nib bid for 'buyer bloc' must be rejected: APHA

PRIVATE hospitals are calling on the competition and consumer watchdog to reject an application that would allow Honeysuckle Health, now a wholly owned subsidiary of nib, to collectively negotiate hospital contracts on behalf of multiple health insurers.

In response to the Australian Competition and Consumer Commission's consultation, the APHA warns the application would give nib's insurer group unmatched bargaining power at the expense of financially struggling private hospitals, jeopardising patient access to timely, high-quality care.

"This is an attempt by nib to gain market dominance through a buyer bloc, with nib (through Honeysuckle) collectively negotiating hospital contracts for itself and other insurers," APHA CEO Brett Heffernan said. "This would further skew an already unequal playing field. If insurers are given even greater collective bargaining power, the people who will ultimately pay the price are patients.

"In considering whether to extend legal protection for the insurer-owned buying group, nib is required to demonstrate public benefit. It has failed that test, while the public detriment of such a move is clear.

"Significantly increasing insurer bargaining dominance when Australia's private hospitals are already under severe financial strain, would only benefit insurance companies. The Australian Bureau of Statistics recently confirmed that private hospitals recorded a $756 million operating loss last financial year, while insurers reaped $2.7 billion in profits.

"Hospitals are already cruelled by rising wages, health inflation outstripping CPI and growing operating costs and no way to recoup them. Meanwhile health insurers fail to meet these real-world costs. You cannot keep squeezing a sector that lost $756 million last year and expect patients not to feel the consequences.

"Reduced investment in hospitals, the closure of more essential services and hospital closures altogether, aren't in anyone's interests. It undermines patient access to timely, high-quality care, and will add to public waiting times as more people are forced into overburdened public hospitals.

"An insurer-owned buying group could have profound influence over provider networks, care pathways and where patients receive treatment, creating a system where commercial incentives increasingly determine how and where care is delivered."

In opposing the proposal, the APHA notes that the application differs markedly from the original authorisation in 2021. Honeysuckle Health is now wholly owned by nib, meaning one of Australia's largest private health insurers would effectively be able to negotiate contracts for itself and other insurers.

"This fundamentally changes the competitive landscape and raises major concerns about market concentration, conflicts of interest and the use of commercially sensitive data," Mr Heffernan added.

"It would give nib line-of-sight across sensitive data like rival costs, product performance and hospital contract terms, as well as hospital reliance on particular funds, casemix economics and viability thresholds. nib would have an unmatched negotiating advantage.

"Australians choose private health insurance because they expect choice: choice of doctor, choice of hospital and timely access to treatment. This proposal moves Australia further towards a model where insurers have greater influence over those choices, with dire outcomes for clinical independence and limiting patients' ability to receive care where it is most appropriate.

"We need a fair and sustainable operating environment that enables private hospitals to continue caring for millions of Australians every year. This proposal would head in the opposite direction. It strengthens the market power of insurers while weakening the hospitals patients depend on. The ACCC should reject it."

-ENDS-

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).

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