1. Australian Health Insurance Association “ The ACCC View of Key Competition Issues Impacting on Private Health” Presented By John Martin Commissioner Australian Competition & Consumer Commission 10 th November 2005 Melbourne

2. “ The ACCC View of Key Competition Issues Impacting on Private Health” How ACCC Operates Application Of TPA To Health Sector Monitoring Report To Senate Broad Areas Of Concern Specific Issues Mergers & Authorisations Recent Health Mergers How Mergers Are Assessed Going Forward

3. How ACCC Operates Independent Agency 7 Commissioners Range of Skills Operates Like Board Committee Structure 500 Plus Staff Decentralised Key Role Via TPA Anti Competitive Conduct Misleading, Deceptive Trading Practices Unconscionable Conduct Complaints Driven Proactive As Patterns Emerge Strong Investigation & Evidence Gathering Powers Emphasis On Compliance & Avoidance Of Problems

4. Application Of TPA To Health Sector TPA To Enhance Welfare Of Australians Promotion Of Competition & Fair Trading All Health Business Subject To Competition Provisions Of TPA Unincorporated Subject To State Fair Trading Acts Health Insurance Technically ASIC Since 1998 Legislative Changes But ASIC Delegate To ACCC Health Services Rather Than Financial Services ACCC Ensure Health Funds Do Not Mislead About Premiums or Conditions

5. Monitoring Reports To Senate Certain Sectors Subject of Formal Monitoring In Some Cases Pricing Approval (eg. Australia Post) Other Sectors Monitoring & Reporting ACCC Reports To Senate Since 1999 On Anti Competitive Or Other Practices By Health Funds Or Providers To Detriment Of Consumers Originally 6 Monthly Now Annual Report Drawn From Internal Material & Submissions ACCC Contacts Over 100 Interested Parties Latest Monitoring Review 23 Submissions Including 5 From Health Funds

6. Areas Of Concern ACCC Only One Of A Number Of Regulators Also Ombudsman & State Health Spike In Approaches To ACCC Over Past Year Medical Info Kit Over 11,000 Info Kits Distributed 400 Extra Inquiries Overall Complaints To ACCC Flat In 2004 774 Health Complaints In 2003-04 Of Which 143 Related To Health Funds Main Complaint Area Against Health Funds Advertising Or Statements By Staff Premium Increases Or Benefit Changes Or Notice There Of Suspected Arrangements Between Competitors Providers Not Having HPPAs With Certain Funds

7. Specific Issues Key Features Guide Exclusions & Restrictions Intermediaries Portability Contracts Between Hospitals & Health Funds Purchaser Provider Negotiation Code Of Conduct

8. Mergers & Authorisations Prohibition On Mergers That Substantially Lessen Competition Merger Requests Generally Informal Clearance Process Most Do Not Raise Concerns Where Concerns Exist Either Do Not Proceed Or Acquirer Offers Conditions Eg. Divestment Where Acquirer Persists Despite ACCC Opposition Resolved In Court Alternative Avenue Is ACCC “Authorisation” Of Merger Where Acquirer Seeks To Demonstrate Public Benefit Outweighs Detriment Note new Legislation To Change Process

9. Recent Health Mergers 3 Hospital Mergers 2005 Ramsay Acquisition Of Affinity Undertaking By Ramsay To Sell 19 Hospitals Health Scope Acquisition 14 Of Ramsay Merger Hospitals Ramsay In Sale Process For Other 5 Earlier In Year Authorisation For Little Company Of Mary Owner Of St Lukes Launceston Acquired Other Launceston Private Hospital

10. How Mergers Are Assessed Hospital Mergers Inherently Complex Due To Health System Complexity Assessment Focus On Local Markets Patients Tend To Use Local Facilities Supply Of Hospital Services To Health Funds Collectively Negotiate On Behalf Of Members Spotlight On Health Fund – Hospital Markets Shows Price & Consumer Choice Issues Based On Market Power Of Merged Hospital Ramsay Merger Case Study 3 markets Price Rises could Not Be Resisted Example Of Gosford Authorisation Alternative Improved Prices Or Quality Of Service Medibank Private Sale Issue

11. Going Forward ACCC Role Permeates Health Sector Given Important Of Health Services To Consumer Interests Regret Timing Because Unable To Brief On Latest Senate Report Unlikely To Be Surprised Continuing Issues In Some Areas Improvements In Other Mooted Medibank Private Sale Issue For Future Titillating Note To Finish Welcome Comments & Questions

12. Contacting the ACCC ACCC PO Box 1199 Dickson ACT 2602 Information Centre: 1300 302 502 http://www.accc.gov.au Happy to Answer Questions