Third Line Forcing: Impact for Medical Practitioners
The ACCC is clamping down on anti-competitive behaviour.
In 2017, the ACCC made it clear that the Health sector is not immune to prosecution for anti-competitive and unfair behaviour, with several companies and health practitioners prosecuted for third line forcing behaviour. While healthcare would be considered highly altruistic - private health care practitioners are private businesses, and as such, like any business in operation, are subject to the Competition and Consumer Act 2010 (the “Act”) and the Trade Practices Act 1974 (“TPA”).
What exactly is third line forcing?
Third line forcing, otherwise known as ‘exclusive dealing’ occurs when a supplier forces a buyer or subscriber to use the services of another third-party supplier. Third line forcing is most commonly associated with franchises, but can be seen across a range of industries and sectors, including healthcare. Examples in the healthcare industry include referrals to other service providers such as radiology, pathology and specialist services such as anesthesiologists.
How does this impact the healthcare industry?
It is common practice within the medical fraternity to refer patients on. And the clamping down by the ACCC has the potential to impact those practising in vertically integrated healthcare organisations, that is, where several primary services, such as pathologists, chemists and general practitioners are located under one roof.
Recent legislation changes mean third line forcing is no longer prohibited per se.
The good news is that there are some new changes to the legislation prohibiting exclusive dealing, or ‘third line forcing’. Following several recommendations of the Harper Review, third line forcing will no longer contravene the Act per se, but only when it “contravenes the Act for the purpose or likely effect of substantially lessening competition.” To determine whether the behaviour will have the effect of substantially lessening competition, consideration will be given to whether a refusal to supply service would restrict availability or whether patients are restricted in their ability to access a service.
Let's consider an example:
Let's say a general practitioner agrees to provide health services to a patient provided the patient seeks treatment from a specific specialist. Ostensibly, this would have contravened the Act prior to the recent changes. Following the amendments, however, this set of facts does not, of its own per se, give rise to a breach. If, however, our general practitioner was perhaps the only GP in a small regional town it could then be said that this arrangement substantially reduces patient access to services and therefore fails the competition test. The GP would be in breach of the Act.
What about medical referrals?
“Full line forcing” will also be subject to the new competition test, this may occur when a GP and specialist agree that a specialist won’t accept any new referrals from another source unless the GP’s patients are given priority. The practice of medical referrals under the anti-competitive legislation remains a question of balance between protecting the community from unfair practices and providing the best, most efficient health care services. One of the key issues for consideration by health practitioners when making referrals for other services will be informed patient consent. Patients are often unaware that they may choose their specialist, or see whatever imaging or pathologist they wish.
What Next?
While the new provisions are good news for private practitioners, regard should still be given to other anti-competitive behaviour and offences under the Act, such as restricting referrals to specific specialists or charging a common fee for provisions of services. If in doubt, always seek legal advice. Contact us and our lawyers at You Legal will be happy to assist you in whatever way we can.
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* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.