The Competition and Markets Authority (CMA) and their role in relation to doctors
We have increasingly been seeing instances of our clients falling foul of the CMA. So, what is it, how does it impact you and how can you avoid falling foul of it in future?
The CMA works to promote competition for the benefit of consumers both within and outside of the UK. They ensure that consumers get a ‘good deal’ when buying goods and services, and that businesses operate within the law.
The CMA's 'Private Healthcare Market Investigation Order' was published in 2014, following a two-year investigation into private healthcare in the UK. The investigation concluded that certain features within private healthcare markets were leading to adverse effects on competition. Under the Order, the CMA can now take various forms of action against private patient units, private healthcare providers and referring clinicians to guard against adverse effects on competition.
How does the CMA operate?
The CMA investigates:
Mergers between organisations, to make sure they don’t reduce competition;
Entire markets if they think there are competition or consumer problems.
The CMA acts against businesses and individuals that take part in cartels or anti-competitive behaviour.
The CMA protects consumers from unfair trading practices.
The CMA encourages government and other regulators to use competition effectively on behalf of consumers.
Therefore, Medical practitioners who work in private practice must make sure that they don’t break competition law. Certain agreements between practitioners to agree fee rates or share sensitive information can result in higher healthcare costs, which can have a harmful impact upon patients, and will be treated punitively accordingly.
Consequences of the CMA taking action
If you are caught instigating, participating in or facilitating anti-competitive practices you could face fines of up to 10% of annual global turnover and company directors could be banned from acting as a director for up to 15 years. In the most serious criminal cases, individuals could even face prison.
Recent examples of the CMA taking action include:
In August 2015, the CMA actioned a fine of £500,000 on a membership organisation of private consultant ophthalmologists. The organisation had previously admitted breaching competition law and agreed to pay a fine. The fine was reduced to £382,500 in recognition of efficiencies for the CMA resulting from the streamlined administrative procedure following settlement and the organisation’s continued co-operation - as well as the organisation’s Board’s willingness to adopt a comprehensive competition law compliance programme. Their competition law infringements during the period September 2008 to May 2015 included: (1) Recommending that its members refuse to accept lower fees offered by an insurer, and that they charge insured patients higher self-pay fees. (2) Circulating amongst its members detailed price lists for ophthalmic procedures such as cataract surgery to be used with insurers. These collectively set prices did not pass on lower local costs (such as cheaper hospital fees) and made it harder for insurers and patients to obtain lower prices. (3) Facilitating the sharing of consultants’ future pricing and business intentions such as whether to sign up to a private hospital group’s package price, which enabled members to align their responses.
In July 2020, the CMA fined a private hospital group £1.2 million for allegedly facilitating a price-fixing arrangement for self-pay ophthalmology consultation fees. The CMA also fined 6 consultants involved a total of £13,170, with individual fines ranging from £642 to £3,859. The set of facts leading to this outcome is a rather alarming warning to healthcare providers and practitioners alike. What appears to have been an innocuous suggestion, merely arrived at as a way to ensure pricing was simplified and less complicated for patients was viewed very simply by the CMA. The background was as follows: the topic of fees for initial consultations had been raised at a hospital dinner attended by the consultants. Afterwards, an employee at the hospital emailed all the consultant ophthalmologists suggesting that the fee for their self-paying patients should be fixed at £200 (3 consultant where already charging £200 whilst 4 raised their price from £180 to £200). All but two responded in agreement. This was deemed to be price-fixing and, as such, one of the most serious kinds of anti-competitive behaviour as they can cheat customers by forcing up prices or keeping them higher than they would otherwise be, and/or reducing quality and choice. A 20% reduction in fines was given to the hospital and the 6 consultants because they admitted what they had done and co-operated with the CMA. One consultant was granted full immunity from fines, benefiting from the CMA’s ‘leniency programme’, as they were the first to report the illegal agreement to the CMA.
So how can you avoid falling foul of the CMA?
Remember that if you are a medical practitioner offering your services to private patients outside of the employment of an organisation, you are acting as a sole trader and are subject to competition law. As such, you must take commercial decisions independently from other medical practitioners and compete locally or regionally to attract patients.
If you work and trade as a group (such as an LLP), it is permissible to co-ordinate prices to have a single combined market presence. However, if members of the practice spend part of their time consulting with patients outside of the LLP as sole practitioners, you must set your prices independently. There should be no co-ordination of commercial strategy between the LLP and the sole practitioner (such as an agreement not to compete for certain patients). For practitioners who do some work both inside and outside a group, special arrangements may be needed (e.g. different email distribution groups for different classes of information) to ensure no inappropriate commercial information is exchanged.
Membership associations and private hospitals should avoid making recommendations or taking decisions which interfere with their members’ commercial conduct, including how they set fees or prices, and avoid facilitating the exchange of commercially sensitive information.
For more information contact:
Flora McCabe
Head of Advocacy and Risk Management - Healthcare
E: flora.mccabe@lockton.com (opens a new window)
T: +44 (0)7775429377
