NIB (ASX:NHF) share price higher on ACCC update

The NIB Holdings Limited (ASX:NHF) share price is pushing higher today after an update out of the ACCC…

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The NIB Holdings Limited (ASX: NHF) share price is pushing higher on Friday following the release of an update.

At the time of writing, the private health insurer’s shares are up almost 1% to $6.10.

What was announced?

This morning the Australian Competition and Consumer Commission (ACCC) announced that it is planning to authorise Honeysuckle Health and NIB to form and operate a health services buying group for five years.

However, the proposed authorisation will include a condition limiting the size of the buying group, and the ACCC is now seeking submissions on its draft determination.

What are NIB’s plans?

The Honeysuckle Health and NIB buying group intends to collectively negotiate and manage contracts with healthcare providers on behalf of private health insurers and other healthcare payers who join the group.

The ACCC considers the buying group is likely to result in public benefits by providing more choice for insurers and other healthcare payers, increased competition between buying groups, and giving participants more input into contracts and better information.

ACCC Commissioner Stephen Ridgeway said: “Our preliminary view is that authorising nib and Honeysuckle Health to form a buying group delivers public benefits that outweigh any potential adverse effects on competition,”

“Increased competition between buying groups is likely to incentivise the buying groups to provide better value to health insurers, which may reduce upward pressure on premiums for their members.”

Though, the regulator doesn’t want the buying group to become too powerful.

Mr Ridgeway explained: ”Although we intend to authorise this arrangement, we would be concerned about the potential effect on competition if the group was to become too large.”

“Many interested parties, including medical specialists, made submissions opposing the authorisation, and this led nib and Honeysuckle to make changes to limit the size of the group. The ACCC’s preliminary view is that these changes and the condition limiting participation in the buying group are sufficient to address these concerns,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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