Doctors fear new health services buying group will create ‘US style’ care in Australia | Private health insurance

Doctors fear new health services buying group will create ‘US style’ care in Australia | Private health insurance

Doctors’ groups want to block a proposal to allow a half US-owned data analytics company from forming a health services buying group, saying it risks creating costly and inefficiently managed “US style” healthcare in Australia.

But health economists and policy experts have dismissed the concerns, saying the buying group could result in more choice, lower costs and better care for consumers, despite warnings from the Australian Medical Association (AMA) and Australian Doctors Federation (ADF) that it will result in poorer care.

In May the Australian Competition & Consumer Commission (ACCC) issued a draft authorisation to allow health analytics company Honeysuckle Health – a 50/50 merger of Australia’s nib health fund and the US-based Cigna corporation – to form a buying group. The ACCC said the buying group was “likely to result in public benefits”.

Honeysuckle Health intends to collectively negotiate and manage contracts with healthcare providers such as hospitals, specialists and GPs, on behalf of private health insurers and other healthcare payers, such as travel insurance companies and the government, who sign up to it.

The four largest health insurers in Australia, excluding nib, which account for approximately 70% of health insurance policies nationally, will not be allowed to join the buyers’ group in order to protect competition.

But AMA president Dr Omar Khorshid said on Thursday the ACCC must block the buying group and abandon its draft authorisation.

“The proposed buying group could have significant market power, putting it in a position to unilaterally impose contracts on providers,” Khorshid said. “This would allow participating funds to exercise more control over the care that patients receive.

“This is a recipe for cost-cutting and less choice.”

Under the draft authorisation, the ACCC proposed conditions on the size of the buyers’ group, and authorised the group for five years, rather than the 10 Honeysuckle sought approval for.

ACCC commissioner Stephen Ridgeway said: “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”.

The chair of the ADF, Dr Aniello Iannuzzi, wrote in a comment piece for the Medical Journal of Australia, that the authorisation would lead to “a major paradigm shift in our healthcare system” and was of “questionable public benefit”.

It “will introduce US-style managed care into Australia”, he wrote. “Moreover, I consider the application a direct threat to Medicare and Australian private hospitals.”

Grattan Institute health economist Prof Stephen Duckett dismissed the concerns.

“The AMA is generally concerned about any potential that they might lose autonomy, and they equate loss of doctor autonomy with a necessarily and inevitably bad thing,” he said. “But in this particular case, it might lead to better care. Certainly the AMA has always been opposed to any strengthening of those who question what they do, saying patients are the only ones who can question them.

“But the reality is patients have no power over fees.”

Health policy expert and former senior public servant in the commonwealth department of health Charles Maskell-Knight said measures to increase cost transparency, such as the “Medical Costs Finder” website, had failed because it relied on doctors being transparent about their fees.

“But doctors don’t want to say what they actually charge,” he said. “Every time the AMA or doctors’ groups have a proposition before them which might result in a bit more scrutiny over what doctors charge, they instantly say there is a threat of US style care and an evil system.”

The buyers’ group will be able to, in exchange for a higher fee than the normal no-gap nib payment, make surgeons who sign up agree not to charge an insurer’s client out-of-pocket costs for certain surgeries, and the surgeon would need to commit to working with other specialists, such as anaesthetists, who agree to the same.

“If doctors are worried about these contracts, the easiest way to avoid that is not to sign one,” Maskell-Knight said. “It’s just nonsense to say it will lead to US-style care.”