1 June 2021

Honeysuckle deal sounds sweet, but there’s a sting

Insurance KnowCents

Despite widespread opposition to managed care in Australia, the ACCC has green-lit a controversial health fund buying group.

While some say this is the beginning of the end for the Australian healthcare system, the industry promises a revolution in delivering value-based preventative care.

Honeysuckle Health, acting as an agent for nib health fund, is on track to receive authorisation to form and operate a buying group which will, according to the ACCC, “negotiate and administer contracts with healthcare providers (including hospitals, medical specialists, general practitioners and allied health professionals) on behalf of participants”.

These participants will include private health insurers, international medical insurers and government payers of health care services, among others.

During the public consultation process the ACCC received 21 submissions from parties opposing to the application, 16 of which came from peak bodies representing medical professionals.

In response to these concerns, the commission stipulated that Honeysuckle Health would only receive authorisation for five years, rather than the 10 it applied for, and has excluded major insurers from some aspects of the authorisation based on market share in each state.

Should everything proceed on the current trajectory, Honeysuckle Health will have the power, for example, to create an agreement through their clinical partners program (a carry-over from nib) with a group of orthopaedic surgeons.

In exchange for a slightly higher fee than the normal no-gap nib payment, these surgeons would agree to never charge a nib client any out-of-pocket costs for something like a hip replacement, and commit to working with an anaesthetist who agrees to do the same.

According to Honeysuckle Health CEO Rhod McKensey, this arrangement would benefit nib members by providing certainty around their out-of-pocket costs, as well as potentially provide more flexible post-surgery options.

“In addition, we then offer an enhanced model of at-home rehab, where the orthopaedic surgeon can choose to offer the patient – based on their clinical judgement, and the patient’s involvement – in-hospital rehab, at-home rehab, or if the patient has done well post-surgery, no rehab at all,” he told The Medical Republic.

“All of that is completely at the discretion of the surgeon.”

The type of networked care which Honeysuckle Health has proposed, however, has led others to draw comparisons to United States-style managed care.

AMA President Dr Omar Khorshid criticised the ACCC’s decision to authorise the proposed buying group, arguing that Australia could “sleepwalk into a managed care environment”.

“Insurers want to exercise greater control over the care that patients receive and this is a recipe for less choice and inferior care in the long term,” Dr Khorshid said in a press release.

“A GP referring a patient privately under these circumstances may be frustrated and concerned that their patient’s choice and improved access to care – the very reasons for their cover – will be constrained by the ‘straitjacket’ created by these arrangements.”

But Mr McKensey stressed that Honeysuckle Health was not seeking to limit patient options.

“[There is] no intention to ever interfere in the clinical relationship between the doctor and the patient,” he told TMR.

“If that’s the definition of managed care, then we are not looking at managed care.”

Instead, Mr McKensey said Honeysuckle Health was looking to help drive a shift toward value-based care, working only with the “coalition of the willing”.

“We are very much looking to take a partnership-based approach, it’s been frustrating that the opposition to what we’re doing is being based on assumptions about what we intend to do, rather than what we actually are doing,” he said.

Australian Doctors Federation CEO Stephen Milgate believes that the model of care proposed by Honeysuckle Health, whether intentionally or not, will create a strained doctor-patient relationship.

“Once doctors are told they’re assessed on a claims basis, there is a massive incentive not to treat patients with complications, and there’s a very strong incentive to move those patients – including DVA patients – to the public hospital system,” Mr Milgate told TMR.

“This proposal has the ability to immediately impact not only the private healthcare sector, but the public hospital system.”

Additionally, Mr Milgate fears that patients will be put at a disadvantage.

“Placing a patient right up against a doctor who is a business partner of a corporation or corporate health fund creates a massive asymmetry and renders the patient powerless,” he said.

“The ACCC has admitted that these contracts are unregulated.

“Health corporations want to obtain patient data, it’s highly valuable in not only current health analysis, but marketing of all products.”

Another potential issue is a buying group with too much market power which – whether it was the original intention of the health fund or not – could end up forcing doctors into a corner.

“I believe that the tipping point is when contracts start to be issued to doctors, and they realise that they’re non-viable without signing up,” Mr Milgate said.

“Then what we’ve seen in the United States is that doctors move to full-time employment, close private practice or form large groups in an attempt to negotiate and rebalance the system on behalf of patients.”

The ACCC will be taking submissions on its draft determination to authorise the Honeysuckle Health buying group until Friday 11 June.

COVID-19 live update