Circle Health has been unable to sell its Birmingham hospital as was required for its merger with fellow hospital group BMI Healthcare to complete.
The lack of a buyer appears to be why the Competition and Markets Authority (CMA) announced in August that it was re-examining the mitigating measures it placed on the merger.
The now combined hospital group believes there has been a material change in circumstances since it was told to sell the Bath and Birmingham locations by the CMA last year.
As a result, it requested a review of the conditions imposed.
Lease arrangement and Circle Rehab
The competition regulator disagreed with Circle’s reasons for the request, but agreed to the review which began in the summer, as it believed other factors may have contributed to a material change.
In a heavily redacted report written in August but only published today, the CMA appears to suggest concerns regarding a lease arrangement with Circle Hospital Birmingham and issues with the accompanying Circle Rehab facility had resulted in material changes.
It noted that these changes had been reflected in the inability to find a buyer.
“The evidence set out above indicates that since the acceptance of the undertakings, there has been a [change in] costs [at] Circle Birmingham Hospital as a result of which the CMA considers to be material,” it said.
“Further to a marketing process for Circle Birmingham conducted by a third party, the commercial significance of the [change] is supported by evidence from prospective purchasers, and indicates that, Circle Birmingham is not [redacted].
“The CMA therefore believes that there is a realistic prospect of finding a change of circumstances in relation to Circle Birmingham. The CMA has therefore decided that it would be appropriate to conduct a review of the undertakings.”
The regulator pledged to publish and consult on its provisional decisions this month, and then publish its final decisions next month.
Covid and HCA hospital already known about
Circle Health’s letter requesting the review, which was also published for the first time today, argued the pandemic’s impact and near-completion of a HCA hospital which is on-schedule to open in mid-2022, meant there had been a material change in circumstances in Birmingham.
It contended the demand for private healthcare in the city had soared as a result of the pandemic, noting that pre-Covid there were no patients waiting more than a year for surgery, whereas that number had already reached almost 18,000 in the summer.
And it added that pre-Covid 88% of orthopaedic patients were treated within the target wait time; however that had dropped to a low of 53%.
Circle also reasoned there would now be only a minimal period of time during which its Birmingham hospital would be in operation without direct competition from the nearby HCA facility.
However, the regulator was not swayed by these arguments, noting that both were well known about when the decision to enforce the sales of the two facilities was made last year.
“Based on the evidence currently available, the CMA does not consider that either the impact of the Covid-19 pandemic, or the entry of HCA give rise to a realistic prospect of a change in circumstances that would merit conducting a review,” the CMA replied.
Health & Protection has contacted Circle Health for comment.
