The UK Competition and Markets Authority (CMA) is about to dive into the health sector again with Ramsay Health Care today announcing an offer to acquire Spire Healthcare.

Only last year, the CMA reviewed Circle’s acquisition of BMI Healthcare. To get the deal through Circle had to sell two hospitals across the three areas where both it and BMI were present.

Ramsay is no doubt confident of gaining CMA clearance but has already indicated that it too may need to sell a few hospitals. From a quick look at the map, the CMA might be expected to take a pretty close look at 10 or so areas when deciding what needs to be sold.

The main risk for Ramsay, though, is not the number of hospital sales that might be needed, but whether the CMA agrees that any concerns it might have will be addressed by these sales.

When the deal completes, the number of hospital chains in the UK with a national presence will go from four to three. (Circle/BMI and Nuffield being the other two chains with a national presence.) It is easy to see this potentially worrying both insurers and NHS England.

Ramsay may be taking comfort from the Competition Commission’s 2012-14 private healthcare market investigation. The CC (a CMA predecessor) found that the prices charged by hospital operators to insurers were a function of how many hospitals an operator owned in areas where customer choice was limited.

Extrapolating from this, Ramsay may be able to argue that the merged business will not have any additional areas where customer choice is limited (as a result of agreeing divestitures with the CMA), and as a result, it will not be able to increase prices for insurers. Our suspicion is that insurers are unlikely to see it quite like this.

Moreover, NHS England will now be faced with one less large-scale private provider with which it can negotiate deals to clear the ever expanding backlog of patients needing elective surgery following the Covid pandemic.

Ramsay has said that it is allowing 12 months for the CMA review, which gives enough time for the CMA to carry out an in-depth Phase 2 process. That feels wise. It is hard to see the CMA giving this deal a quick nod through on the back of a few local hospital sales.