The Australian Competition and Consumer Commission has released a Statement of Issues (SoI) outlining concerns with the proposed acquisition of the Brunswick Private Hospital, in Melbourne’s north, by Healthscope Limited from Healthe Care Australia Pty Ltd.
The SoI seeks more information on competition issues which have arisen from the ACCC’s review to date.
The ACCC is concerned that the proposed acquisition may result in a substantial lessening of competition in the market for the supply of private rehabilitation services to patients. The ACCC’s preliminary view is that this market is likely to be limited to the northern suburbs of Melbourne.
If the relevant market is limited to northern Melbourne, the proposed acquisition would result in Healthscope owning all three of the private rehabilitation hospitals in that market. The ACCC is concerned that Healthscope would face limited competition and that this may result in a reduction in the quality of the rehabilitation services that Healthscope provides to patients in Melbourne’s north.
“Market inquiries have indicated that patients tend to choose private rehabilitation facilities located close to home so that it is easier for their families to visit them if they are inpatients or to minimise their own travel if they are attending as outpatients,” ACCC Commissioner Jill Walker said.
“For people living in the northern suburbs of Melbourne the proposed acquisition would reduce their choice of provider from two to one. This lack of alternatives may reduce the pressure on Healthscope to continue to invest in the quality and range of its rehabilitation offering,” Ms Walker said.
The ACCC is concerned that the loss of competition resulting from the proposed acquisition may particularly affect patients requiring a long period of rehabilitation, referred to as ‘slow-stream’ rehabilitation (for example, elderly patients or those recovering from a serious accident). Market inquiries have indicated that Brunswick Private has been actively competing for these patients in contrast to other providers who may focus on fast-stream patients.
The ACCC’s preliminary view is that a competing private rehabilitation provider is unlikely to enter the northern Melbourne market in the foreseeable future due to the long lead times associated with building a new hospital.
The ACCC invites further submissions from the market in response to the SoI by 10 April 2014. As a result, the ACCC’s final decision will be deferred until 8 May 2014.