Joint Media Release

41/2008
9 December 2008

Medibank Private and Health Services Australia (HSA) merger

The Rudd Government announced today that Medibank Private Limited (Medibank) and Health Services Australia (HSA) will be merged into a combined entity in a bid to develop a national health prevention and management capability including private health insurers and health service providers.

Lindsay Tanner, Minister for Finance and Deregulation said: “This move will place Medibank in a better position to support the Australian Government’s preventative health agenda while enhancing the value of these two businesses for the taxpayers.”

“As the Shareholder Minister of Medibank and joint Shareholder Minister of HSA with Minister Ludwig it is appropriate that we ask our Boards to look into ways to maximise shareholder value and meet the Government’s policy objectives, which ultimately provide value to taxpayers.”

HSA’s national medical workforce combined with Medibank’s expertise in managing the health needs of its private health insurance policy holders will enable the development of health prevention and management programs to service its existing customers and new customers in the workplace and general community.

Lindsay Tanner said: “The merger has commercial merit and would create a national capability to provide health insurance and management and is strongly supported by Medibank. Medibank and HSA will have greater opportunities to diversify into health related sectors such as health prevention and management, creating potential value for both entities.”

Joe Ludwig said: “The HSA Board has signalled its intention to enter the market for health prevention and management. A merger between these entities is one of the steps the Australian Government will take to achieve health reform in the private sector.”

Prior to the merger, HSA will return $27.0 million of its retained earnings to the Commonwealth, which accounts for approximately three years worth of HSA’s future dividend stream that will no longer flow to the Commonwealth.

Joe Ludwig said: “The merger will not alter the way HSA conducts its business and it will continue to grow and develop. Neither HSA’s clients or staff will be disadvantaged by the merger.”

Discussions have been held with the Australian Competition and Consumer Commission and the merger is subject to its final approval.

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