AMA concerned over health fund proposal but is it running a closed shop?

The benefits of a health services buying group being proposed between health data company Honeysuckle Health and insurer nib has been slammed by the Australian Medical Association (AMA) but supported by other parties.

The AMA says the move will limit patient choice and could lead to inferior health outcomes.

Under the proposal, which is being considered by the Australian Competition and Consumer Commission (ACCC), the Honeysuckle Health buying group intends to collectively negotiate and manage contracts with healthcare providers on behalf of private health insurers and other healthcare payers who join the group.

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The ACCC took a contrary view to the AMA when issuing the draft determination for the proposal. It said the buying group was likely to result in public benefits by providing more choice for insurers and other healthcare payers.

Australia’s four largest health insurers (excluding nib) manage their contracts with health providers internally, while the remaining 31 health insurers engage in collective bargaining through one of two existing buying groups.

The ACCC said the move for nib to form its own separate buying group would lead to increased competition and give participants more input into contracts and better information.

AMA president Dr Omar Khorshid, however, said he feared the buying group could give health insurance customers less choice and could result in inferior healthcare.

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“The reality is that the proposed buying group will potentially wield significant market power in some areas – particularly in relation to services provided by medical specialists,” Dr Khorshid said.

“This could lead to the demise of some smaller health funds.

“We are seeing increasing efforts by private health insurers to enter unregulated contracts with medical specialists with very clear aims.

“Insurers want to exercise greater control over the care that patients receive and this is a recipe for less choice and inferior care in the long term.”

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Health insurance expert and Compare Club chief executive Andrew Davis has accused the AMA of attempting to “run a closed shop” when it came to healthcare.

He said the proposed partnership between nib and Honeysuckle Health was aimed at introducing increased access to preventative medicine and lower out-of-pocket expenses for members, which, if successful, could also result in driving down the cost of health insurance premiums.

Mr Davis said the AMA was concerned about protecting its turf when it came to healthcare, and was always opposed to arrangements that could set limits on how much AMA members could charge for their services.

He believed the proposed arrangement was likely to increase rather than reduce competition.

“With nib holding 8.3 per cent marketshare of people with health insurance (about 4 per cent of the population), and the limited application of this program, it is difficult to take seriously any suggestion that consumers will have their ability to choose a provider reduced,” Mr Davis said.

ACCC commissioner Stephen Ridgeway agreed, suggesting that the potential benefits from the buying group were impressive.

“Our preliminary view is that authorising nib and Honeysuckle Health to form a buying group delivers public benefits that outweigh any potential adverse effects on competition,” Mr Ridgeway said.

“Increased competition between buying groups is likely to incentivise the buying groups to provide better value to health insurers, which may reduce upward pressure on premiums for their members.

“Although we intend to authorise this arrangement, we would be concerned about the potential effect on competition if the group was to become too large,” Mr Ridgeway said.

“Many interested parties, including medical specialists, made submissions opposing the authorisation, and this led nib and Honeysuckle to make changes to limit the size of the group.

“The ACCC’s preliminary view is that these changes and the condition limiting participation in the buying group are sufficient to address these concerns.”

Dr Khorshid said he was concerned that the proposal was setting Australia on the wrong healthcare path.

“A GP referring a patient privately under these circumstances may be frustrated and concerned that their patient’s choice and improved access to care – the very reasons for their cover – will be constrained by the ‘straitjacket’ created by these arrangements,” Dr Khorshid said.

“We need to be careful that Australia doesn’t sleepwalk into a managed care environment – and proposals such as the one made by the ACCC seems a step in the wrong direction.

“This proposal could effectively grant Honeysuckle Health and nib the ability to compete directly with existing buying groups that represent smaller funds – funds which are already struggling.

“Private health insurance will not become more sustainable through the creation of large buying groups that can exert undue influence.”

What do you think? Should private health funds looking at preventative medicine solutions and reduced known out-of-pocket costs be encouraged? Or are you concerned consumers will be offered less choice?

YourLifeChoices is owned by Compare Club.

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Ben Hocking
Ben Hocking
Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.
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