A draft proposal to allow eight independent private hospitals located throughout regional NSW and Sydney to collectively negotiate with health insurance funds on the level of fees payable by the funds for hospital services provided to their members has been issued by the Australian Competition and Consumer Commission.
"Collective negotiations with the health funds would be carried out through an Inter-Hospital Agreement", ACCC Chairman, Professor Allan Fels, said today. "The draft proposal also provides for fee and non-fee information sharing between the hospitals.
"The eight hospitals are small-to-medium sized private hospitals located throughout Sydney and regional NSW. They are the Alwyn Rehabilitation Hospital, Wolper Jewish Hospital, Hornsby Day Surgery Centre, Longueville Private Hospital, Poplars Private Hospital, (all located in Sydney); Mayo Private Hospital, Taree; Calvary Hospital, Wagga Wagga; and Hunter Valley Private Hospital in Newcastle.
"The ACCC considers that there are a number of specific factors that would appear to minimise any detrimental effect on competition that may result from the collective negotiations which would limit any flow-on effect on membership premiums.
"The factors include: the size of the applicants, the possibility that the reimbursement levels paid to each of the hospitals would not be the same even though they are represented in negotiations by a common agent, and the fact that the proposed IHA will not provide for collective action by way of a group boycott.
"The ACCC found a number of public benefits were likely to result from the proposed conduct particularly efficiency gains resulting from access to an improved contracting and negotiation process. In particular, the ACCC accepts that there is public benefit in efficiency improvements from a better informed group and savings on the time taken for contract negotiations.
"Subject to some conditions, the ACCC is satisfied that the public benefits, that are likely to result from the proposed conduct, would outweigh the detriment to the public constituted by any lessening of competition. The conditions relate to safeguards in the IHA about the conduct of the joint negotiations, collection and presentation of information and the role of the negotiating agent.
"The ACCC proposes, subject to any request for a pre-decision conference, to grant authorisation for three years and has granted interim authorisation".