Honeysuckle Health (nib) application for collective bargaining

THE Australian Private Hospitals Association (APHA) opposes the application by Honeysuckle Health and nib to continue operating a buying group that collectively negotiates contracts with hospitals and other healthcare providers.

APHA's concern is not simply that a group of smaller insurers want help negotiating contracts. Shared contracting can sometimes reduce administration and help smaller funds participate in the market.

The problem is that this buying group is now wholly owned by nib, one of Australia's major private health insurers. That changes the nature of the arrangement. It means an insurer would be given legal protection to negotiate collectively against hospitals on behalf of itself and other insurers, including competing funds.

APHA says the application should be refused because the public benefits have not been demonstrated and the public detriments are significant. In plain terms, APHA makes five core arguments.

The arrangement has changed since it was first approved

When the arrangement was first authorised in 2021, Honeysuckle Health was presented as a joint venture between nib and Cigna. It was said to have some separation from both owners and to offer contracting and data capability to smaller funds.

That is no longer the position. nib now wholly owns Honeysuckle Health. Honeysuckle Health has also been brought together with nib's broader digital health business. This means the buying group is no longer a separate joint venture with shared ownership. It is now part of an insurer's corporate group.
That matters because nib is not a neutral contracting service provider. It is an insurer with its own commercial interests. It has an incentive to reduce claims costs, influence where care is delivered, and strengthen its position against hospitals and other insurers. If Honeysuckle Health is allowed to negotiate collectively on behalf of multiple insurers, nib may gain influence over hospital contracting beyond its own membership base.

In APHA's view, this turns the arrangement from a shared administration service into an insurer-led contracting vehicle. The legal protection being sought would allow one insurer to coordinate purchasing terms for other insurers, including rival funds. APHA says this is a serious competition concern and should not be treated as a simple continuation of the 2021 authorisation.

<strong)The claimed public benefits have not been proven</strong>

The applicants say the buying group produces public benefits, including lower transaction costs, better data analytics, more competition between buying groups, value-based care, reduced out-of-pocket costs and better support for smaller funds.

APHA's position is that these benefits have not been properly demonstrated.
The ACCC granted a shorter authorisation period in 2021 so the effects of the arrangement could be tested before any renewal. After almost five years, the applicants should be able to show clear evidence that the buying group has delivered real benefits to consumers. For example, they should be able to show that premiums were lower, out-of-pocket costs were reduced across the system, care outcomes improved, or smaller health funds gained meaningful competitive advantages.

APHA says the application does not do this. Instead, it relies largely on the same claims made when the arrangement was first approved. Those claims were predictions. The current application should be assessed on actual results.
APHA also says that administrative savings for insurers are not automatically public benefits. They are private savings unless there is evidence that the savings are passed on to consumers through lower premiums, better products or better access. Similarly, data analytics are not automatically a public benefit when the data is controlled by a subsidiary of a competing insurer.

APHA's point is that the applicants are asking the ACCC to renew legal protection for conduct that would otherwise raise serious competition concerns, but they have not shown that the public has received enough benefit to justify that protection.

The private hospital sector is too financially fragile to absorb more insurer buyer power

APHA argues that the private hospital sector is in a very different position from 2021. Hospitals are facing rising costs, falling margins, workforce pressures and serious financial strain. Some services and facilities have already closed or become unsustainable, particularly in maternity, mental health, rehabilitation and regional care.

In that environment, giving insurers more collective bargaining power does not simply create efficiency. It risks pushing hospital contracts below the cost of delivering care.

APHA says this would have consequences for the whole health system. If hospitals are forced to accept unsustainable terms, they may reduce services, delay investment, close beds or exit certain areas of care. This would reduce patient access and choice. It would also shift more demand onto the public hospital system, increasing pressure on public waiting lists and emergency departments.

APHA's concern is especially strong for smaller, independent and regional hospitals. These hospitals may not have the bargaining power or portfolio size of larger operators. If a buying group representing multiple payers takes a hard line, a single hospital may have little practical choice but to accept the terms offered, even where those terms are not sustainable.

For APHA, this is not a theoretical risk. It is a real-world consequence of increasing insurer bargaining power in a sector that is already financially distressed.

The model risks managed care by contract, reducing patient choice and clinical independence

APHA's fourth argument is that the Honeysuckle Health model appears to go beyond ordinary price negotiation.

The application refers to care pathways, provider networks, data analytics, utilisation review, clinical governance, care coordination, member navigation and guided provider selection. In plain terms, this means the buying group may influence which providers are preferred, which pathways patients are guided toward, how care is funded, and how hospitals and clinicians are assessed.

APHA says this creates a risk of managed care by contract. Patients may still appear to have choice, but in practice they may be steered toward particular providers or settings through network design, funding rules, no-gap arrangements or out-of-pocket penalties.

This is particularly concerning because Honeysuckle Health is owned by an insurer. An insurer benefits when claims costs are reduced. Hospitals and treating clinicians are focused on the patient's clinical needs. Those incentives do not always align. Without strong safeguards, payer-designed pathways can place cost control ahead of appropriate care.

APHA does not oppose innovation, better coordination or genuine value-based care. But it says these models must be transparent, clinically governed and designed around patient interests. They should not be used to give an insurer-led buying group greater control over patient flows, provider participation and clinical decision-making.

The central concern is that private health insurance is built on the promise of choice: choice of doctor, choice of hospital and timely access to care. Selective networks and guided provider selection can undermine that promise if patients are financially or practically pushed toward only certain providers.

nib's ownership creates data and competition risks

APHA's final core argument is that the buying group creates significant data and competition risks because it is owned by nib.

If Honeysuckle Health negotiates on behalf of multiple insurers, it may receive or generate sensitive information about claims, utilisation, contract pricing, provider performance and fund strategies. Because Honeysuckle Health is now wholly owned by nib, APHA says this information could give nib an unfair advantage.

That advantage could operate in two directions. First, nib may gain insight into the costs and strategies of rival insurers that participate in the buying group. Second, nib may gain detailed information about hospitals, including their case mix, cost pressures, reliance on particular funds and willingness to accept certain contract terms.

APHA says this kind of data is not just administrative. It is commercially powerful. In hospital negotiations, it can be used to identify how far a provider can be pushed. In insurance markets, it can give one fund insight into the position of competing funds.

APHA is also concerned that the arrangement could weaken existing independent buying groups and consolidate more small-fund contracting under nib's influence. Over time, this could reduce independent contracting options, increase insurer concentration and normalise insurer-led collective bargaining against healthcare providers.

For the APHA's full submission to the ACCC see: Honeysuckle Health Pty Limited and nib health funds Limited – application for authorisation (revocation and substitution).

Previous Submissions:
9/12/2025 APHA response to draft Private National Efficient Price