FIPO NEWSLETTER May 2014

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1 To all Consultants Dear Colleague, FIPO NEWSLETTER May 2014 In this Newsletter we bring you our views on the recent report by the Competition Commission (CC) now known as the Competition and Markets Authority (CMA) and how FIPO is intent on responding. We also bring news about some recent moves by Bupa in cardiology and spinal surgery which have far reaching effects on all specialties. We apologise for the length of this letter but the situation is complex and demands a detailed review. The Competition and Markets Authority Report Private Health Care The Competition and Markets Authority (CMA) produced its final Report at the beginning of April 2014 (see here): - final-report The report is fundamentally similar to the earlier Provisional Report in that the CMA has concentrated on the relationship between the hospitals (although now only HCA is required to divest) and the insurers (PMIs). It has again largely ignored patient detriment and consultant relationships with the PMIs and the questions of fee structures, open referral and the threats to individual consultants. The Remedies cover the following issues. Hospital Divestments HCA must divest of either The London Bridge and the Princess Grace hospitals or the Wellington hospital (including the Platinum Medical Centre). Previous threats to BMI in the Provisional Report have now been dropped. NHS Private Patient Units (PPUs) Arrangements between NHS Trusts and private hospital operators to operate or manage PPUs will be open to review by the CMA in order to prevent any local geographical dominance by any group. Consultant Incentivisation Schemes and Equity Ownership There will be a ban on certain benefits and incentive schemes provided by private hospital operators to clinicians. 1

2 Consultant equity share in hospitals are limited to 5% and must be bought at market price; these must not be linked to patient referrals or other conditions not to compete. This rule applies where the equity participation is a stake in a hospital, or in a joint venture in which a private hospital operator also has a stake. There are no apparent restrictions on doctors owning clinics, X-ray units etc. unless these clinics or individual items of diagnostic equipment are part-owned by clinicians and part-owned by a private hospital group (in which case the 5% stake per consultant rules applies). Fee Estimates and Information to Patients Prior to Treatment Consultants must provide fee information to patients using standard letter templates provided by the hospital Hospital operators will be required to enforce compliance and implement this remedy within six months of 2nd April 2014 This information will be sent to patients in two letters; The first sent before the outpatient consultation The second sent within 48 hours of the final outpatient consultation and prior to surgery (whichever is sooner) This process must be driven and supervised by the private hospitals. Consultant fee and Quality Information There will be a combination of measures to improve the public availability of information on consultant fees and of information on the performance of consultants and private hospitals. The CMA said; The principal aim of the CC in requiring consultants to provide additional information on their fees is to ensure that patients are adequately informed regarding the costs of private healthcare, thereby stimulating competition on price between consultants by facilitating shopping around by patients (Paragraph ) We took into account the concerns of the OFT regarding the potential for collusion over fees if these were to be made public. We thought that this could be best addressed by requiring that consultants published their list prices on the information organization s website, leaving them free to charge more or less than this level as they considered appropriate and preventing consultants from knowing the actual prices charged by their competitors to patients (Paragraph ) We concluded, therefore, that this remedy was likely to be effective in ensuring that patients had sufficient information on the prices charged by consultants. In conjunction with our remedy on providing consultant quality information, we reasoned that this remedy would be effective in allowing patients to make meaningful choices between consultants based on value (ie both quality and price) of the healthcare services provided by consultants (Paragraph ). PHIN (Private Healthcare Information Network) will be the Information Organisation. PHIN ( ) collects and publishes information about private and independent healthcare, including quality indicators, to help patients make informed choices. PHIN receives data from its member organisations, which is taken from administrative and billing systems, clinical reporting and submissions to the NHS and regulators. 2

3 PHIN will be supported by hospitals who will share in the collection and publication of information on hospital and consultant performance. The structure of PHIN has been mandated although its precise relationship with the profession is yet to be determined. Consultants practising privately must submit information on their outpatient consultation fees and standard procedure fees (covering all procedures under-taken by the consultant) to the information organisation by December 2016 for publication on its website alongside information on performance. FIPO s VIEW ON THE CMA REPORT Hospital Divestments and Investment in PPUs FIPO can see little benefit to patients in terms of reduced insurance premiums and quality of care. It is our understanding that HCA will be appealing the CMA decision. The case for not allowing private companies from gaining geographical dominance in various areas by setting up deals with NHS PPUs was clear cut under competition law. Consultant Incentivisation and Equity Partnerships There can be little argument made about this ruling and FIPO did not object to the principle that consultants and patients should be free to choose their preferred hospital for treatment without any financial incentivisation. FIPO argued strongly for a common sense approach to minor issues such as free coffee and sandwiches for consultants and for normal hospital social and academic events. On the critical issue of equity partnerships by consultants we are pleased that our arguments to the CMA were upheld and consultants are not banned from shareholdings in clinics etc. albeit with certain caveats. Fee Estimates FIPO s view is that estimates of fees should be given wherever possible with standard template letters and FIPO, along with other professional groups has supported this for a long time (see FIPO Website; However, this Remedy which involves hospital supervision of fee estimate letters is intensely bureaucratic. We are discussing this with hospitals as to how best to manage this matter. Fee and Quality Outcomes The CMA has mandated that consultants should publish an indicative range of fees and this should be maintained through PHIN. In addition PHIN is expected to produce Quality data on individual consultants. FIPO has been discussing these issues with PHIN but there are some inherent difficulties in measuring individual consultant outcomes which we need to address. PHIN will be working with hospitals to produce outcome data from the private hospitals on the 10 national datasets which have been mandated for the NHS so that comparisons can be made between the two sectors. Some of these databases (for example NJR) are 3

4 more mature than others. FIPO believes that the CMA view about the cost/quality measure of consultants is simplistic and must be interpreted with caution. FIPO s ACTIONS FOLLOWING THE CMA REPORT THE APPEAL PROCESS FIPO, along with many organisations who submitted evidence, is disappointed that the CMA failed to address The impact of open referral on patient care The changing terms and conditions of some PMI contracts for patients The dominance of PMIs vis-à-vis the consultants The de-recognition of consultants on dubious financial grounds The relentless attack on fees and reduction of patient benefits The barriers to entry for new consultants on fixed and very low fees The future economic un-sustainability of consultant practice The CMA has mandated a complex system of how and where fee information should be published, but this does not address the Remedy of promoting competition if most fees are set by the PMIs. In a fee assured system, which does not allow subscribers to top-up or co-pay, the consultant fees are paid by the PMI, thus totally bypassing the patient. Competition Appeals Tribunal (CAT) The FIPO Board has taken an opinion from Counsel about the possibility of a judicial review by the CAT (Competition Appeals Tribunal) on behalf of the profession. Counsel explained that there maybe grounds for such an appeal based on certain legal considerations with a better than 50% chance of a successful appeal. Based on this the FIPO Board agreed to lodge this appeal and will hopefully do so within the allotted timeframe (before the end of May). Thereafter it may be some months before we get a response and a decision. If this goes in our favour then the CMA may be requested to review the evidence and reconsider its current position. Funding for this legal appeal has to be from professional sources and to that end several organisations and many individual consultants have contributed to a fund. We would like to thank all contributors and whilst at the present moment we are approaching the desired total we are still in need of funding for this initial appeal. Attached you will find a separate letter in which FIPO has asked for funding and also a donation form which explains how you may contribute. Our thanks again to all those have made a donation and we will be ing all donors in due course with a progress report. Insurance Issues Recent Bupa Changes Consultants in cardiology and spinal surgery will have received notification from Bupa about certain changes in pre-authorisation of patients and benefits payable. For spinal surgery Bupa has suggested for certain complex procedures that a second opinion by a Bupa "specialist" will be required before funding is agreed. Bupa also refers to MDTs being a necessity for these non-malignant conditions. The various spinal associations have complained to Bupa that the Bupa letter to consultants was misleading in the sense that it implied that the spinal associations supported this Bupa initiative. 4

5 The Bupa cardiology initiative involves a detailed review of the scope of practice of all consultant cardiologists, a system of supporting patients with various Bupa nurses and insurance led teams and also a cutback in the benefits payable for invasive cardiology procedures. The British Cardiovascular Society and BCIS have also protested to Bupa for misrepresenting their views, stating that they do not endorse the Bupa strategy, and currently they, along with the spinal associations, are waiting for a response. These initiatives are similar to those employed by Bupa in other spheres of practice (arthroscopy, hysterectomy heavy menstrual bleeding) and the cutback in patient benefits again reflects Bupa's previous approach to many different specialties. We know from previous analysis that compared with WPA benefits the average reduction made by Bupa amounts to nearly 20% for both surgical and anaesthetic reimbursements. This is an overall average cutback and the true cutback depends on the volumes of the procedures and this can amount to more than 20% for many specialties. What can consultants do now? May we quote again from a recent FIPO Newsletter in which we noted that both Bupa and PPP have continued to enforce their fixed fee schedules on young consultants and Bupa are trying to persuade or pressurise senior consultants to become fee assured. Bupa is leading on this but other PMIs are following a similar strategy with certain insurance products. The pressure on established consultants from Bupa is often based on the allegation that their consultation fees are in the top 10%, although in many instances this seems most unlikely. Consultants must make a personal decision about how they react to the Bupa pressure but they should be clear that those who become fee assured (or a "premier consultant") are losing their contract with the patient. The patient no longer has responsibility for any part of their fees. Consultants may become fee assured because they are asked to just lower their consultation fees by a small amount and some have said they are still getting more than a colleague; others may feel that they are temporarily gaining patient referrals. Of course it is clear that if Bupa is ultimately successful not only will all PMIs follow suit and lower their benefits but any temporary gain in volume will vanish as the general pool of patients will remain the same but the number of consultants dealing with them will have increased. This is a no win situation for consultants and it will lead to quite severe economic difficulties for many. The theory of Gaming Theory and a slide demonstration which describes this scenario can be seen here; Consultants have asked why Bupa are trying to coerce them in to signing up to consultation fees which may be higher but are often lower than a colleague in the same specialty who has not been approached. The point is that this is just the start of the process and the actual fee is irrelevant; it is the contract between the consultant and the PMI which matters so that consultants become locked in and the patient is then excluded from any financial liability. FIPO has calculated that the initial and follow up consultation fees for the new young consultants has been fixed at about 40% below the average fees charged by established consultants. These young doctors will gradually increase in number (although those going into private practice are far less than previously despite Bupa s assertion to the 5

6 contrary) and senior doctors will retire. Once the PMIs reach a tipping point with the vast majority of consultants signed up (whether young or senior fee assured consultants) then experience in the USA has shown that the insurer will gradually ratchet down the benefits for all and those who fail to comply will simply be delisted. This is now happening. We are very keen to hear from any consultant who have been delisted by an insurer and also if you have any evidence that open referral or any other actions by an insurer has led to patient detriment. Again our thanks for your support and we hope that those who have not so far donated to our Appeal Fund will be able to do so. The FIPO Board 6