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Spin doctors appointed to help sell Medibank sale study

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The Federal Government has engaged a PR company to advise it on how to present the findings of the forthcoming scoping study on the proposed sale of Medibank Private.

Information released by Government agency AusTender on 6 February shows that the PR agency Newgate Communications has been engaged on a six-month $211,750 contract to “assist with the scoping study into the sale of Medibank Private Limited”.

Shadow Health Minister Catherine King said the appointment showed the Government had pre-empted the findings of the scoping study and had already made up its mind to sell the insurer, which is the nation’s largest health fund.

Last November investment bank Lazard was appointed to undertake a study on how well prepared Medibank was for privatisation, and to advise on best method and timing of sale to maximise proceeds, with estimates the fund could fetch around $4 billion.

It is due to report its findings by the end of the month.

When announcing Lazard’s appointment, Finance Minister Mathias Cormann was at pains to stress that the Government had “not made any decisions yet regarding the timing and structure of any sale”.

But Ms King said the Newgate contract showed the Government was determined to push ahead with the privatisation without demonstrating how the sale would benefit consumers.

“At a time when thousands of Australian workers are losing their jobs, the Abbott Government is demonstrating its true priorities by engaging specialist skills at $2000 per day to talk up the sale of public assets,” she said. “It is the role of the Government to demonstrate why the sale of Medibank is in the public interest, not a team of external communication specialists paid $2000 per day.”

The AMA has voiced concerns about the potential for Medibank to be sold, warning it could result in higher insurance premiums for consumers, particularly if it resulted in less competition in the marketplace or if the acquisition was funded by large amounts of debt, forcing the new owners to hike premiums in order to meet repayments.

“We don’t want a sales pitch; we want information,” AMA President Dr Steve Hambleton told the Sydney Morning Herald. “The scoping study should evaluate the impact on a competitive market and the potential for premiums to be affected. If [the Government] is going to privatise and premiums go up, we’re not going to be happy because it’s in everyone’s interests to have as many people covered as possible.”

But Senator Cormann talked down such concerns.

“[Medibank Private] is a commercial business operating in a competitive, highly regulated environment,” he told the Senate. “A highly competitive private health insurance market without the involvement of the government as a market participant will be good news for people across Australia that are privately insured.”

The Government has been accused of acting to increase the attractiveness of Medibank to potential buyers by raising the prospect it could be appointed to help manage the National Disability Insurance Scheme, and by approving an average 6.2 per cent jump in health insurance premiums across the industry from 1 April – the biggest increase in almost 10 years.

Adrian Rollins