ACCC green-lights Honeysuckle Health-nib deal despite concerns

MedTech News: After months of lobbying against US-style managed care, the ACCC has authorised Honeysuckle Health and nib Health Funds to form and operate a health services buying group.

The authorisation has been granted with a condition that major insurers Medibank, Bupa, HCF and HBF in Western Australia not be allowed to join the buying group. The ACCC has also only granted authorisation for five years, rather than the 10 years sought by Honeysuckle Health and nib, to facilitate a review of the effects of the authorisation at an earlier time, if reauthorisation is sought.

The Honeysuckle Health buying group intends to collectively negotiate and manage contracts with healthcare providers, including medical practitioners and hospitals, on behalf of nib and other private health insurers and other healthcare payers (such as travel insurance companies) who join the group.

“The arrangement is likely to have a public benefit by increasing competition between health services buying groups. We expect this is likely to result in better service and pricing provided by buying groups to smaller private health insurers, who will then be in a better position to provide reduced premiums and improved services to consumers,” ACCC Commissioner Stephen Ridgeway said.

“If the buying group expands to more of the smaller insurers, we consider that Honeysuckle Health’s Broad Clinical Partners Program is likely to help reduce uncertainty for more consumers about out of pocket expenses for certain types of procedures. It is also likely to provide more consumers with greater access to medical procedures which attract no out of pocket expenses.”

“However we were concerned about the potential effect on competition if the buying group involving Honeysuckle Health and nib became too large and gained too much bargaining power, and have accordingly imposed a condition that excludes the participation of other major health insurers.  These insurers represent around 70% of the market in most states and territories,” Mr Ridgeway said.

The ACCC carefully considered the concerns raised by interested parties, such as medical specialists, who opposed the authorisation, arguing that it would lead to ‘US-style managed care’.

After an extensive investigation, the ACCC was not satisfied that granting the authorisation would result in the current Australian healthcare system changing to a US-style managed care model.  In reaching this conclusion the ACCC took into account a number of healthcare regulatory restrictions and policy settings. The ACCC also noted that health insurers are currently engaged in the contracting practices proposed for the buying group, and that these practices are likely to continue even if the authorisation was not granted.

Australian Medical association’s (AMA) President Dr Omar Khorshid recently said that if insurers get their way with US-style managed care, patients could expect to see reduced length of stay in hospital, reduced prosthesis choice, a reduction in choice of doctor, and increased costs.

“The losers will be patients and our health system. The United States has high-cost healthcare, despite providing low levels of access. The AMA will not allow managed care to get a foothold in Australia. We will be in the trenches with others against managed care,” he said.

Despite the significant lobbying from AMA and other medical associations, the ACCC has given approval to this deal.

“We also concluded that the condition that excludes the major insurers from membership of this buying group, and the shorter period of authorisation, are likely to address concerns about the long term effects of the authorisation,” Mr Ridgeway added.