A move by three of Sydney's biggest private hospital to negotiate collectively with health insurance funds on fees paid by the funds to the hospitals for treating fund members is likely to be rejected by the Australian Competition and Consumer Commission.
"St Vincent's Private Hospital, Mater Misericordiae Private Hospital Ltd and Sydney Adventist Hospital had applied for authorisation of the negotiation proposal," ACCC Chairman, Professor Allan Fels, said today.
"The hospitals had argued the move would give rise to benefits to the public which would outweigh its anti-competitive effect.
"The objective of the authorisation application was to achieve a higher reimbursement level for the hospitals.
"The ACCC does not believe the arrangement would necessarily result in the same prices being agreed for equivalent services. Rather the arrangement would inevitably see the hospitals fixing between themselves the price levels being sought in negotiations with the funds.
"Price agreements or arrangements between competitors are amongst the most serious forms of anti-competitive conduct and are highly likely to result in less competition.
"In this case, the arrangements could lead to price rises payable to the three hospitals, and increased costs to health funds, possibly raising health funds' premiums and discouraging membership; and easing competitive pressures on the hospitals to improve quality and efficiency of operations and services. "Earlier this year the ACCC authorised five Queensland hospitals to exchange certain information and use a common agent to help negotiate with health funds. In that case the hospitals proposed to negotiate separately without any collective action such as a group boycott.
"The Sydney hospitals claimed a number of public benefits would arise including countervailing power, a continuation of community services, a reduction in public hospitals and reduction in hospital costs.
"The ACCC does not believe the extent of the claimed public benefits outweigh the anti-competitive detriment of the arrangement".
Today's announcement is a draft determination. Interested parties can call a pre-decision conference to discuss the ACCC's proposed decision before a final determination is issued.
"St Vincent's Private Hospital, Mater Misericordiae Private Hospital Ltd and Sydney Adventist Hospital had applied for authorisation of the negotiation proposal," ACCC Chairman, Professor Allan Fels, said today.
"The hospitals had argued the move would give rise to benefits to the public which would outweigh its anti-competitive effect.
"The objective of the authorisation application was to achieve a higher reimbursement level for the hospitals.
"The ACCC does not believe the arrangement would necessarily result in the same prices being agreed for equivalent services. Rather the arrangement would inevitably see the hospitals fixing between themselves the price levels being sought in negotiations with the funds.
"Price agreements or arrangements between competitors are amongst the most serious forms of anti-competitive conduct and are highly likely to result in less competition.
"In this case, the arrangements could lead to price rises payable to the three hospitals, and increased costs to health funds, possibly raising health funds' premiums and discouraging membership; and easing competitive pressures on the hospitals to improve quality and efficiency of operations and services. "Earlier this year the ACCC authorised five Queensland hospitals to exchange certain information and use a common agent to help negotiate with health funds. In that case the hospitals proposed to negotiate separately without any collective action such as a group boycott.
"The Sydney hospitals claimed a number of public benefits would arise including countervailing power, a continuation of community services, a reduction in public hospitals and reduction in hospital costs.
"The ACCC does not believe the extent of the claimed public benefits outweigh the anti-competitive detriment of the arrangement".
Today's announcement is a draft determination. Interested parties can call a pre-decision conference to discuss the ACCC's proposed decision before a final determination is issued.