The Competition Authority has found that hospital consultants engaged in price fixing in negotiating deals on fees with the private health insurance industry, writes Martin Wall.
The authority found that the aim of the consultants was to eliminate or restrict competition, particularly price competition, between medical specialists.
It said their conduct harmed consumers who were forced to pay higher subscriptions or receive lower levels of benefits because of the absence of competition.
In a confidential finding sent to the main consultants' representative body, the Irish Hospital Consultants' Association (IHCA), last week and seen by The Irish Times, the authority demanded an undertaking by tomorrow that collective negotiations with health insurers would cease or it would initiate legal action against the organisation.
The Irish Times revealed a fortnight ago that the association was to pull out of talks with the country's largest health insurer, the VHI, on a new fee agreement to come into force next month in anticipation of the Competition Authority ruling.
The authority said that following an investigation, which has been under way since early 2003, it believed that the negotiation of a deal between consultants and the health insurers which governed fees for particular procedures was in breach of Section 4 (1) of the Competition Act.
The issue in question was the negotiation of the "total cover" arrangements under which the VHI offered higher fees to doctors who guaranteed not to send balance or top-up bills to its subscribers.
Over 90 per cent of consultants in the country accepted the VHI "total cover " fee schedule - which was later adopted by most of the other insurers in the market.
"In the authority's view the IHCA's conduct and activities when engaging in collective negotiations on behalf of its members with health insurers pertaining to price and competitive terms constitute a decision/recommendation by an association of undertakings, the object and/or effect of which is to either directly or indirectly fix the price of the fees paid to consultants by health insurers," the authority stated.
It said it had concluded that the IHCA's conduct prevented, restricted or distorted competition in two relevant markets, namely the general market for medical consultancy services and/or the markets for consultant services in individual medical specialities.
It also found that the conduct of the IHCA harmed consumers "who are obliged to pay higher insurance premia and/or who receive lower levels of benefit by reason of the absence of competition among IHCA members.
"It is the authority's view that the object of the IHCA's activities when conducting negotiations with health insurers is to prevent, restrict or distort competition in trade for the general market for consultants' services and the markets for consultant services in the individual specialities."
The authority said it required an undertaking from the IHCA that it or any speciality groups under its auspices would immediately desist from activities during its negotiations with health insurers which have the objective of restricting or distorting competition.
"It is for the IHCA to arrange its activities in accordance with the law. However, if this undertaking is forthcoming the authority is willing to meet with the IHCA to assist in the formulation of a policy pertaining to the conduct of its collective negotiations with health insurers that, in the authority's view, will be in compliance with the Act.
"If the above undertaking is furnished and a policy is drawn up, agreed to and adhered to by the IHCA, the authority will not commence legal proceedings under the Act as set out," the authority said in correspondence with the consultants' association last week.