Analysis: NHS should take note of OFT investigation

Doc- you get how much for a private referral?

Advocates for more competition in the NHS should pay attention to the Office of Fair Trading’s recent statement on financial incentives offered to private doctors.

The trade body is part way through an investigation into the private healthcare market. The interim statement suggests hospital groups may be asked to stop paying doctors to treat more private patients at their facilities, amid fears the incentives are influencing decisions on patient care.

The OFT has two major concerns about consultant incentives, which include ‘loyalty’ payments, equity share schemes and non-financial incentives such as free secretarial support.

‘Consultants’ incentives may increase the cost of private healthcare without driving improvements in quality,’ it said. ‘Second, the OFT has concerns that the provision of certain incentives may foreclose competing providers from entering or expanding into the private healthcare market since these arrangements may distort the referral patterns, and in some cases incentivise consultants to direct a significant proportion of their patients to one facility.’

Attracting consultants
The incentives reflect the fact that providers are now competing on their ability to attract consultants rather than competing directly for patients on quality and price, the watchdog added.

The insurer AXA PPP has previously complained about consultants’ incentive payments to the General Medical Council as well as the OFT.

Dr Simon Peck, head of investigations at AXA, said: ‘We understand that certain incentive payments are made by some hospitals and laboratories to doctors in return for their using or increasing their usage of facilities. These are generally confidential and it is hard to see any other motive for such payments other than to influence the way in which doctors treat their patients. These payments are not generally disclosed to patients or to insurers.’

BMI Healthcare, the UK’s largest private hospital group, is one private operator that is understood to pay consultant incentives. A spokeswoman said: ‘Across our organisation, the scale of any incentives for growing private practice at BMI is small, and the operation of these is kept under review for compliance with guidelines from the General Medical Council.’

She added: ‘BMI sees some aspects of consultant incentives as an issue for the industry and the medical profession, and supports the OFT in its review of current practices.’

While the payments are currently only offered in the private sector, an increase in competition in the NHS could lead to similar incentives emerging in the state-funded sector.

GP sweeteners
Consultants have far less influence over decisions about who they see and treat in the NHS than in private healthcare. But as numbers of operators increase in the NHS – and competition for patients heats up – it’s almost inevitable that some will attempt to incentivise referrals, perhaps through sweeteners for GPs.

Just last year a primary care trust was seriously considering plans to pay GPs to refer patients to an independent sector treatment centre. Such payments are not illegal, though British Medical Association guidance says doctors should avoid taking payments to refer in a certain way.

As well as direct payments, the OFT is looking into the effects of equity share schemes on competition, referrals and patient choice. One company that runs such a scheme is healthcare provider Circle Health. Circle, which is 49.9% owned by its staff, treats private and NHS patients and offers all its employees shares in the company.

Before the company built its flagship Bath hospital, it asked its doctors to commit to bring a proportion of their private practice – usually around 60% – to the facility during its first year of its operation.

Dr Peck said: ‘We do have concerns about the situation where doctors have a direct financial interest in facilities where they refer patients. Whilst we would like to believe that most doctors in such situations act in the best interests of their patients, it is possible that financial interests may distort their referrals decisions. At least, however, the equity share model used by Circle is transparent.’

The NHS is not affected by the Circle doctors’ patient referral commitments, except in that they are key to the firm’s expansion plans.  These plans could be affected by a possible negative OFT pronouncement on the model. Circle is planning to build a network of hospitals which would treat NHS and private patients.

Former BMA chairman Sir Sandy Macara, however, has raised concerns that share ownership could cause a conflict of interest where Circle partners are working at rival NHS hospitals.   Criticism of equity share schemes by the OFT could exacerbate those concerns.

Circle also has 676 GP shareholders, who were issued shares in 2007 and 2008 before the company decided to end its involvement in primary care. Circle told the Bureau that all the GPs are based in Hampshire and Dorset and are therefore not in a position to refer patients to Circle’s current facilities. But Circle wants to build a hospital on the edge of Southampton. The company says it will buy back the shares from GPs who practice in the same areas as future Circle hospitals.

But the issue – as with the points raised by the OFT – illustrates the complexity and potential for conflict that is likely to accompany the increased marketisation and commercialisation of the NHS.