Tribunal prohibits proposed Mediclinic hospital merger over fear healthcare prices would go up

The Competition Tribunal said on Wednesday that it has prohibited a merger between Mediclinic and Matlosana Medical Health Services (MMHS) in the North West province.

In terms of the proposed transaction Mediclinic would have acquired a majority interest in MMHS.

MMHS owns and operates, among others, two multi-disciplinary private hospitals in Klerksdorp.

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"Mediclinic, one of the largest hospital groups in South Africa, owns and operates, inter alia, Mediclinic Potchefstroom which is located about 50km from the target hospitals," the Tribunal said in a statement.

"Mediclinic Potchefstroom, Wilmed Park and Sunningdale all provide inpatient private hospital services in the Klerksdorp and Potchefstroom area."

In June 2017, the Competition Commission, after investigating the matter, recommended to the Tribunal that the proposed merger should be prohibited on grounds that the joining together of Mediclinic Potchefstroom, Wilmed Park and Sunningdale hospitals would likely result in a significant increase in healthcare prices in the region.

In addition, the Commission argued that the incentive to improve on non-price factors, such as patient experience and quality healthcare, would likely diminish after the merger. The Commission also argued that the acquisition would confer relatively greater bargaining power to Mediclinic in terms of medical schemes.

Mediclinic and MMHS denied that the proposed merger would have any negative effects on competition and argued that it would lead to a number of pro-competitive efficiencies. These included improved costs of procurement, increased clinical quality and patient experience at the target hospitals.

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The Tribunal said in the statement that it engaged extensively with the merging parties on whether a potential remedy could be found to address the Commission's competition concerns.

"The merging parties' proposed remedies were canvassed with a number of medical aids that gave valuable inputs to the Tribunal. However, despite different proposed remedies put up by the merging parties over several months, no appropriate remedy was tendered that would cure the substantial lessening of competition that would arise as a result of the proposed transaction," said the Tribunal.

The Tribunal has, therefore, prohibited the proposed merger.

According to the Tribunal, full reasons for prohibiting the transaction will be issued in due course.