Health funds have been warned not to act unconscionably in their contract negotiations with private hospitals.
The warning follows the investigations during the ACCC's assessment to the Australian Senate* on any anti-competitive or other practices by health funds or providers. The report examines the dealings between health funds, hospitals, medical and allied health practitioners, as well as consumers' concerns in the private health care sector.
"Contracting between health funds and private hospitals via Hospital Purchase Provider Agreements is effectively ensuring that fund members have no or known gaps for hospital accommodation services", ACCC Chairman, Professor Allan Fels, said today.
"The contracting process between hospitals and health funds has not been without problems.
"Many of the problems, in fact, reflect the competitive processes but the ACCC is watching this sector carefully.
"It is currently investigating allegations of unconscionable conduct by a health fund toward a small hospital. The matter relates to the attempt by the fund to impose a unilateral contract variation clause in a proposed HPPA with the hospital. The ACCC has used its powers to demand information and documents and take testimony, under oath in this matter.
"The ACCC will continue to examine any allegation of breaches of the Act in relation to the contracting process, and will further investigate any matters that raise trade practices issues.
"It should be noted that in some instances hospitals have been unwilling to speak out to the ACCC in specific terms about particular health funds and alleged conduct because of an apparent fear of future commercial retribution by health funds towards the hospital for speaking out to the ACCC
"The ACCC considers that a Code of Practice may be able to address some of the hospitals' concerns with the contracting process.
"It notes that a Code of Practice for Hospital Purchase Provider Agreement Negotiations between Private Hospitals and Private Health Insurers is in the process of being developed by health funds and private hospitals. It will deal with processes and not the levels of benefits or prices to apply in contracts.
"The ACCC is very disappointed in the delays of the code formulation. The ACCC understands the code has stalled due to the insistence of some health funds to include a clause in the code indirectly endorsing a 'unilateral contract variation clause' in HPPAs.
"The ACCC is surprised at this insistence, given the investigation currently under way.
"Health funds should be aware that the endorsement of such clauses in the proposed Code would not exempt funds from the unconscionable conduct provisions of the Trade Practices Act 1974.
"Finalisation of the code should not be held back by this issue. It should be left aside until the ACCC concludes its investigation and, if needs be, the code could be revised.
"The ACCC believes the Federal Department of Health and Aged Care, or an independent third party acceptable to both hospitals and health funds, could intervene and mediate between the parties to ensure the code is quickly finalised".
*On 25 March 1999 the Australian Senate agreed to the following order during consideration of the Health Legislation Amendment Bill (No 2) 1999:
That there be laid on the table as soon as possible after the end of each period of 6 months, commencing with the 6 months ending on 31 December 1999, a report by the Australian Competition and Consumer Commission containing an assessment of any anti-competitive or other practices by health funds or providers which reduce the extent of health cover for consumers and increase their risk of out-of-pocket and other medical expenses.
This report is the second prepared by the ACCC in compliance with the Senate order, covering the period 1 January to 30 June 2000. The report was tabled in the Senate yesterday.