Doctors Accuse ACCC Of Double Standard – 29 May 2000

The Australian Competition and Consumer Commission (ACCC) can be accused of a double standard if it does not take action under the Trade Practices Act against health funds who held a meeting and discussed a strategy to fix prices, Executive Director of the Australian Doctors’ Fund, Mr Stephen Milgate, said today.

The meeting of health funds, which took place in early April between more than 30 competing health funds, and attended by the federal Health Minster’s Chief of Staff, Mr Ken Smith, concerned the issue of premium rate increases for the coming year.

A spokeswoman for the Minister for Health, commenting on the health funds’ meeting said “If there was mention of insurance rate hikes, it was only in the context that health insurers were saying after (Mr Smith’s) speech that there might not need to be a rate rise next year.”

Mr Milgate said “This admission suggests that an agreement was reached between the competing health funds on how they were going to set their prices for the coming year.”

“We understand that this sort of ‘price fixing’ arrangement is forbidden under the Trade Practices Act. It doesn’t matter whether the agreement is to lower, maintain or raise prices. The Act is only concerned with the anti-competitive nature of collective price fixing agreements.”

“If the ACCC does not take action against the health funds then it makes a mockery of everything that the ACCC has said in the past about how the Health Sector must behave.”

In November 1995 the ACCC issued a ‘Guide to the Trade Practices Act for the Health Sector’ in which the ACCC warns health funds that:

“The least risk option for health funds in setting premiums for health insurance or in negotiations with hospitals or health professionals is to act unilaterally. Discussing rates of reimbursement with other health funds automatically risks breaching the price fixing provisions of the Act.” (Page 18)

In the same document, the ACCC warns doctors:

“Discussing fee scales with colleagues who compete with you raises the possibility that an agreement or understanding will be reached that fixes, controls or maintains the level of those fee scales. (Page 13, underline added)

“You should also be aware that an agreement or understanding with other professionals to adhere to a recommended fee scale would amount to a price fixing agreement.” (Page 13)

Commenting on the health fund’s meeting the on Monday 8 May 2000, Mr Sitesh Bhojani, of the ACCC, told a Senate inquiry that “…the reports I have read suggest that it [the health fund meeting] was a futuristic issue: that nothing has actually happened as yet, that there has just been some urging on the part of the government.”

However, in 1998 the ACCC pursued Sydney anaesthetists who had written to a number of private hospitals through their professional association requesting higher payments for supplying out of hours anaesthetist services.

“The anaesthetist case was ‘futuristic’ but it didn’t stop the ACCC descending on them from a great height. Now it seems that the rules have changed to protect the politically sensitive,” said Mr Milgate.

The ACCC has also told the Australian Doctors’ Fund that: “…in the unlikely scenario that all funds did collectively agree not to raise prices, the Commission would need to consider the actual or potential consumer detriment arising from the conduct before deciding to pursue such a matter.”

“In our view this is not the test that the ACCC has adopted in other cases and is inconsistent with its previous directives to the health industry which talk about’automatic breaches’. By not increasing prices, health funds may be jeopardising their viability and this could be quite detrimental to health fund members.”

“What we have here is two sets of laws. One for the health funds who can conduct a meeting between competitors and can agree to a price strategy, and another law for everyone else. If doctors were to hold a meeting and discuss their fee arrangements for next year they would be threatened with fines of $500,000 per individual or $10,000,000 per organisation,” Mr Milgate said.

Chairman of the Australian Doctors’ Fund, Dr Bruce Shepherd, said “I understand how workers and trade unionists feel.”

“Independent professionals and business people small and large are increasingly without political or effective industrial representation.”

“We are told we must negotiate, as an individual doctor, with a multinational corporation and that this is all fair and reasonable. It smacks to me of a sell out to the corporate and large organisations who are prepared to do the government’s bidding.”

“The way competition laws are being administered in Australia is quite frightening for the future of democracy.”

“Personalities aside, we have an unelected institution, the ACCC, with what appears to be quite arbitrary powers as to who they will pursue and target and who they will not.”

“Even if you are able to prove yourself innocent, it could cost up to tens of thousands of dollars in legal fees. Most small businesses and independent professionals couldn’t afford to defend themselves and would have to sign confessions of wrong doings, rather than go bankrupt.”

“It is an indictment on Australia that no political party has raised any concern about this situation. Maybe it’s time we started one that did!” said Dr Shepherd.