The creep of US-style managed care in Australia and reduced competition in the optical market are among major concerns raised with the competition watchdog as it considers the formation of a new buying group to collectively negotiate contracts with healthcare providers.
The Australian Society of Ophthalmologists (ASO) and Optometry Australia (OA) recently lodged submissions with the Australian Competition and Consumer Commission (ACCC), which will decide whether Honeysuckle Health can form and operate the buying group for 10 years.
Honeysuckle is an equal joint venture between nib health funds and US-based health services company Cigna Corporation. If approved, the Honeysuckle buying group could collectively negotiate and administer contracts with hospitals, medical specialists, GPs and allied health professionals.
This would be done on behalf of ‘participants’ that may include other private health insurers, international medical and travel insurance companies, and government and semi-government payers of healthcare services.
Honeysuckle anticipates smaller private health insurers that currently outsource their contracting services to two existing buying groups are most likely to join its group. Larger players Medibank, Bupa, HCF and HBF – who conduct their own negotiations – may be interested in purchasing bespoke aspects.
While supporters argue it could reduce out-of-pocket costs for consumers, health bodies are worried about the level of control insurers will have over clinical care pathways. The potential size of the group is also unclear, with concerns it could have disproportionate market power.
ASO vice-president Dr Peter Sumich said Australia’s healthcare model allowed “control of the who, where and when of our private medical care”.
“US-style managed care places the insurer in the position to determine a patient’s treatment pathway. We wish to see patients continue with full choice of care as decided in consultation with their doctor. Inevitably, insurers design care packages with a minimum viable product which may not be appropriate for all patients,” he said.
Sumich was part of an ASO delegation to Canberra where they raised concerns with Health Minister Greg Hunt’s office, as well as Opposition Health spokesperson Mr Mark Butler and Opposition Aged Care spokesperson Ms Ged Kearney.
“The discussions related to the creep of managed care under the trojan horse of Honeysuckle Health, Medibank vertical integration and HCF obstetric bundled care pathways,” Sumich said.
“Their response was one of concern and surprise because these individual commercial developments are not always put together to reveal the emerging patterns we all see as clinicians at the coalface.”
The ASO is also concerned Honeysuckle would compare the value of services from a provider against peers in the region.
“Many clinicians operate on different levels of complexity which sees some clinicians appear high quality, but only because they operate in a very limited range and on simple conditions,” its submission said. “In other cases, highly talented and reputed clinicians, who operate on most serious and complicated conditions, are marked down in this simplistic non-qualified system.”
Optical competition could be compromised
OA’s submission stated larger funds and buying groups often entered low or ‘no gap’ contracting arrangements with the largest optometry providers only.
“Our concerns include that funds/buying groups that limit particular contracting arrangements to particular providers deny smaller optometry providers the opportunity to participate, compromising fair competition and can disadvantage policy holders in areas (typically rural) where such providers are not available,” the OA submission stated.
“We have concerns that a buying group, such as the proposed [Honeysuckle buying group], that includes at least one larger fund, and may potentially include multiple larger funds, by undertaking contracting arrangements for a potentially larger proportion of the health insurer market, will further compromise the capacity of smaller providers to compete fairly in the market, with the ultimate impact of reduced competition in the optometry/optical market.”