Australia’s Private Health Industry has caught a cold

Australia’s Private Health Industry has caught a cold

AMA (WA) President

Thursday 17 March 2016

Regular readers of the business pages of newspapers recently might have come across the smiling face of Mr George Savvides, CEO of Medibank Private.


The insurance company is one of the darlings of a currently troubled market with profits way ahead of predictions. I have no doubt that those of you who availed themselves of a piece of the float would be delighted.


It was only a few months ago that Medibank Private used its substantial buying power to bully the relatively small Calvary Health Care into accepting its terms. St John of God Health Care has announced that it has signed a similar contract. Ramsay Health Care has indicated its desire to fight on behalf of some of the smaller players in the market.


Against this background, we have seen the proliferation of a whole series of ‘junk’ policies. WA Health Minister Dr Kim Hames has stated his desire to see cash-strapped public hospitals in our state get something like the levels of revenue enjoyed by his ministerial colleague in New South Wales.


Of course, the reason why public hospitals in Sydney enjoy double the revenue of those in WA is because they do not have anything like the wonderful private hospital infrastructure we do here, predominantly those owned by SJGHC and Ramsay. While this might be good for the business manager of the public hospital, it does nothing to improve access to health services, and potentially reduces the access of public patients who have no choice.


Unfortunately many insured patients have policies that are hardly worth the paper they are written on. You might get TV rental and a toothbrush, but this is not the kind of policy that supports an efficient health system with a healthy mix of public and private care. It hurts universality. Policies which exclude your newborn baby from care in the Special Care Nursery if the problem affects the cardiac or respiratory system are as ludicrous as they are inhumane. Policies that pay the surgeon a pittance above the MBS and are designed to do nothing but help the policyholder escape an income tax penalty do not improve the quality of healthcare that the community enjoys.


I recently wrote an opinion piece for The West Australian where I encouraged readers to think twice before accepting the latest PHI deal offered to them. Significant proportions of private health insurance (PHI) policy holders are being dudded. The industry’s own data shows that PHI is not a privilege reserved for the wealthy. Many people on low and fixed incomes appropriately prioritise their health above other spending and take out insurance. They are entitled to better.


The Commonwealth Department of Health needs to develop the capability to help patients make choices. It is their job to legislate against junk products. As a profession, it is our responsibility to try to reward those patients who have taken out insurance. In my view, gaps upwards of $10,000 to $15,000 for an afternoon’s work are unprofessional, unethical and often vulgar.


Australia’s public/private mix is a big part of our world-class health system. It would benefit few to emulate US-style managed care. I have had enough experience of the NHS in the UK to see the failings of a system that has no competitor to shake it up.


The value proposition of private medicine in Australia is either better care, quicker care or both. Otherwise why would you potentially pay gaps in addition to the costs of private pharmacy, private physiotherapy, a private health insurance levy and income tax? A private system that is better and more innovative will continually lift the quality of the public system which will maintain an equal or near equal standard of care, because of the instruments of our democracy.


The current system of private medicine has caught a cold. I can only hope that the Mutuals behave better than the for-profits. If the private system fails patients, we potentially lose our unique mix, and diminish access to the public hospital system for the neediest. We all have to be part of the solution.

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