6.65 The PH provider market appears to be concentrated at the national level. At the local level there appear to be areas of high concentration, such as
areas where there is no alternative fascia PH facility within a 30 minute drivetime of a PH facility (solus PH facilities), and some local markets with 'must have' PH facilities.
6.66 The existence of solus and 'must have' PH facilities means that PMI providers are dependent on the PH providers that own these facilities in order to provide nationwide coverage for their policyholders.
6.67 The size of the larger PMI providers appears to result in at least a degree of buyer power in that PH providers are, to some extent, dependent on these larger PMI providers for the financial viability of their facilities. However, there may be limits on the PMI providers' ability to exercise their buyer power for two main reasons. Firstly, buyer power may be constrained by the need for PMI providers to purchase PH in most local markets, including areas with solus and 'must have' facilities as
described above. Secondly, since in most cases GPs rather than PMI providers recommend the consultants, and consultants often determine a patient's choice of PH facility, the PMI providers have limited ability currently to direct patients to different PH facilities. Therefore, as the buyer power of the PMI providers appears not to be countervailing, the larger PH providers may have a degree of market power.
6.68 The OFT notes that the development of partnership arrangements between PPUs of NHS/Foundation Trusts and PH providers has the potential to either exacerbate or alleviate concentration in local PH markets. Local market concentration may increase if a PH provider that is already present in the local market partners with the PPU. This is because the partnering arrangement may remove any competitive constraint on the relevant PH provider offered prior to the partnering arrangement and reduce choice for PH patients and PMI providers. On the other hand, a partnership arrangement between a PPU and a new PH provider in the local market has the potential to provide a platform for entry and thereby to increase competition. As a result of this market study, the OFT has made a recommendation to the Department of Health and to the NHS/ Foundation Trusts in relation PPU partnering
7
CONCENTRATION OF ANAESTHETISTS
7.1 Submissions received during the course of this market study have
indicated that there is a growing trend for consultants to form groups. In particular, there is a trend for anaesthetists to form groups (AGs) and this has led to concentration of anaesthetists in parts of the UK. 7.2 In a number of local areas, consultants form groups that work to a
common fee level. The OFT consultant survey showed that 16 per cent of those who responded were part of a consultant group. Those
consultants who were part of a consultant group stated that
'membership brought cost efficiencies through shared resources, gave them a more effective platform for marketing themselves to GPs and PH facilities, and provided access to a wider range of experts and
professional opinion'. 210
7.3 The legal structure of consultant groups varies, ranging from legal partnerships to more informal groups that operate joint billing and equal profit sharing. From the evidence submitted, it appears that the observed trend to form consultant groups, both within single PH facilities and across a local area, is especially marked for anaesthetists. 211
7.4 Anaesthetists tend to establish working relationships with surgeons, who will arrange for them to treat their patients if necessary for a particular procedure. In many cases, the PH patient may be unlikely to meet their anaesthetist before undergoing treatment, and anaesthetists appear to have little impact on the direction of the patient journey. 212
7.5 In relation to the specific benefits enjoyed by such groups, the
Association of Anaesthetists of Great Britain and Ireland (AAGBI) states that typical benefits for anaesthetists working in such groups would
210 OFT consultant survey page 76
211 Anaesthetists are qualified medical doctors who specialise in pain management, anaesthesia
and intensive care medicine. Anaesthetists provide medical care to patients before, during, and after surgical procedures.
212 OFT patient interviews, at page 32, indicated limited interaction between patient and
include the division of administrative costs, shared secretarial support, an increased ability to promote and build a private practice and optimal team working with surgeons which improves patient outcomes. The OFT is also aware that typically AGs set a common fee level for their
members.
7.6 According to a survey conducted by the AAGBI, around 44 per cent of anaesthetists active in the PH market are involved in an AG. The AAGBI submitted that the number of AGs has grown from 22 in 2006 to over 45 in 2011. This trend coincides with the observation, made by a number of PMI providers, that anaesthetists are the sub-speciality with which the PH patient is most likely to experience a shortfall.
7.7 The OFT has received a number of submissions from PMI providers and complaints from patients which indicated that the anaesthetist fees being charged for the relevant treatments received by some patients were not covered in full by the PMI provider and, as such, the patients would face an unexpected shortfall and the patients could not find an alternative local anaesthetist who charged within their PMI provider's fee schedule.
7.8 These submissions state that it is difficult for a patient to switch to an alternative anaesthetist. This is because patients will typically only meet their anaesthetist just before their surgery and at this point patients are unlikely to switch to an alternative anaesthetist as this would require postponing their surgery and travelling to an alternative facility located much further away to avoid paying a shortfall.
7.9 The OFT has raised with the FSA the issue of whether PMI providers should make the likelihood of consultant shortfalls clear , both at the point of sale and at the time a PMI funded patient makes a claim under their PMI policy (see chapter 9).
7.10 Furthermore, PMI providers have provided evidence which demonstrates that in most cases the shortfall rate amongst AGs is higher than the national average shortfall rate for anaesthetists that are not part of an AG, which indicates that anaesthetists that are part of an AG may charge higher fees than those who are not part of an AG.