Dr Kerryn Phelps, AMA President, to the Medical Indemnity Summit, Parliament House, Canberra

About ten days ago the AMA held a forum to discuss a range of issues related to the renegotiation of the Commonwealth State Healthcare Agreement.

However, today we are facing a crisis for Australia's health system which is impossible to overestimate.

Doctors and patients stand to lose heavily if changes are not implemented quickly and the impact will quickly flow on to governments, hospitals and other stakeholders.

I would like to congratulate the Prime Minister and the Ministers for, firstly, tackling the UMP issue; secondly, holding yesterday's medico-legal meeting; and, thirdly, for organising today's medical indemnity summit.

Thanks also go to the many officials who have been, and are, working so hard to develop solutions to this crisis.

The AMA has been working on medical indemnity for years as we have watched the erosion of obstetrics, GP procedural work and specialist services, particularly in rural areas.

A recent survey of all the Fellows of the Royal Australian and New Zealand College of Obstetricians and Gynaecologists shows that most of today's obstetricians plan to quit within five to ten years, largely because of the threat of being sued and the rapid escalation in the premiums. Also, it is becoming more and more difficult to attract new young doctors to the speciality of obstetrics.

Private obstetric services have already disappeared in many regional areas of Australia and are under threat nationwide.

We know that young people go into private health insurance because they want top obstetric treatment to be available during the years that they are having children. Why would a healthy young family take out private health insurance if they knew that private obstetrics would be unavailable or out of their reach financially?

The AMA has always recognised that, while medical indemnity poses a major problem for the profession, our patients also have rights and needs.

Negligent doctors are extremely rare but mistakes and accidents do happen.

Many less than satisfactory outcomes can be resolved by open and frank discussion with the patients.

People understand that the human body is hugely complex and no outcome can be predicted with 100% accuracy.

However, when someone's future life is seriously affected, there must be recourse, and compensation must be available.

The AMA has consulted widely on these issues including with virtually all of the groups represented here today.

Many of you have attended AMA meetings and participated in teleconferences on medical indemnity.

I believe, therefore, that we have already reached a broad consensus so that today can be about developing the solutions along the lines that we already know are the way to go.

The issues and arguments have already been distilled to their essentials and we do not need to go back over that ground again.

I believe there will be little dispute to a Heads of Agreement along the following lines:

1 The current system is inequitable for both patients and doctors; it is inordinately lengthy, adversarial, costly and unpredictable. It just does not provide consistent fair outcomes.

2 Medical indemnity premiums have already, or will soon, force many doctors to cease a range of procedures and this will markedly affect the availability of medical services.

3 The medical defence organisations (MDOs) have become the insurers of last resort. Doctors have no where else to go unless the system is changed dramatically.

4 The MDO structure has many good features but it has become financially unsustainable unless current trends in the number and size of claims can be significantly curbed.

5 More financial calls on doctors by the MDOs are not the answer. Many doctors are struggling to pay recent calls and if there is a prospect of future calls many more will give up the procedural work.

6 All of the key stakeholders will have to participate in the solution to this crisis and bear some of the costs. For example:

6.1 Doctors will have to keep on paying medical indemnity premiums, but at a manageable level.

6.2 Doctors will have to make further commitments to quality and safety programs to minimise the number of claims coming forward.

6.3 The MDOs will have to undertake management and commercial reform and meet prudential requirements for reserves and for disclosure.

6.4 The State Governments will need to significantly reform administrative and legal processes and address issues in relation to statute of limitations and the activities of contingency fee lawyers.

6.5 The private health insurers will need to make sure that patient reimbursement under their various schemes reflects the cost of medical indemnity, particularly in the high-risk groups.

6.6 The Commonwealth will need to maintain short to medium term support to the MDOs, as necessary, to keep them operating effectively in the current framework until reforms can be put in place.

6.7 The Commonwealth will need to review Medicare rebates and other schemes such as the Department of Veterans' Affairs' programs to ensure that rebates and reimbursements reflect current costs.

6.8 The Commonwealth Government must introduce a national community funded scheme for the ongoing care and rehabilitation of seriously injured patients.

Today's summit will no doubt discuss the evidence for these reforms and the details of how to implement them but I believe that there will be very little argument that this is broadly the situation and what we have to do to address it.

Today's focus is quite rightly about taking the current system and making it affordable but we must not forget other aspects to medical indemnity, such as:

The current system encourages defensive medicine, in other words doctors ordering every test under the sun; no doubt this is contributing to the increase in the costs of the system.

The Trade Practices Act must be reformed so that doctors can work together to share the workload and agree who will carry out certain procedures. The current persecution by the ACCC of obstetricians in Rockhampton for what amounted to getting together and setting up a roster is an example of the situation that worsens risks and reduces services.

The issues surrounding safe hours and work flexibility must be tackled. Doctors working excessive periods in hospitals are general risk factors that we know contribute to less than optimal patient care and must be addressed.

Finally, timing is of the essence, the prominence of this issue and the prospect of reforms is attracting a spate of claims which has, in conjunction with the collapse of HIH, the September 11 catastrophe and the escalation of court awards, brought the whole issue forward. The directors of the MDOs must, quite rightly, look to the viability of their organisations and their fiduciary duties.

The AMA's position is that we have until 30 June to achieve a clear commitment from all stakeholders and to have processes in place, such as draft legislation, to achieve the reforms we are all committed to.

I look forward to working with you today to achieve exactly that outcome.

CONTACT: John Flannery (02) 6270 5477 / (0419) 494 761

Sarah Crichton (02) 6270 5472 / (0419) 440 076