Doctors fear a bid by health insurer nib and a US partner to form a health services buying group in Australia will bring US-style managed care to Australia, but the deal is not assured, despite a provisional go-ahead from Australia’s competition regulator.

The Australian Competition and Consumer Commission (ACCC) gave conditional authorisation for Honeysuckle Health and nib Health Funds to establish the buying collective to negotiate and manage contracts with hospitals and medical practitioners on behalf of nib.

Honeysuckle Health is a joint venture between nib and Cigna Corporation, a powerful US health services and data provider.

The ACCC decision announced on 21 September came despite strong opposition from doctors, the AMA and hospital groups, who argued that the step could open the way for US-style managed care in Australia.

However, Stephen Milgate, CEO of the Council of Procedural Specialists (COPS), said the outcome was still being analysed and any interested party could take the matter to an appeal within a statutory two-week period.

“It is not a done deal yet,” he told the limbic.  

He noted that ACCC decisions were frequently appealed but declined to comment further due to legal considerations.

In response to the doctor-led campaign, the ACCC barred the strongest private health funds – Medibank, BUPA, HCF and Western Australia-based HBF, which account for up to 70% of market share in some areas – from joining the buying collective but said smaller players would be allowed.

It is understood that Honeysuckle Health will seek partners including, travel insurers and state-based workers compensation groups, as well as other health funds.

In last week’s ruling, the ACCC also limited the buying group’s authorisation to five years, instead of 10 years sought by Honeysuckle Health.

“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,” ACCC Commissioner Stephen Ridgeway said.

“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.”

He said the arrangement was considered “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.”

Collective bargaining

Dr David Scott, federal vice president of the Anaesthetists Society of Australia, said the ACCC could not be faulted for decisions based on consumer competition law.

“That’s their job.  I can’t criticise them for that,” he told the limbic.

“But we are disappointed that they would allow any kind of collective bargaining to go on (in the healthcare system), and we are still concerned.  The only reason (private health insurers) would do this is to make more money for their shareholders.

“How do you make more money out of the healthcare system?  You do it by increasing premiums or reducing payments.  In simple terms, they are the two options.”

Dr Scott said doctors across all specialties and allied health practitioners should be concerned because their patients would be impacted if managed care took hold in Australia.

The campaign against the Honeysuckle venture so far drew out the ACCC’s decision-making process by six months.

It attracted more than 200 submissions, and more than 80 groups and individuals took part in a subsequent “pre-decision conference” in July. According to an ACCC spokesperson, it was one of the “most attended” conferences the organisation has ever seen.

In submissions and online videos, doctors who had worked in the US health system warned that under the managed care approach patients had limited choices and private health insurers could interfere in clinical decisions.

Fears allayed?

AMA President Dr Omar Khorshid said the peak doctors’ body would continue the fight against managed care.

“While the ACCC listened to the concerns we raised about the potential for managed care, its role as a competition regulator clearly underpinned its approach to decision making,” he told the limbic.

“This is not the ideal outcome, but the final authorisation looks vastly different from what was originally proposed and some of our worst fears have been allayed,” he said noting that the original bid proposed letting the major private health funds join the buying group.

“The application by Honeysuckle Health is symptomatic of a broader move, particularly by major PHIs, to pursue a managed care agenda by stealth. While the ambitions of Honeysuckle Health have been severely curtailed, this issue is not going away and it remains a key advocacy area for the AMA.

“The challenge now is to agree on a lasting and durable solution that stops the managed care agenda in its tracks and allows us to focus on other, much needed reforms, that support the long-term sustainability of our private health insurance system.”