The Competition Tribunal has approved the merger of private health-care group Netcare and mental health-care provider Akeso Clinics, subject to conditions relating to pricing and divestment by Netcare of its Rand and Bell Street hospitals.
Akeso has 811 beds in 12 facilities located in areas including Cape Town, George, Johannesburg, Pretoria, Nelspruit, uMhlanga and Pietermaritzburg.
Netcare will make use of existing resources to fund the R1.3 billion acquisition.
The Competition Commission initially recommended to the Tribunal that the merger be prohibited. The commission said the merger would result in a significant combined
market share in the provision of mental health-care services in a local market in Gauteng, with the merged entity likely to exercise market power.
In response to questions raised by the tribunal, the merging parties tendered further conditions to the merger, which the commission accepted would adequately address the concerns raised.
The commission then reversed its recommendation from prohibition to approval subject to conditions.
In terms of these conditions:
Netcare must maintain the base tariff currently implemented at Akeso facilities, as agreed to between Akeso and various medical aid schemes.
Netcare must not seek to alter the tariff classifications used at Akeso facilities for any existing treatment modalities.
Netcare must honour Akeso’s existing contractual agreements with medical aid schemes with regard to alternative reimbursement models and the post-transaction annual tariff increases for fee-for-service reimbursement.
Netcare must also dispose of Rand Hospital and Bell Street Hospital, which both have psychiatric health beds, to a purchaser which is able to prove to the commission it has the requisite resources and incentive to develop the hospitals as viable and active competitive forces, in competition with Netcare and other competitors.
The tribunal said it would give its reasons for its decision in due course.
Netcare chief executive Dr Richard Friedland assured staff, doctors and patients that Netcare Rand and Netcare Bell Street hospitals would continue to function as normal for the foreseeable future and that a process to dispose of the facilities would commence.
“We are engaging with our staff at Netcare Rand and Netcare Bell Street hospitals and encourage them to remain fully focused on delivering quality patient care and excellent service,” he said.
Friedland said Akeso Clinics co-founder and managing director Allan Sweidan would continue to manage the business within Netcare.
Sweidan said the acquisition by Netcare would enable an additional investment in what was already a successful model for the delivery of
mental health care.