Private hospital merger to be approved if local concerns addressed

The CMA has found that the completed merger between Circle and BMI does not raise UK-wide competition concerns but could reduce competition in 2 local areas.

Both Circle and BMI provide elective care to NHS and privately funded patients in the UK. BMI manages 52 private hospitals and clinics in the UK, while Circle currently operates 2 private hospitals in Bath and Reading and is planning to open a third hospital in Birmingham this year.

After completing its initial Phase 1 investigation, the Competition and Markets Authority (CMA) has found that the merger could result in a substantial reduction in competition between private healthcare services in Bath and Birmingham. Circle and BMI do, or will, compete closely in these cities and there are limited other competitors available for patients.

The CMA is concerned that if the businesses were to merge, patients who pay for their own healthcare in Birmingham and Bath could face higher prices and that NHS and privately funded patients could face a lower quality of service in those areas.

As part of its assessment, the CMA has taken into account the impact of the Coronavirus (COVID-19) outbreak by considering not only the current provision of private healthcare but also how this is likely to impact the opening of new hospitals both by the merged company and their competitors.

Joel Bamford, CMA Senior Director said:

If local concerns can be overcome, we will clear this merger. At the moment though, we have found that it if it goes ahead as planned, competition will be reduced and it could negatively impact patients in Bath and Birmingham.

We recognise that this is a difficult time, with private hospitals having effectively put their entire hospital capacity temporarily under the control of the NHS to deal with the Coronavirus (COVID-19) outbreak. It remains important that we protect competition between private healthcare providers and the benefits it can bring to patients.

The companies now have until Friday 17 April 2020 to address these concerns. If they are unable to do so, the deal will be referred for an in-depth Phase 2 investigation.