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17 Mar 2017

ASSOCIATE PROFESSOR JULIAN RAIT

The Council of Private Specialist Practice (CPSP) is the most recent of the Federal AMA’s Councils – created in 2016 to recognise and respond to the key challenges that face private practitioners within the Australian health system. Our Terms of Reference provide for us to identify issues relating to private specialist medical practice and make recommendations to Federal Council, as well as develop and draft policy or position papers on key topics.

Private practices are an essential component of a sustainable Australian health system. The private system alleviates much of the demand on the public system – providing nearly 70 per cent of all elective surgical admissions.

And as with all other advanced economies, Australia requires both a strong private and public health system to meet the challenges that lie ahead – including an ageing population, rising health care costs and increasingly complex care.

The structure and format of private specialist practice is also changing – with solo and group practices competing with corporate entities.

Two big “funders” of private health, the Commonwealth Government via the MBS, and the Private Health Insurers, continue to grapple with how best to fund the system in an era of escalating cost pressures. In response, they are seeking to drive down their costs, especially by curbing the growth in their outlays. This creates significant pressure on the private medical practitioner who is trying to deliver a high quality and economically viable service. Consequently, patients are incurring escalating out-of-pocket costs, prompting many to question the value of their private health insurance. 

Private health is an area currently under extensive review, and subject to increasing scrutiny. We’ve seen the previous Health Minister announce the Private Health Ministerial Advisory Committee (PHMAC), and under this committee, a further number of working groups.

CPSP has been engaged, and supportive of the AMA’s work in relation to PHMAC’s deliberations– which clearly indicate that our Federal Government is considering various options in an attempt to make private health insurance a more attractive proposition for Australians. This includes considering clear categories of health insurance, reviewing of hospital contracting arrangements (and especially second tier funding provisions), while making polices easier to understand and removing impediments to policy portability for customers.

The reality is that a great deal of discussion will arise from the usual hot button media issues – with constraints on out-of-pocket costs and online rating sites being hailed as the ‘answer’ to make private health insurance “more attractive”. Meanwhile, health insurers continue to record extraordinary profits and breathtaking returns on equity. For example, news outlets are reporting NIB recently received approval to lift its premiums by 4.48 per cent after announcing a 65 per cent increase in net profit (compared to the prior year) and scoring a return on equity of 32 per cent – with the latter result being double that of the Commonwealth Bank.

The CPSP has, and will continue to, be firm advocates for the profession on these issues. A little known fact among the broader population is that medical fees only account for 16 per cent of private health insurance benefits with 85.6 per cent of medical services having no gap, and 92.3 per cent of services having nil or a known gap charge[1]. So you might agree that the gap fees of medical practitioners are not the leading cause of the PHI affordability challenge.

However, despite these modest figures, there is a perception that out-of-pocket costs are not being actively managed by the profession – a view apparently held by governments, consumers and mass media. The profession can no longer ignore the issue around significant or unexpected out-of-pocket costs without it being seen as a failure of the profession to self-regulate appropriately, and become the scapegoat for all the affordability problems of the system. Insurers and consumer groups have commenced research on the quantum and frequency patients experience these costs.

Moving beyond private health insurance reforms, we’ve also seen the Federal Government embark on changes to the medical indemnity insurance subsidy schemes. Many doctors would be aware that last year the Government included a funding cut of $36 million to one of these long-standing subsidies that underpin medical indemnity insurance in the Mid-Year Economic and Fiscal Outlook (MYEFO). Furthermore, they have announced a review into all the Government’s indemnity support schemes – signalling that strong consideration is being given to future cuts to these important Government subsidies for the profession.

To that end, CPSP will be closely monitoring any proposed changes and the AMA will be participating in the forthcoming review.

The AMA has already written to the Government, reminding them of the truly disruptive crisis that brought about the current support schemes, and warning that any changes made without effective consultation with the profession, and their indemnity insurers, could lead to significant unintended consequences. CPSP has also discussed the importance of universal coverage arrangements (whereby no registered doctor can be denied insurance) – agreeing that any changes here need to be carefully considered.

Finally, there continues to be a number of reviews underway which may have impacts upon private practice. The Senate Community Affairs Committee has an inquiry into Prosthesis List Framework, the Australian Competition and Consumer Commission is calling for submissions on their annual report to the Senate on Private Health Insurance, and of course the MBS Review Taskforce continues. CPSP will be navigating all these reviews, ensuring that the private practitioner’s voice continues to be well placed to advise the AMA on the implications of any changes.

The coming weeks will also see the release of the AMA’s Private Health Insurance Report Card – a good chance to shine a light on the key issues facing private health, so please continue to be attentive to our initiatives.

  

 



[1] Australian Prudential Regulation Authority (APRA). Private Health Insurance Quarterly Statistics. December 2016 (Released 14 February 2017). 


Published: 17 Mar 2017