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Comment: NHS gives Monitor jurisdiction over competition and economic regulation in the UK healthcare sector

16 December 2010

"The new powers for Monitor to promote competition, where appropriate, and to enforce competition law are not unusual and similar powers are enjoyed by other sector regulators in the UK (for example, Ofcom the communications regulator).  The health care sector does have some special features which distinguish it from some other regulated sectors.  In the NHS, the service is free at the point of delivery to consumers, so there is more limited scope for price competition in the market.  The promotion of competition in health care may therefore also focus on non-price elements such as the range or quality of services or where competition takes place "for the market" at the procurement stage.  The same range of choice may not, however, be appropriate for certain emergency services.  
 
As more attention is focused on the role of competition in the NHS, similar issues are being considered in the United States in response to the massive US health care reform changes that were enacted earlier this year.  In the US, competition authorities have long played an active role in ensuring that hospitals, physicians and other health care providers do not collude with respect to the prices they negotiate with private health plans, who account for about 30-40% of US health care expenditures.  They also have closely reviewed health plan mergers and conduct to ensure that plans do not depress their payments to providers below competitive levels, or raise the premiums they charge to employers above competitive prices.  US antitrust enforcers also have been concerned about the impact of anticompetitive mergers and conduct on government-run programmes such as Medicare and Medicaid, even when such programmes use administered prices, as opposed to negotiated rates. 
 
These developments represent a step change for the UK health and social care regulatory framework. The NHS already encompasses a variety of monopoly and competition elements with providers ranging from acute and foundation trusts, general practitioners, private sector providers and others.  Important social and economic interests are in play and interested parties will no doubt be monitoring developments as the sector comes under closer competition law scrutiny.  
 
In common with any nascent competition regulator, Monitor will want to choose its cases carefully to ensure that there is a flexible and dynamic system that reflects the evolving needs of the sector.  Experience in other sectors and internationally, albeit in different contexts, highlights some of the challenges.  This suggests a need for a national regulator to balance a range of complex issues which should not overstate technical solutions over the interests of competition and, ultimately, patient consumers."

Robert Leibenluft

Partner in Hogan Lovells' Antitrust, Competition and Economic Regulation (Washington)
Tel: +1 202 637 5789
robert.leibenluft@hoganlovells.com

Simon Barnes

Counsel in Hogan Lovells' Antitrust, Competition and Economic Regulation (London)
Tel: +44 207 296 5899
simon.barnes@hoganlovells.com

Suzanne Rab

Counsel in Hogan Lovells' Antitrust, Competition and Economic Regulation (London)
Tel: +44 207 296 2382
suzanne.rab@hoganlovells.com

 
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