The acquisition of neuro-rehabilitation provider, Christchurch Group, by Montreux Capital in December 2019 is a useful prompt for reviewing merger control risks in neuro-rehab services and wider adult specialist care. While the Competition and Markets Authority (CMA) has reviewed several mergers in the mental health sector in recent years (e.g. Acadia’s acquisition of Priory Group), neuro-rehab services have largely fallen outside the scope of these reviews.
(This article is one of a series in which Aldwych Partners reviews specific transactions to illustrate competition or merger control risks. Other articles in this series review transactions in the supermarket, care home, foster care and vet care sectors.)
By way of background, neuro-rehab services cater for patients with a wide range of needs. A patient that has incurred a brain injury might, for example, start by receiving hospital-based care and then progress to care home based rehabilitation followed by community-based rehabilitation. Some patients may require longer-term care in hospitals or residential homes that specialise in neuro-rehab services, while others may need care in a less specialised environment. Highly specialised neuro-rehab services in England are commissioned by NHS England, while less specialised services are funded locally by NHS Clinical Commissioning Groups (CCGs). Local authorities, through their adult social care budgets, also provide support services.
Our expectation is that any merger between providers of neuro-rehab services, such as Montreaux’s acquisition of Christchurch, would follow a similar pattern to other CMA reviews of mental health (or adult specialist care) services. Competition in neuro-rehab services would be analysed separately from other mental health services, and within neuro-rehab services, hospital-based services would be looked at separately from care home or community-based services. The market for neuro-rehab services would be local, but with the size of each local market increasing with the complexity of the service that is offered.
Taking this as a starting point, it seems likely that mergers between hospital-based providers of neuro-rehab services would face more challenges in securing CMA clearance than mergers between providers of care home or community-based services. Hospital services are more complex, there are fewer providers and their catchment areas are likely to be larger.
Consistent with this, the Montreux/Christchurch transaction appears to raise few concerns. Both are present in the Midlands (with Christchurch in Birmingham, Northampton and Bedford and Montreux near Hinckley and Rushden – see map). As we understand it, however, Christchurch offers more complex care than Montreux, with at least some its services hospital-based. 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 services.