Study begins on sale of Medibank
Tender documents show the scoping study, the first step in the privatisation process, will consider whether the government should proceed with an initial public offering or a trade sale, which would require legislation to remove an ownership cap.
A sale of Medibank must "contribute to an efficient, competitive and viable private health insurance industry" while maintaining service and quality levels in country Australia, the documents say.
It must also ensure Medibank's 4800-plus employees are treated in a fair manner, reduce post-sale risk and liabilities to the Commonwealth, and maximise net proceeds, according to the Department of Finance documents.
A trade sale would require the Medibank Private Sales Act to be amended to remove a 15 per cent ownership limit. If the government chooses to list Medibank on the sharemarket, the business adviser is asked to review advice from the selling syndicate regarding offers to Medibank's 3.8 million members.
A sale of Medibank has been considered controversial given Medibank's capital base has almost entirely been built on taxpayer contributions.
Medibank has a 29 per cent share in the health insurance market, with more than 120 branches. Almost a third - or more than 1500 - of its employees are doctors, nurses, counsellors, dentists and other health providers.
The Australian Medical Association has warned that a sale could increase health insurance premiums by decreasing competition. But Health Minister Peter Dutton said recently that a sale would put "some downward pressure on premiums".
The scoping study, which will report to the government before the 2014 budget, will provide recommendations on sale method, timing, regulatory issues, readiness and estimated proceeds.
The successful bidder will not be able to participate in any initial public offering. The department stressed that a sale was not assured, and there could be a gap of at least 12 months between the scoping study and a sale - meaning it will proceed in 2015. Mark Fitzgibbon, the chief executive of the country's only listed health insurance NIB, has tipped Medibank Private could emerge as a takeover target if privatised.
Frequently Asked Questions about this Article…
The federal government has initiated the privatisation process for Medibank Private by calling for tenders to advise on the potential sale structure. This includes considering an initial public offering or a trade sale.
The federal government has initiated the privatisation process for Medibank Private by calling for tenders to advise on the potential sale structure. This includes considering an initial public offering or a trade sale.
The sale of Medibank is intended to contribute to an efficient, competitive, and viable private health insurance industry while maintaining service and quality levels, especially in rural areas.
The sale of Medibank is expected to contribute to an efficient, competitive, and viable private health insurance industry while maintaining service and quality levels, especially in rural areas.
The scoping study will explore whether the government should proceed with an initial public offering or a trade sale, which would require legislative changes to remove an ownership cap.
The scoping study will explore whether the government should proceed with an initial public offering or a trade sale, which would require legislative changes to remove the ownership cap.
The privatisation process aims to ensure that Medibank's 4,800-plus employees are treated fairly throughout the sale.
The Australian Medical Association has expressed concerns that privatisation could lead to increased health insurance premiums by reducing competition. However, the Health Minister believes it could put downward pressure on premiums.
The Australian Medical Association has expressed concerns that the sale could increase health insurance premiums by reducing competition, although the Health Minister believes it could put downward pressure on premiums.
The scoping study will provide recommendations on the sale method, timing, regulatory issues, readiness, and estimated proceeds. It will report to the government before the 2014 budget.
The scoping study will report to the government before the 2014 budget, with recommendations on the sale method, timing, and other factors. However, a sale is not assured and could take place in 2015.
The sale process aims to ensure that Medibank's 4,800-plus employees are treated fairly, with considerations to reduce post-sale risks and liabilities to the Commonwealth.
Medibank holds a 29% share in the health insurance market, with over 120 branches and a workforce that includes more than 1,500 health professionals.
Medibank holds a 29% share in the health insurance market, making it a significant player with over 120 branches and a large workforce, including many healthcare professionals.
The sale aims to maximize net proceeds while reducing post-sale risks and liabilities to the Commonwealth.
While a sale is not guaranteed, there could be a gap of at least 12 months between the scoping study and the actual sale, suggesting it might proceed in 2015.
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