The Commerce Commission says there are no clear health benefits in allowing a group of specialists to negotiate collectively with Southern Cross Health Insurance, and that doing so could raise premiums.
Southern Cross has been engaging with gynaecologists and hospitals on the transition of gynaecology surgery into its affiliated provider programme “to address sustained cost increases under the current fee-for-service model”.
A group of specialists formed the New Zealand Gynaecology Association and applied for Commerce Commission approval to collectively negotiate with the insurer and private hospitals, saying the insurer’s proposal would lead to worse health outcomes for women.
But the competition regulator has now declined its bid for interim authorisation and isn’t convinced by its more substantive application: “Our preliminary view of the evidence before us is that the magnitude of the detriments is likely to significantly outweigh the benefits in aggregate.”
The commission considered three possible benefits of allowing the application, including health benefits and an improved supply and retention of gynaecologists in New Zealand.
The New Zealand Gynaecology Association had submitted that Southern Cross’s proposal wasn’t clinically appropriate, meaning some patients best served with multiple procedures in one operation would require repeat surgery and poorer outcomes.
It also says the proposal doesn’t properly account for variation in surgical complexity.
This concern was echoed by the likes of Endometriosis New Zealand, but was disputed by Southern Cross Health Insurance in submissions and statements to the media, maintaining that the proposed framework doesn’t determine what treatment a clinician can provide, doesn’t remove cover for pelvic floor disorders or gynaecological cancer procedures and includes mechanisms for claiming multiple procedures performed during the same surgical episode.
The commission’s preliminary view is that no material health benefits or detriments arise from the proposal as it hasn’t identified any significant difference in the quality of health outcomes if it goes ahead or not.
It says it needs to make its assessment on the evidence available. “To date the applicant has not provided any quantitative evidence supporting its claim of better quality health outcomes in factual compared to the counterfactual, either as to the magnitude or likelihood of harm.”
The gynaecology association declined to comment when contacted by Newsroom.
The commission did find there was likely a small benefit from letting the proposal go ahead, with the insurers approach possibly impacting the incentives of some gynaecologists to enter and exit the speciality, but it said the evidence in support of this wasn’t strong.
What it did find evidence of was that increased bargaining power would lead to higher surgical fees being paid by Southern Cross.
“Although the relationship between gynaecology costs and premiums is unlikely to be one-for-one, because premiums are set having regard to Southern Cross Health Insurance’s broader portfolio of costs and risks, increases in gynaecology costs would nevertheless be expected to place upward pressure on premiums charged to Southern Cross Health Insurance members.”
It says it is unclear precisely how large of an effect these higher fees would have on insurance premiums.
“In response to premium increases, SCHI members may switch to a lower tier plan, increase their excess, remove optional modules, switch to another insurer … or leave the private insurance market all together.”
Southern Cross’s customers make up 60 percent of New Zealand’s health insurance market by numbers and 70 percent by value, making it the largest funder of healthcare that isn’t part of the Government.
Southern Cross’s Russell Simpson says it welcomes the decision to decline the Gynaecology Association’s application.
“We recognise that the substantial application is a draft determination and that the commission’s process is continuing. We are reviewing the decision in detail and will continue to participate respectfully in the commission’s process.”
The draft determination isn’t final, and another round of submissions will take place before the Commerce Commission makes a decision.
The final decision is due on November 12.