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The medical profession must abide by competition law too

By Sitesh Bhojani - posted Thursday, 12 December 2002

In 1995, the ambit of the Trade Practices Act was extended to cover all the professions, including medicine. While most accepted they were running businesses and should be treated as such for the purposes of the Act, there has been resistance from some doctors and their lobby, the Australian Medical Association. However, doctors and other health professionals are not a special case. They are in business (as well as being professionals) and while they have obligations under the Act not to engage in anti-competitive practices they also have rights. The Act protects them against the anti-competitive practices of others and their access to facilities and hospitals. It protects them in dealings with stronger parties.

Walk into a doctor’s surgery and you will inevitably see a list of charges on the wall, sometimes an additional amount if the consultation extends beyond a fixed time. You are usually asked to pay on your way out. No mistake, you have entered a business and this is understandable; doctors have to earn incomes to support their families and pay their staff.

There seems to be the impression among some in the medical profession that a lack of competition is good for quality and service. The dubious claim is that competition law interferes with doctor-patient relationships and even prevents GPs forming out-of-hours rosters. Rosters are not a breach of the Act and no court proceedings have been launched against those establishing them. They increase the supply of medical services and help prevent doctor fatigue. What does breach the Act is collusion between competing doctors to collectively engage in anti-competitive practices. Without the Act there would be nothing to stop all doctors in a country town collectively boycotting bulk-billing or new no-gap arrangements.


It’s the role of the ACCC, in the health sector as elsewhere, to ensure that businesses comply with the Act in the public interest and to protect consumers. Vigorous enforcement of the law encourages businesses to respond to what consumers want rather than doing cosy deals for their own benefit or misusing their market power.

Informed consent is vital in the medical profession. Patients should know the likely cost of medical treatment and particular treatments or services recommended by their doctors. The ACCC is ready to pursue matters where patients are not informed of costs or are misled by advertising. Unfortunately, there remain concerns that some professionals fail to appreciate the significance of costs in the provision of specialists care and, in some cases, patients are not adequately informed about the commercial or financial interests of medical practitioners in their referrals to other specialists.

Some health fund advertising may have misled consumers about the real costs of health insurance. Court proceedings have been launched by the ACCC against several funds for allegedly misleading consumers about insurance coverage.

In one case the ACCC alleged that Medibank Private promised customers who switched from another fund that any waiting period would be waived and they would get 30 days free. What was allegedly not disclosed was that only the two-month general waiting period and the six-month optical waiting period were waived and that conditions applied to the 30 free days. The ACCC has also alleged that Medibank Private advertised “no rate increase in 2000” in relation to its Package Plus insurance products when the rates increased on 1 July 2000.

It has been alleged that pregnant women were misled by some insurers about the waiting time for obstetric and pregnancy related services.

In a landmark judgment of December 2001 the Federal Court ordered the AMA (WA branch) and two officers to pay penalties and costs totalling $285,000 for price fixing and primary boycott breaches of the Trade Practices Act relating to services by visiting doctors to patients at the Joondalup Health Campus in Perth. In 1998, four anaesthetists servicing four Sydney private hospitals and the Australian Society of Anaesthetists gave undertakings to the Federal Court not to engage in price fixing for the supply of on-call services.


In October 2002, the Federal Court found that three Rockhampton obstetricians had breached the Act by collusion to collectively boycott no-gap billing. As a result almost $97,000 will be repaid to affected patients to refund the gap the patients were required to pay. The Rockhampton conduct caused substantial harm for consumers. Families expecting a new born can be under financial pressures and should not be saddled with an additional unexpected bill.

The case further highlights the fact that medical practitioners are not above the law and must resist pressure by others to engage in boycotts. Contrary to AMA assertions, after-hours rosters were not a factor in the court proceedings.

The proposal that competition law is inconsistent with the ethical obligations of doctors to patients does not stand up. Ethical obligations are not about prescriptive rules and regulation nor complying with the law. Ethics are really about achieving something much higher than the law – it is about pursuing excellence. There is no conflict between a professional’s ethical obligations and compliance with competition law (the professional’s legal obligations).

It is possible for anti-competitive conduct to be authorised by the ACCC as long as there is a net public benefit. The ACCC has granted interim authorisation to GPs working within the same general practice to agree on fees in certain circumstances.

Since 1995, when health professionals came under the Trade Practices Act, the ACCC has made a concerted effort to bring them up to speed on their rights and obligations under the Act. This includes many consultations with medical organisations and the distribution of the publication, A Guide to the Trade Practices Act of the Health Sector. The ACCC will continue to work cooperatively with the health sector to increase it.

All sectors of the Australian economy, including taxpayers, have a legitimate interest in health professionals competing fairly so they are provided with better quality services at competitive prices. This would bring us closer to the goal of an equitable, efficient and effective health-care system.

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About the Author

Sitesh Bhojani is a Commissioner at the Australian Competition and Consumer Commission.

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