One of the largest hospital mergers ever in the UK was completed in 2018. The mega-hospital serves the UK’s second largest city, Birmingham. It supports over 2.2 million patients each year, employs over 20,000 staff, provides over 2,700 beds, and has annual revenues of over £1.6 billion.

NERA helped deliver the crucial project and achieve the needed regulatory approvals.   

In September 2016, two large hospitals—University Hospitals Birmingham NHS Foundation Trust (UHB) and Heart of England NHS Foundation Trust (HEFT)—announced their intention to merge. Financial and clinic problems at HEFT meant that UHB’s executive team was asked by the health regulator, NHS Improvement, to step in to stabilise HEFT.

UK merger control rules required that the Competition and Markets Authority (CMA) investigate the impact of the merger on patient choice and whether the new hospital would actually deliver better outcomes for patients.

NERA was retained by the executive team of UHB and their external legal advisors, Pinsent Masons, and worked alongside the UK health regulator team to design the patient benefits case and navigate the merger through the CMA process.

Director Grant Saggers led the NERA team in undertaking economic analyses of how patients made choices across the Birmingham healthcare system, the levels of competition between hospitals in clinical specialities, and forecasting how HEFT would evolve (and potentially fail financially) if the merger did not take place. The analyses needed to account for the rapidly changing NHS landscape.

The NERA team also worked closely with clinicians and the health regulator to develop the new patient pathways crystallised in the patient benefits plan.

NERA supported UHB and its staff over 18 months, making submissions to the CMA and presenting economic evidence to the CMA’s key decision makers.

The CMA approved the merger at phase 1. The CMA found that the scale of the merged hospital could give rise to competition concerns across a number of elective specialties, but that these concerns were outweighed by the substantial improvements to patient care that were expected to arise as a result of the new financial and clinical plans.

The CMA press release confirmed that: “This is the first time the CMA has cleared an NHS hospital merger on the basis of patient benefits at phase 1 and reflects the quality of the benefits case put forward in this instance.... The hospitals involved presented clear evidence and a well-reasoned case.”

The merger was given the green light by the UHB and HEFT boards, and was cleared by both councils of governors in March 2018. The merger completed on 1 April 2018.