Netherlands: Health Care Concentrations: ACM Keeps Finger On Pulse?

The health care sector is likely to stay on the ACM's radar. Not only has the application of the separate notification thresholds for concentrations in the health care sector been extended by another five years, the number of hospitals intending to merge is also rising: the ACM expects a minimum of seven hospital mergers this year and has designated the health care sector as one of its priorities. The bargaining power of health insurers appears to be a significant factor in the ACM's merger assessment and recently resulted in a rather unusual solution in the clearance of three hospital mergers. The minister has indicated that the increase in scale requires a "concentration-effects" test by the Dutch Health Care Authority, in addition to concentration control, as well as an amendment of the policy rules on concentrations between health care providers so as to include concentrations between health insurers.

The Minister of Economic Affairs announced in October last year that the lower merger notification thresholds for health care mergers, scheduled to be repealed on 1 January 2013, will continue to apply for another five years. Many health care concentrations fall outside the "regular" notification thresholds due to the health care companies' low turnovers. These concentrations may still, however, have a negative impact on competition due to the often narrow scope of the relevant geographic markets involved. This is particularly detrimental to the health care sector as it is still in transition to a demand-driven system. The lower notification thresholds are aimed at resolving this problem by bringing more health care concentrations under the ACM's scrutiny through notification. According to the Minister, the NMa (now: ACM)1 has reviewed twice as many concentrations in the last four years as it would have done without the lower health care notification thresholds. A number of these concentrations had (potential) anti-competitive effects, thus proving the effectiveness of the lower thresholds.

Health care organisations will therefore still need to notify the ACM of concentrations if in the previous calendar year:

  1. at least two of the companies concerned each generated a turnover of more than EUR 5.5 million by providing healthcare services, and
  2. the combined worldwide turnover of the companies concerned exceeded EUR 55 million, and
  3. at least two of the companies concerned each achieved a turnover in the Netherlands of at least EUR 10 million.

According to the Minister of Health, Welfare and Sport, however, health care mergers need to be subject to a stricter scrutiny than merger control alone. In order to safeguard the quality and continuity of health care, a "concentration-effects" test - to be performed by the Dutch Health Care Authority - should be introduced for intended health care concentrations prior to the ACM's merger control assessment. In addition, the policy rules on mergers between health care providers should be extended to include concentrations between health care insurers in order to oblige the ACM to extensively substantiate its market delimitation.

The more stringent scrutiny of health care mergers through additional tests and lower merger thresholds seems to be at odds with the ACM's clearance of three hospital mergers in November last year on the basis of a self-imposed annual price ceiling instead of an official remedy. Due to the price ceiling's voluntary nature, the ACM has no legal basis for enforcing compliance, but intends to hold the hospitals publicly accountable for any quality decrease or excessive price increase resulting from the mergers. The ACM is, however, confident that the health insurers' bargaining power will guarantee the best possible price-quality ratio, thus leaving the price ceiling to act as a safety net only. Last year, the Dutch cabinet gave health insurers a leading role in the healthcare system by providing them with more opportunities and incentives to buy at competitive prices. According to Henk Don, member of the ACM Board, the health insurers "have already demonstrated that they are able to influence the market by focusing on health care quality. The insured thus benefit directly".

Footnote

1. The NMa, the Netherlands Consumer Authority and the Dutch Independent Post and Telecommunications Authority (OPTA) joined forces on 1 April 2013, creating a new regulator: the Netherlands Authority for Consumers and Markets (ACM).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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