Circle’s recent acquisition of BMI Healthcare has been cleared by the Competition and Markets Authority (CMA) subject to hospitals being divested in Bath and Birmingham. While most of the CMA’s decision is about competition between private hospitals, its most interesting implications are for GP practice mergers.
Centene, a part owner of Circle, owns 18 NHS GP practices in the UK through The Practice Group (now Operose Health). The CMA found that Centene acquired material influence over Circle as part of the deal to acquire BMI, and as a result, it looked at the risk to competition if Centene’s GPs favoured BMI’s hospitals when referring patients.
The CMA decided that there was no realistic prospect of a loss in competition between private hospitals, not least because Centene’s GPs have only a very small share of patients in the catchment areas for BMI’s hospitals. That is, even if Centene’s GPs directed their patients to BMI’s hospitals, it would not materially affect the viability of other private hospitals given the small number of patients involved.
The most interesting point about the CMA’s analysis of this issue was not the finding – which seems sensible – but that it was carried out at all.
Previously, the OFT (a CMA predecessor) had decided that GPs did not fall within the merger control rules on the grounds that GP practices did not meet the definition of an ‘enterprise’. This was always a somewhat odd decision as it was based on a view that the NHS contracts held by GP practices so tightly defined their service provision requirements that they could not be regarded as capable of independent strategic decision-making.
The CMA now appears to have moved away from this approach, and says that Centene, as an operator of NHS GP practices, is an ‘enterprise’ for the purposes of the merger control rules. There is no reference to the OFT’s earlier decision so the reasons for any change in its view are not particularly clear.
Nonetheless, in deciding that Centene is an ‘enterprise’ the CMA seems to have opened up to its oversight mergers between NHS GP practices. It is an interesting contrast to the move away from reviewing mergers between NHS hospital trusts.
The implications of this decision by the CMA are likely to be most significant for large GP practice operators, such as Our Health Partnership, AT Medics, Modality and Lakeside Healthcare (as well as Centene).
If any two of the large operators were to merge, the likelihood of a CMA review is now more significant. It could also affect mergers involving local GP practice groups as they expand. As our earlier blogs show, a number of GP practice groups have a substantial presence in various local areas. Any reduction in patients’ ability to choose between GP practice operators in these areas could be subject to significant CMA scrutiny.
Please feel free to contact us at Aldwych Partners to discuss the issues in this blog or for advice on handling the risk of CMA intervention.