The planned merger of two large radiology groups, Integral Diagnostics and Capitol Health, has added fuel to the controversy over the future shape of the Australian corporate sector.
The Australian Competition and Consumer Commission (ACCC) has still not approved the merger, which was announced in June, and some observers have concerns about the impact of the deal on patient care.
Also, health economist Stephen Duckett, honorary enterprise professor at the University of Melbourne and former Health Program Director at the Grattan Institute, has caused anxiety among executives in the corporate sector over his statements on reforming radiology and pathology.
"Despite the evolution of ownership and market structures, pathology and radiology services are still reimbursed by fees for each service (with complex rules about rebates when multiple tests are performed simultaneously)," he wrote in The Conversation on 28 January 2024. "But while both industries are expensive to set up and buy or lease equipment, the cost of processing an additional test or image is low and sometimes close to zero. This means Medicare pays pathology and radiology providers much more than the tests or images cost."
Significantly, the Federal Health Minister wants all radiology and pathology reports to be released instantly to the online accounts of patient-controlled electronic heath records. Failure to do so may lead to withholding Medicare payments (see https://www.health.gov.au/our-work/modernising-my-health-record-improved-sharing-of-pathology-and-diagnostic-imaging-information).
"These are interesting times for the corporate sector," a source told AuntMinnieEurope.com. "Fewer companies means fewer employers for radiologists."
Merger plan
Under the proposed merger between Integral Diagnostics and Capitol Health, Capitol shareholders would receive 0.12849 Integral shares per Capitol share. Following the proposed merger, Integral shareholders would own approximately 63% of the combined group.
Integral, which owns 67 clinics, and Capitol agreed to work together to complete confirmatory due diligence and finalize and enter into a binding agreement to implement the merger during a four-week period of mutual exclusivity. The implementation deed is subject to conditions and regulatory approvals, including Capitol shareholder approval.
Capitol’s board of directors has confirmed that subject to completion of confirmatory due diligence and entry into the implementation deed, each director intends to recommend to Capitol shareholders to vote in support of the deal.
On 25 November 2024, the ACCC announced that the former proposed decision date (28 November) was now to be delayed "to allow the ACCC to consider a proposed divestiture remedy." The commission said it will reveal a new proposed decision date in due course.
For the ACC review of the merger posted on 5 September 2024, go to https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews-register/integral-diagnostics-capitol-health
