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Australian Health Insurance Association

Australian Health Insurance Association. “ The ACCC View of Key Competition Issues Impacting on Private Health” Presented By John Martin Commissioner Australian Competition & Consumer Commission 10 th November 2005 Melbourne.

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Australian Health Insurance Association

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  1. Australian Health Insurance Association “The ACCC View of Key Competition Issues Impacting on Private Health” Presented By John Martin Commissioner Australian Competition & Consumer Commission 10th November 2005 Melbourne

  2. “The ACCC View of Key Competition Issues Impacting on Private Health” • How ACCC Operates • Application Of TPA To Health Sector • Monitoring Report To Senate • Broad Areas Of Concern • Specific Issues • Mergers & Authorisations • Recent Health Mergers • How Mergers Are Assessed • Going Forward

  3. How ACCC Operates • Independent Agency • 7 Commissioners • Range of Skills • Operates Like Board • Committee Structure • 500 Plus Staff • Decentralised • Key Role Via TPA • Anti Competitive Conduct • Misleading, Deceptive Trading Practices • Unconscionable Conduct • Complaints Driven • Proactive As Patterns Emerge • Strong Investigation & Evidence Gathering Powers • Emphasis On Compliance & Avoidance Of Problems

  4. Application Of TPA To Health Sector • TPA To Enhance Welfare Of Australians • Promotion Of Competition & Fair Trading • All Health Business Subject To Competition Provisions Of TPA • Unincorporated Subject To State Fair Trading Acts • Health Insurance Technically ASIC • Since 1998 Legislative Changes • But ASIC Delegate To ACCC • Health Services Rather Than Financial Services • ACCC Ensure Health Funds Do Not Mislead • About Premiums or Conditions

  5. Monitoring Reports To Senate • Certain Sectors Subject of Formal Monitoring • In Some Cases Pricing Approval (eg. Australia Post) • Other Sectors Monitoring & Reporting • ACCC Reports To Senate Since 1999 On • Anti Competitive Or Other Practices • By Health Funds Or Providers • To Detriment Of Consumers • Originally 6 Monthly Now Annual • Report Drawn From Internal Material & Submissions • ACCC Contacts Over 100 Interested Parties • Latest Monitoring Review • 23 Submissions • Including 5 From Health Funds

  6. Areas Of Concern • ACCC Only One Of A Number Of Regulators • Also Ombudsman & State Health • Spike In Approaches To ACCC Over Past Year • Medical Info Kit • Over 11,000 Info Kits Distributed • 400 Extra Inquiries • Overall Complaints To ACCC Flat In 2004 • 774 Health Complaints In 2003-04 • Of Which 143 Related To Health Funds • Main Complaint Area Against Health Funds • Advertising Or Statements By Staff • Premium Increases Or Benefit Changes Or Notice There Of • Suspected Arrangements Between Competitors • Providers Not Having HPPAs With Certain Funds

  7. Specific Issues • Key Features Guide • Exclusions & Restrictions • Intermediaries • Portability • Contracts Between Hospitals & Health Funds • Purchaser Provider Negotiation Code Of Conduct

  8. Mergers & Authorisations • Prohibition On Mergers That Substantially Lessen Competition • Merger Requests Generally Informal Clearance Process • Most Do Not Raise Concerns • Where Concerns Exist • Either Do Not Proceed • Or Acquirer Offers Conditions Eg. Divestment • Where Acquirer Persists Despite ACCC Opposition • Resolved In Court • Alternative Avenue Is ACCC “Authorisation” Of Merger • Where Acquirer Seeks To Demonstrate Public Benefit Outweighs Detriment • Note new Legislation To Change Process

  9. Recent Health Mergers • 3 Hospital Mergers 2005 • Ramsay Acquisition Of Affinity • Undertaking By Ramsay To Sell 19 Hospitals • Health Scope Acquisition 14 Of Ramsay Merger Hospitals • Ramsay In Sale Process For Other 5 • Earlier In Year Authorisation For Little Company Of Mary • Owner Of St Lukes Launceston • Acquired Other Launceston Private Hospital

  10. How Mergers Are Assessed • Hospital Mergers Inherently Complex • Due To Health System Complexity • Assessment Focus On Local Markets • Patients Tend To Use Local Facilities • Supply Of Hospital Services To Health Funds • Collectively Negotiate On Behalf Of Members • Spotlight On Health Fund – Hospital Markets Shows • Price & Consumer Choice Issues • Based On Market Power Of Merged Hospital • Ramsay Merger Case Study • 3 markets Price Rises could Not Be Resisted • Example Of Gosford • Authorisation Alternative • Improved Prices Or Quality Of Service • Medibank Private Sale Issue

  11. Going Forward • ACCC Role Permeates Health Sector • Given Important Of Health Services • To Consumer Interests • Regret Timing Because Unable To Brief On Latest Senate Report • Unlikely To Be Surprised • Continuing Issues In Some Areas • Improvements In Other • Mooted Medibank Private Sale Issue For Future • Titillating Note To Finish • Welcome Comments & Questions

  12. Contacting the ACCC ACCC PO Box 1199 Dickson ACT 2602 Information Centre: 1300 302 502 http://www.accc.gov.au Happy to Answer Questions

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