NIB (ASX:NHF) share price lower despite ACCC authorisation

The ACCC has approved NIB's plans, with conditions…

| More on:
A healthcare worker wearing a white coat holds his fingers to his mouth looking worried as healthcare stocks like Cochlear crash today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The NIB Holdings Limited (ASX: NHF) share price is trading lower today despite a potentially positive announcement.

In morning trade, the private health insurer's shares are down 1.5% to $6.64.

What did NIB announce?

This morning the Australian Competition and Consumer Commission (ACCC) revealed that it would authorise Honeysuckle Health and NIB to form and operate a health services buying group.

However, the competition watchdog's authorisation comes with conditions.

The release explains that the ACCC has granted authorisation with a condition that major insurers Medibank Private Ltd (ASX: MPL), Bupa, HCF, and HBF in Western Australia are not allowed to join the buying group.

In addition, the ACCC has only granted authorisation for five years, rather than the 10 years sought by Honeysuckle Health and NIB. This is to facilitate a review of the effects of the authorisation at an earlier time, if reauthorisation is sought.

The buying group intends to collectively negotiate and manage contracts with healthcare providers, including medical practitioners and hospitals, on behalf of NIB and other private health insurers and other healthcare payers who join the group.

What did the ACCC say?

ACCC Commissioner Stephen Ridgeway revealed that the regulator was hopeful that the buying group would benefit consumers.

He commented: "The arrangement is likely to have a public benefit by increasing competition between health services buying groups. We expect this is likely to result in better service and pricing provided by buying groups to smaller private health insurers, who will then be in a better position to provide reduced premiums and improved services to consumers,"

"If the buying group expands to more of the smaller insurers, we consider that Honeysuckle Health's Broad Clinical Partners Program is likely to help reduce uncertainty for more consumers about out of pocket expenses for certain types of procedures. It is also likely to provide more consumers with greater access to medical procedures which attract no out of pocket expenses," Mr Ridgeway added.

Though, the Commissioner revealed that he does have some concerns.

He explained: "However we were concerned about the potential effect on competition if the buying group involving Honeysuckle Health and nib became too large and gained too much bargaining power, and have accordingly imposed a condition that excludes the participation of other major health insurers. These insurers represent around 70 per cent of the market in most states and territories."

The ACCC also revealed that it considered concerns that it could lead to a US-style managed care. However, it dismissed these concerns after an extensive investigation.

The NIB share price is up over 10% in 2021.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Share Fallers

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Qantas, Resimac, Tyro, and Soul Patts shares are falling today

These shares are having a tough session today. But why?

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why Betr, Evolution, NIB, and West African Resources shares are falling today

These shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Elders, IDP Education, Life360, and Pilbara Minerals shares are falling today

Let's see why investors are selling these shares.

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Share Fallers

The 5 worst performing ASX 200 shares in May unmasked

These five ASX 200 shares got smashed in May. But why?

Read more »

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why Brazilian Rare Earths, Mineral Resources, Pilbara Minerals, and Syrah shares are falling

Why are these shares starting the week in the red?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Brainchip, Findi, Lottery Corp, and REA shares are falling today

These shares are ending the week in the red. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Black Cat, Boss Energy, and Soul Patts shares are falling today

These shares are falling on Thursday. Let's find out why.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Fisher & Paykel Healthcare, IPD, and Predictive Discovery shares are falling today

These shares are having a tough time on hump day. But why?

Read more »