Neuro-rehabilitation provider, Christchurch Group, was acquired by Montreux Capital Healthcare Fund in December 2019. Montreux is already active in neuro-rehab services through its ownership of Active Care Group. While the Competition and Markets Authority (CMA) has reviewed a number of mental health transactions in recent years, neuro-rehab and acquired brain injury (ABI) services largely fell outside the scope of these reviews. As a result, the Christchurch acquisition provides a useful prompt for looking at potential merger control issues in the sector.
Neuro-rehab services (including ABI) cater for patients with a broad spectrum of needs. A patient that has incurred a brain injury might, for example, start by receiving hospital-based care and then progress to a care home based rehabilitation service and then community-based rehabilitation. Some patients may require longer-term care in hospitals or residential homes that specialise in neuro-rehab services, while others – with perhaps less complex conditions – may receive care in a less specialised care home environment.
Highly specialised services for neuro-rehab patients in England are purchased at a national level by NHS England, while less specialised services are commissioned at a local level by NHS Clinical Commissioning Groups (CCGs). Local authorities, through their adult social care budgets, also provide for people that need neuro-rehab services.
The CMA’s approach in both Acadia/Priory and Cygnet/Cambian has been to analyse the competitive effects of a merger separately with respect to different mental health conditions. As such, we would similarly expect competition in neuro-rehab services to be analysed separately from other mental health services. Within neuro-rehab services, the CMA could be expected to differentiate between hospital- and care home-based services (consistent with its approach elsewhere). Moreover, it also seems likely to distinguish between providers according to the complexity of the care services that are supplied. In terms of the geographic market, more complex services could be expected to have larger geographic markets compared to services that cater for patients with less complex conditions.
While generalising accurately can be difficult, it seems reasonable to expect that mergers between the smaller number of hospital-based neuro-rehab services providers may face more CMA-related challenges than mergers between providers that offer care through home-based services.
Consistent with this, a quick look at the neuro-rehab services by Christchurch and Active Care Group indicates few reasons for any concerns from a merger control perspective. Both have a presence in the Midlands (with Christchurch in Birmingham, Northampton and Bedford and Active Care Group near Hinckley and Rushden – see map). As we understand it, however, Christchurch offers more complex care than Active Care Group, with at least some its services hospital-based. This means that there is likely to have been little competition between the two providers prior to the acquisition, and a significant number of other providers also offering an alternative for patients and commissioners. (The presence of other providers would also mitigate the potential for any vertical/conglomerate effects.)