The Competition and Markets Authority (CMA) is adding the sale of BMI Priory hospital as a potential requirement to fulfil the Circle Health and BMI Healthcare merger which was completed last year.
It is also varying the original requirement to sell the Circle Birmingham hospital, adding that it could be sold with another undisclosed entity on more favourable terms.
The regulator said either of these two options would satisfy its concerns about the competition impact of the merger of two of the largest private hospital groups in the UK.
Health & Protection reported in October that Circle had so far been unable to sell the brand new Circle Birmingham hospital and believed there had been a change in circumstances.
However, Circle Health has hit back at the regulator’s decision, calling it “flawed” and “unviable”, adding that it would disrupt work with the NHS and meant the new Birmingham hospital would be sitting empty for another winter.
Reduced competition in Bath and Birmingham
Originally the CMA required the sale of Circle’s hospitals in Bath and Birmingham to address reduced competition in those cities and allow the deal to proceed.
Circle successfully sold its Bath hospital to Royal United Hospitals Bath NHS Foundation Trust in June. The latest CMA report also revealed that on 21 June Circle requested that it be allowed to sell BMI Edgbaston rather than BMI Birmingham, claiming a material change in circumstances, which the regulator appears to have rejected.
However, in August the CMA revealed it was reviewing the requirements, which has now been revealed as a result of Circle not being able to sell the Birmingham site.
Now, the regulator has updated its proposed remedies to include the option of selling the BMI Priory.
Change of circumstances
The CMA provisionally found that market conditions had not changed enough to justify releasing Circle from addressing the matter, it also provisionally found there has been a change of circumstances about whether they were an effective remedy.
“Thus, the CMA has provisionally found that the divestiture of Circle Birmingham Hospital as currently envisaged in the undertakings in lieu (UIL) is no longer an effective remedy to the substantial lessening of competition and therefore the UILs are no longer appropriate and should be varied,” it said.
“The CMA has provisionally concluded that either of the following remedies would be an effective remedy to the SLC :
(a) a divestiture of Circle Birmingham Hospital, with [redacted] [on more flexible terms]; or
(b) a divestiture of BMI Priory.”
Circle hits back
However, Circle Health Group has expressed its displeasure at the CMA’s proposal.
“We are deeply disappointed by this flawed decision, which threatens to disrupt our partnership with the local NHS to perform urgent, life-saving operations at BMI the Priory, and means a brand new hospital – Circle Birmingham – must now sit empty during the critical Winter period,” it said.
“The CMA’s previously proposed solution of selling this new hospital has proved unworkable – there is limited interest in purchasing private hospitals in the Birmingham market – and we are concerned that the new proposals they have announced are equally unviable.
“With the local health system under severe distress with staff shortages, record waiting lists and a virulent new strain of Covid, it is senseless to insist a brand new hospital sits empty for a second Winter, and deeply damaging to interrupt the urgent, complex NHS care we are providing at the Priory hospital.”
Circle argued it had offered “practical and deliverable alternatives” to the CMA, which “safeguarded competition and patient care in Birmingham”, but these were sadly rejected.
“We believe the market conditions have fundamentally changed since the CMA reviewed this issue two years ago, and having tried in good faith to comply with their instructions, we hope they will now work with us to find a more realistic solution,” Circle added.
The regulator noted that if Circle did not agree to the changes the CMA had the power to issue an order to address the reduction in competition which could include either of the options.
A consultation on the decision is open until 24 December.
