consultants from setting fees to reflect their costs,
experience, expertise and the local market conditions.” In 1994 the benefit maxima was used to inform
customers of the level of reimbursement insurers would pay under their policies for services and
procedures provided by consultants. The situation now for new consultants is that the BUPA benefit
maxima and the AXA PPP schedule of published fees outline the maximum fees consultants can charge for
certain services and procedures. Agreeing to charge at the fees set by BUPA and AXA PPP are conditions of
recognition. The threat of de-recognition is new in the context of benefit maxima. It means that policies
such as the benefit maxima are no longer wholly guidelines for patients and their purpose has changed
since 1994.
Finally, the entry into force of the Competition Act 1998 in March 2000 placed legal constraints on an
organisation such as the BMA in issuing price guidelines that did not exist at the time of the 1994 MMC
report. That legal development alone is sufficient to render the Undertakings otiose.
In light of the developments since 1994 described above, we believe therefore that there is relevant
evidence for the CMA to undertake a review of the reasoning and decision that brought into force this
monopoly remedy.
Page 3 of 3