AMA Submission to the Dawson Review of the competition provisions of the Trade Practices Act (1974)

"Obviously, the medical sector needs to be efficient, progressive and cost effective but, because the provision of medical services requires close cooperation and coordination between doctors, the simple competitive market model does not fit well with providing the high quality, round-the-clock primary and specialised care that patients are looking for," Dr Phelps said.

"The AMA is not seeking exemption of the medical profession from the TPA.

"We are seeking special arrangements that will enable doctors to work cooperatively without feeling that they have to have their legal advisers with them every time they meet.

"The AMA believes that this outcome can be achieved through some relatively minor amendments to the TPA that will provide for a reasonably straightforward clearance process for doctors wishing to work cooperatively, and for a modified framework for enforcement of the TPA in relation to doctors," Dr Phelps said.

Dr Phelps's full statement to the Dawson Review follows:

Statement by Dr Kerryn Phelps, AMA President, to the Review of the Competition Provisions of the Trade Practices Act Review (1974), Melbourne

Thank you for the opportunity to participate in this very important inquiry this afternoon.

The application of competition policy in the Trade Practices Act (1974) (TPA) to the medical profession is a two-edged sword.

Obviously, the medical sector needs to be efficient, progressive and cost effective but, because the provision of medical services requires close cooperation and coordination between doctors, the simple competitive market model does not fit well with providing the high quality, round-the-clock primary and specialised care that patients are looking for.

In a recent draft determination the ACCC noted "The Commission accepts that a team approach to the provision of healthcare is likely to have a positive impact on patient health outcomes".⁽¹⁾

The AMA is not seeking exemption of the medical profession from the TPA. We are seeking special arrangements that will enable doctors to work cooperatively without feeling that they have to have their legal advisers with them every time they meet.

The AMA believes that this outcome can be achieved through some relatively minor amendments to the TPA that will provide for a reasonably straightforward clearance process for doctors wishing to work cooperatively and for a modified framework for enforcement of the TPA in relation to doctors.

This submission by the AMA is made against a background of worsening doctor shortages, particularly in rural and outer urban areas. Access Economics estimates that the national shortage of general practitioners is between 1,200 and 2,000 out of a total workforce of about 21,000. One in five Australians lives in an area of severe GP shortfall.

The increasing red tape and legal risks associated with medical practice, particularly in country areas, combined with a chronic work overload are major factors discouraging doctors from working in rural Australia.

Doctors are the only independent professional group with an obligation to provide 24 hour, seven-day care for patients and the impact of this is no more clearly obvious than in country areas where there are few alternative providers.

Doctors form rosters and other work sharing arrangements so that they are able as individuals to withdraw from duty while being covered by their colleagues and, in doing so, they naturally regulate their competition with each other.

I would like to provide some examples of the types of arrangements among doctors that the AMA considers should be subject to automatic clearance unless the ACCC has strong evidence that they are not in the public interest.

1. The establishment of rosters

The ACCC maintains that there is no problem with the establishment of 'genuine' rosters. However, as the AMA understands it, an 'ACCC genuine' roster excludes any consideration or discussion of commercial matters such as fees or charges and we find this quite impractical. If doctors are going to look after each other's patients after hours and on weekends, they need to agree explicitly or implicitly on the fees that they will charge. They do not necessarily all have to charge the same fee but they have to, atleast, agree on a fee structure that can be advised to patients.

Also, it is interesting to note that while the ACCC approves of the establishment of a roster, the Commission has indicated in its second submission to the Wilkinson inquiry that, if doctors get together and agree to disband a roster and no longer offer the combined services of the rostered arrangement, this would be regarded by the ACCC as a boycott.⁽²⁾

In addition, the rules that the ACCC seeks to enforce around membership and conduct of rosters as set out in the ACCC's Guide to the Trade Practices Act for General Practitioners (30 March 2001 pages 12 and 13, copy attached) are extremely complex and would require doctors to obtain legal advice at every stage.

2. Worksharing

Doctors in a country town or region may agree to share the types of medical work in some way. For example, they may agree that, if one doctor takes out high cost medical indemnity premiums to cover obstetrics, all of the others will recommend their pregnant patients to him or her. Without this assurance it may not be worthwhile for any of the doctors in the region to continue with obstetric practice with its high level of medical indemnity premiums.

The ACCC advises in its GP Guide that "this agreement would be likely to constitute a primary boycott" (p15).

3. Provision of Specialist Services

Doctors in a country town or region may agree that they will invite a specialist to come for perhaps two or three days per month on the basis that they will refer all of the patients requiring those specialty services to him or her and thus make travel to the region financially viable for the specialist.

The ACCC has made it clear (Second Submission to Wilkinson page 8, copy attached) that they would regard this sort of arrangement as clearly in breach of the Act.

4. Collective Negotiations with Hospitals and Area Health Services

Local hospitals and area health services are in a very powerful market position. Doctors in country towns are often unable to continue to practice if they do not have access to the local hospital. The AMA put forward a case for authorisation for country doctors to negotiate collectively with hospitals, however, this was rejected by the ACCC and country doctors are now unable to jointly negotiate with hospitals. ⁽³⁾

There are obviously many variations of these types of cooperative arrangements among doctors that help to preserve services and deliver a public benefit to the people in the region that would far outweigh the costs associated with any anti-competitive elements.

As an example of misplaced zeal the ACCC has prosecuted three obstetricians in Rockhampton for establishing a roster. As part of establishing the roster, one of the doctors indicated that he would not participate in private health insurance 'no gap' arrangements but would charge the other doctors' patients his normal fee. The patients knew, therefore, that if they had their babies with these doctors they would have 24hour 7-day coverage but that they might not be fully covered by private health insurance and may have to pay an additional amount.

As a consequence of the ACCC's prosecution of these doctors, two of them have now given up obstetrics and the availability of private obstetric services in Rockhampton has been very significantly reduced.

The ACCC has proposed that doctors seeking to establish arrangements that may be anti-competitive should apply for authorisation. As a consequence of the AMA's experience with authorisation applications the AMA does not believe that this is a practical solution for doctors as it involves a costly, time consuming legal process that can take years to complete. The outcome of an authorisation application and the conditions that may be required of the doctors involved are uncertain and the duration may not be for a sufficiently long period of time for new doctors to come to a town, set up and establish their lives and practices.

The AMA believes that there should be simple clearance process whereby doctors setting up a cooperative arrangement lodge a summary with the ACCC and this provides automatic approval unless the Commission believes that some aspect of the arrangement needs investigation and modification if it is shown not to be in the public interest.

We note that in respect of third line forcing notifications under the TPA, the ACCC has 14 days after filing to 'object' to the notice or otherwise it stands until subsequently reviewed under the TPA's formal processes.

Turning to the issue of the appropriateness of the conduct and the penalties.

The AMA is of the view that the ACCC processes are far too heavy handed and are devoid of a level of natural justice to make them appropriate for application to the medical profession. The size of the penalties, running into hundreds of thousands, and in some cases millions, of dollars are ridiculous in relation to any infringement of the TPA by one or a few individual doctors.

Typically, the first contact that the doctor may have from the ACCC is a letter saying that it is believed that he or she has breached the Act and that he or she faces massive penalties but if the doctor undertakes to maintain total confidentiality (in other words, not speak to the AMA or any other representative body, let alone their colleagues) and fully cooperates in terms of informing on their colleagues, then they may be treated somewhat more leniently. A copy of a letter of this nature is enclosed with the papers that the AMA is presenting today.

This letter may then be followed by a letter to all of the doctor's patients telling the patients that it is believed that the doctor may be in breach of the TPA and inviting each patient to discuss the matter with the ACCC with a view to lodging some sort of claim. A copy of this type of letter is also enclosed with the papers today.

Apparently the ACCC regards access to patient lists (which may indicate a patient's medical condition) as a sign that a doctor is being "cooperative" but the AMA is concerned that there may be privacy issues involved for the patients.

ACCC media statements to the local press indicating that specific doctors are being investigated for possible breaches of the TPA usually accompany these processes, affecting the doctors' reputation without any chance to defend themselves or prove their innocence.

Some investigations and negotiation of penalties then follow. However, it is extremely difficult for the doctors involved to find out exactly what the Commission's concerns are and what the appropriate action is for them to take, particularly if they have obeyed the ACCC's injunction not to talk to anybody other than their legal adviser.

As the process stretches out, the doctor's reputation is progressively damaged and he or she incurs legal bills that run into tens of thousands of dollars.

Doctors often find the stress, anxiety and adverse publicity associated with this process almost as much or more damaging than the financial costs. Frequently they find the process impacts on their professional lives and patient care and leads them to give up certain areas of practice, such as, two out of the three Rockhampton obstetricians who are no longer prepared to deliver babies.

The AMA believes that the ACCC should have clear and legally enforceable protocols for handling of trade practices investigations and actions in relation to doctors and full principles of natural justice should apply also, there should be a Medical Trade Practices Ombudsman that doctors can appeal to if they consider they are being unfairly or inappropriately dealt with by the Commission.

I now would like to turn to the Wilkinson Review into the Impact of the Trade Practices Act on the Recruitment and Retention of Rural Doctors.

While the Wilkinson Review is yet to be made public, it may be worth briefly discussing the outcome in a hypothetical context.

It seems, to the AMA, that in broad terms, the Wilkinson Review can either adopt the AMA's view about the need for changes to the TPA to provide for rural medical services, as outlined above, or recommend that doctors receive increased and ongoing legal training in relation to the TPA without there being any amendment to the Act or to the way in which it is applied. Wilkinson could also recommend that the ACCC adopt a more sympathetic and cooperative approach in its dealing with doctors and that some form of working group or panel could be established involving the ACCC, consumers and the medical profession to try to deal with any issues that might arise.

In the event that the Report came out along the lines of the second scenario, the AMA would be extremely concerned.

Doctors are already faced with a very large overload of information in relation to medical practice alone. Any expectation that doctors and medical educators will allocate expensive training time and ongoing medical education to the application of the TPA would be regarded extremely unfavourably. In practice, this approach would mean that doctors would need to consult their lawyers before entering into any cooperative arrangements. Doctors contemplating a rural career would know that they would have to devote substantial time and resources to maintaining an understanding of the TPA and there would always be the chance that they would inadvertently enter into some agreement that would breach the TPA.

The AMA is extremely sceptical about the prospect of the ACCC becoming doctor-friendly in any sense. The AMA has endeavoured to work cooperatively with the ACCC over a number of years but has found the Commission to be extremely inflexible and punitive in its approach. The ACCC has described its role with doctors as performing its function of enforcing the law and has told the AMA that if doctors have a problem it is not the ACCC's fault and we should ask the Government to change the law.

Overwhelmingly, the experience of the AMA and, we are advised, other key medical groups, is that the ACCC regards the medical profession from an extremely hostile perspective and this is unlikely to change.

The AMA would be pleased to participate in any process that lead to a more cooperative, consultative relationship between the medical profession and the ACCC. The AMA does not believe, however, that resolution of the current crisis with rural doctors or the problems for the medical profession with the TPA shows any signs of being achieved without a fundamental change in the modus operandi of the ACCC and changes to the TPA.

In conclusion, I would like to emphasise again that the AMA is not seeking exemption from the TPA but the Association believes that there is a very strong case for some processes to be put in place that will allow doctors to work as a team, unless there is a very clear primary anti-competitive intent, and that protocols should be established and penalties revised to make the process much more practical and realistic in relation to the activities of medical professionals.

Finally, the AMA requests the Review to recommend appropriate changes to the TPA in order to help address the medical indemnity crisis.

The Review may be aware that the Commonwealth and State governments are currently developing a number of tort law reforms designed to make the medical indemnity process more streamlined and equitable for patients and more workable and affordable for doctors and health services.

As part of this process the Commonwealth has commissioned a Review of the Law of Negligence (The Ipp Review). One of the terms of reference of the Ipp Review relates to the interaction between the TPA and the common law principles applied in negligence and this issue is dealt with in detail in chapter 5 of the First Report of the Ipp Review (August 2002). Recommendations 17 go 22 of the Ipp Review recommend that the TPA should be amended to provide that the limitations of actions recommended by the Ipp Review apply to any claims brought under the TPA.

The AMA requests this Review to support the amendments to the TPA proposed by the Ipp Review.

Thank you for your time today.

^References:

^{(1) ACCC, Draft Determination, application for authorisation lodged by the Royal Australian College of General Practitioners, 20 June 2002 Para 5.21 page 22.}

^{(2) ACCC, Second Submission to the Inquiry into the Impact of Part iv of the Trade Practices Act 1974 on the Retention and Recruitment of Medical Practitioners in Rural and Regional Australia.}

^{(3) ACCC Determination, Application for Authorisation, Australian Medical Association Limited and South Australian Branch of the Australian Medical Association Incorporated in relation to Fee for Service Agreement in rural South Australian public hospitals 31 July 1998.}

CONTACT: John Flannery (02) 6270 5477 / (0419) 494 761

Sarah Crichton (02) 6270 5472 / (0419) 440 076