Regulations on private medical indemnity are geared to a market from more than a decade ago, not today’s reality. Legislation must be updated.
In the private healthcare market, doctors and consultants working in hospitals must arrange their own medical indemnity cover. Unlike NHS doctors, they are not covered by a state scheme.
Under the Competition and Markets Authority’s (CMA) Private Healthcare Market Investigation Order 2014, hospitals are prohibited from subsidising or paying for consultants’ indemnity insurance unless the consultant reimburses the hospital at a fair market value.
At the time, the order made sense.
The CMA was concerned that private hospitals were distorting the market and gaining unfair advantage. Hospitals sometimes offered high-value benefits like subsidised indemnity, secretarial support, or consulting rooms to lock in consultant loyalty. This distorted competition as it steered consultants to admit more patients to a particular hospital, which, in turn, made it harder for new hospitals to attract consultants.
The effect of the order has been that consultants since then have shouldered the full cost of indemnity themselves, which can run to tens of thousands of pounds per year in some specialities. Hospitals, even if willing to ease this burden, are not allowed to do so.
A distorted market
This has led to a distortion in the market. All NHS Trusts and Health Boards in England, Scotland and Wales are members of the state-backed NHS medical schemes.
In England, indemnity is provided through the Clinical Negligence Scheme for Trusts (CNST), which is administered by the NHS Resolution; while in Wales, indemnity is provided through the Clinical Negligence Scheme for Trusts and Health Boards by Welsh Risk Pool Services. For Scottish doctors, indemnity is provided by the Clinical Negligence and Other Risks Indemnity Scheme (CNORIS). NHS National Services Scotland is the scheme manager, with the central legal office providing legal advice and guidance to Health Boards. And in Northern Ireland, each health and social care trust provides its own indemnity, funded by the Department of Health, Social Security and Public Safety.
But as the General Medical Council warns: “If you carry out any private or independent practice, you must arrange adequate and appropriate insurance or indemnity (even if this work takes place on NHS or Health and Social Care body premises). This applies even if the work is in addition to work you do for an NHS or HSC body.”
With rising indemnity costs, some consultants are reducing private practice, which has distorted the market by leaving patients with fewer options. What hasn’t helped, is that it is also a barrier to entry for younger consultants who are unable to enter into private practice because they must finance high indemnity premiums upfront themselves.
On top of that, it is also harming Britain’s healthcare competitiveness. In other jurisdictions, hospitals are allowed to cover or negotiate indemnity on behalf of clinicians, which keeps British doctors on the back foot.
No longer fit for purpose
The rule was designed to tackle competition concerns a decade ago, but today the greater risks today come from workforce shortages and reduced access to private care, rather than excessive inducements.
In the House of Lords last July, Natalie Bennett, Baroness Bennett of Manor Castle, asked what plans there were “to re-assess and update” the order. Margaret Jones, Baroness Jones of Whitchurch, brushed off the question, saying that the responsibility for reviewing the order lay with the CMA, though she did indicate that the door for change was open for change by adding that it “welcomes submissions from relevant parties where existing remedies may no longer be fit for purpose”.
There is a sense that a desire, indeed a need for change, is gathering speed.
As Oliver Maughan, chief executive of Maulin Group, wrote in Healthcare Today recently: “The private healthcare market of 2026 is materially different from that of 2014, and it is legitimate to ask whether parts of the framework now warrant careful re-examination, not to weaken competition protections, but to strengthen patient protection in a changed risk landscape.”
Healthcare chief executives approached by Healthcare Today agreed that change is needed. Practice Plus Group’s Ross Dowsett said that anything that could be done to simplify the indemnity landscape “would make sense”. Steven Gray, the former chief executive of Nuffield Health, went even further. The rules, he says, “get in the way of practice, pragmatism and progress” adding that the rules were “bureaucratic and completely illogical”.
As Maughan concludes, this is not about weakening safeguards, it is about ensuring that the regulations serve patients in the market as it exists today.
