Southern Cross denies threat to competition

Auckland has 53 private medical facilities owned by 24 operators, says Southern Cross, which wants to buy a private day-stay centre.

In its full application to the Commerce Commission for clearance to buy the Auckland Surgical Centre, Southern Cross Health Trust pointed to the scope and depth of the city's private medical market, which it said was extensive. Buying the new centre would not limit competition in the private health sector.

"The merged entity could not have the power to sustainably increase prices and/or reduce quality of its services relative to what would have occurred in the absence of the acquisition," the trust's application said.

Collusion between hospital providers would be easily detected by patients, surgeons, insurance companies and the Accident Compensation Corporation. The trust said district health boards would closely monitor any potentially collusive behaviour.

Its application was posted on the commission's website this week under the mergers and acquisitions link.

The commission is due to issue its decision on January 28, a day after it releases investigations into two other deals: Gallagher Holdings' application to buy Tru-Test Corp and a fishing quota deal between Sanford and Simunovich Fisheries.

But because the application was made in the holiday season, the commission could extend its investigation and delay the release of the Southern Cross decision.

Private Auckland medical operators included in the Southern Cross submission included:

* Its main Auckland rival, MercyAscot, with hospitals in Ellerslie and Epsom. If the application was allowed, MercyAscot would remain "a very strong competitor" and by far the largest competitor in Auckland.

* The Northern Clinic Medical and Surgical Centre in Glenfield, with two operating theatres and a wide range of procedures for in-patients and day-stay patients.

* Quay Park Day Surgery Centre on the fringe of the CBD, with two theatres, urology, oral and maxillofacial and plastic surgery.

* The Navy, which offers its Devonport hospital facility to other military services and private elective patients. It has two theatres and is contracted by the Waitemata District Health Board to provide procedures.

The trust also listed Shore Surgery, the Eye Institute, Laparoscopy Auckland, Manukau Health Trust, St Marks Eye Hospital and other operators in Auckland.

It said other planned private medical centres would also compete with Southern Cross.

Auckland would soon get a large new private centre when the Apollo Hospital at Albany was finished.

In putting its case for the purchase, the trust also pointed to the commission's clearance of a Southern Cross subsidiary's purchase last year.

On November 11, Southern Cross Oxford Hospital - a 50 per cent subsidiary of Southern Cross Health Trust - was given approval to buy the assets of the Oxford Clinic in Christchurch.

The trust also cited MercyAscot's ability to expand and the possibility of other new private hospitals to open as further competition.