Newsletter Editorial, July 2001 Reform Competition Regulation: Why & How

Letter from Dr Bruce Shepherd (Campaign Launch)

Dear Colleague

This letter launches the Australian Doctors’ Fund campaign for reform of competition regulation in health care.

Why is reform needed?

  • Because the net result after seven years of competition intervention in health has not been positive.
  • Because the competition regulators have been happy to implement a managed care agenda rather than encourage real competition.
  • Because competition policy has been applied in an unjust manner across the health sector.
  • Because we oppose using the banner of competition regulation to pursue a political agenda.
  • Because we oppose the imposition of a lower price or cheaper deal while disregarding the impact on quality, service and safety (ie higher real costs).
  • Because we oppose the labelling of Australians who work hard and achieve a good standard of living as an elitist group who must be knocked off their perch.
  • Because we oppose trial by media.
  • Because we support real competition with legal safeguards against exploitation.

What are the results of competition intervention in health?

Does anyone really believe that our health funds are thriving in open competition when they are relying on a $2 billion annual government subsidy and a mountain of legislation to protect them against competitors? No longer private, they are now quasi-government health funds.

How can there be “competition” between private hospitals on quality of service and reputation when their cost structure and investment programmes are dependent on the whim of health fund executives?

How do you improve the competitiveness of our profession by taking away our independence and handing us over to large corporations, health funds and governments?

Sweeteners offered by governments and health funds so often generate toothache.

When it all boils down it’s about control, not competition.

Are we paranoid?

If so, it appears to be contagious.

Peter Harbison, Managing Director of the Centre for Asia-Pacific Aviation, states that the application of competition regulation in aviation:

“illustrates just how fundamentally flawed is the whole competition regulatory structure of the Trade Practices Act and its application by the Australian Competition and Consumer Commission.” The Australian. 31 May 2001

He could well be talking about health care.

Enclosed with this letter is a list of reforms that if implemented would help to bring about positive change. This list is not exhaustive, it is the first step forward.

Our success will depend on your financial support. With a strong campaign fund we can mount a substantial communications effort and gain wider support.

Our profession has always been highly competitive in its pursuit of continuous improvement in patient care. Who among us has not trained our future competitors and nurtured their growth?

Our profession welcomes all those who meet the appropriate standards – standards established to protect our patients from second-rate care and quackery.

Advances in surgery and anaesthesia have led to reductions in surgical, medical, and hospital costs. Our profession has made a substantial contribution to cost effective medicine. In particular, our General Practitioners have for years subsidised the Medicare system for which they have been demonstrably under-rewarded.

We believe in a fair reward for many years of study, dedication and hard work. Nobody should be undervalued. All Australians who work hard must be rewarded for their honest efforts if our country is to prosper and grow.

This is a battle we can win! It will take courage and cash!

I urge you to contribute to the Australian Doctors’ Fund Campaign to Reform the ACCC (CRACCC) by completing the enclosed remittance advice and sending it with a contribution to the Australian Doctors’ Fund, PO Box 12, Arncliffe NSW 2205. All contributions will be promptly receipted and used solely in this campaign. We must act now!

Bruce D Shepherd
Chairman
1 July 2001


Recommended Reforms

August 2001

REFORM: Public Allegation Prohibition
The prohibition of public allegations, comments, threats, and media releases by the ACCC on any matter which has not been determined by the ACCC or the Federal Court.

Explanation
The ACCC, part of the public service, has continually issued media releases and made allegations against parties it is seeking to prosecute. This behaviour would never be sanctioned in any other jurisdiction where an individual’s right of being innocent until proven guilty, is strictly protected. The practice of trial by media by an organisation with the resources and authority of a government institution is an abuse of power which should not be tolerated in a democratic society. The minister responsible for competition regulation will always have the ability to raise in parliament any matter of public interest identified by the ACCC. The parliament allows for free speech, scrutiny and right of reply in matters of public interest.

REFORM: Collective Representation
Express recognition in legislation of the right of negotiators to collectively represent small business, sole traders, and independent professionals in the same commercial or professional activity on any matter providing individual consent is provided to the negotiator by those being so represented.

Explanation
It is time to end the situation where an individual representing a group of competitors against a much more powerful acquirer of services can only represent one client at a time. Providing there is no collective price fixing agreement between clients, a negotiator should be able to present all views at once.

REFORM: Fee Schedule Legalisation
Express recognition in legislation removing the threat of legal prosecution against associations who publish fee or price schedules provided there is no attempt by those associations or publishers to coerce association members to adhere to the published fee.

Explanation
The ACCC claims that price or fee schedules are not illegal but warns against their use or their publication without authorisation from the ACCC. Fee Schedules are an important way of informing the market as to what one organisation believes a service is worth as opposed to hidden pricing which denies consumers price information about that service. Providing that there is no attempt to enforce a schedule on its members, associations should not be prosecuted and should even be encouraged to publish fee schedules which will provide consumers with price information in order to make informed decisions.

REFORM: The Right to Sue for Damages
The right of an individual to sue the ACCC for damages incurred to personal and/or commercial reputation and trade where it can be shown that the ACCC’s actions have misrepresented an individual or organisation.

Explanation
At present, an injured party has to prove fraud and dishonesty against the ACCC in order to seek redress if the ACCC has caused damage through misrepresentation. What about the business or individual whose reputation and economic viability is damaged by media comments alleging wrong doing when it is later found, on the facts, that the public comments by the ACCC were unsubstantiated?

REFORM: ACCC Ombudsman
The establishment of an independent ACCC Ombudsman and Complaints Commissioner with mandatory time limits for reporting.

Explanation
Who regulates the regulator? Currently complaints about the ACCC are dealt with by ACCC internal processes, even though the Commonwealth Ombudsman has the power to investigate ACCC complaints. This area is so contentious, specialised, and demanding that it requires a full time watchdog with powers to impose penalties and demand redress to complaints upheld.

REFORM: Fee Discussion Legalisation
The legalisation of discussions, meetings, conversations, expressions of opinion or exchange of documents or dissemination of information about fees or prices falling short of price fixing.

Explanation
At the moment there is mass confusion about what so-called competitors can do when raising matters about fees and pricing. On one hand, the ACCC warns that it is best not to discuss fees with competitors. Others advise that you can discuss fees but not come to an agreement about fees.

REFORM: Independent Authorisations Body
Establishment of a separate independent body solely responsible for authorisations.

Explanation
The ACCC has at times made public its view on matters which are later subject to authorisation. How can any organisation objectively assess, let alone authorise, behaviour which it has already publicly condemned, criticised or questioned? The ACCC cannot be allowed to be the police force, the judge, the jury, and gaoler.

REFORM: Non-Renewable Commissioner Terms
A four-year non-renewable term for ACCC commissioners and senior staff.

Explanation
A four-year non-renewable term will help safeguard against the potential use of the office and its powers to impose a personal or political agenda. By renewing senior staff every four years, policy positions adopted by the ACCC can themselves be reviewed by those coming into office.

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