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15 Feb 2018




The AMA has always defended against US-style managed care encroaching into our health system.owever, we are now challenged by the emergence of new private insurer led and gap free, full maternity service suite pilot schemes. 

Of course, pilot programs are just that, but they can be the genesis from which new monopolies and controls can spring. The AMA can point to a history of attempts by some insurers to compromise universality of health care, through the pursuit of preferential access arrangements or efforts to undermine clinical autonomy (exampled in plastic surgery where insurers did not cover reconstruction costs for burns and cancer victims). The AMA understands managed care can have many guises – our continued vigilance is required. 

The establishment of any pilot scheme will require commercial relationships to be made at the doctor and clinic level – but the capacity for doctors to negotiate terms can be severely limited as a result of large insurers offering only pro forma contracts. We are all time poor, and at first glance the initial offer, or the administrative simplicity of the model may be attractive. But any doctor considering entering such a relationship might wish to consider the following before signing: 

  • Am I entitled to operate a dual practice model? That is, one business operating under the terms of the insurer contract and another separately operating in a free manner at the doctor’s discretion.
  • Is my clinical independence protected in writing both now and into the future in the contract, or does the potential exist for clinical independence to be compromised?
  • Is the contracted service mid-wife or specialist led? What liability are the signatories exposed to and will the arrangement offer any protections or potentially expose the signatory to more medico-legal risks?
  • Are there reasonable opportunities to exit the relationship if my circumstances change or the model does not operate as anticipated? What if there are penalties incurred if the doctor leaves the model, where will they go if they do leave, would there be a restraint clause limiting future practice location after leaving, would there be time frame restrictions on hospital admitting practices?
  • Do the amounts paid index regularly over time to keep pace with ever rising clinical operating costs? Indexation is a must for signed contract inclusion but what indexation formula would apply? Is there a guarantee that any future contracts will be indexed or does the potential for only the first (or entry) contract mandate indexation (leaving the doctor alone to negotiate with the fund for ongoing indexation)?
  • Am I willing to forgo fee for service remuneration for fixed ‘block’ payments and all this entails, both for now and into the future? Remember, ending such a contract may mean it could become harder to slot into another model of funding afterwards.
  • Is the insurer’s set cost structure (via block payments) ensuring they have a vested interest in delivering the best clinical outcome? If costs rise for the insurer, is it more likely than not that the insurer will seek to undermine care rather than absorb costs in the interest of maintaining quality?
  • Am I assured patients maintain appropriate access to care based on their clinical need, have choice and continuity of treating practitioner? This includes pathology, imaging, anaesthetic, paediatric and other surgical assisting. If the insurers have these specialists contracted as well, will there remain opportunity to use alternative providers? Is the logical next step to create vertical integration (a tradition observable overseas) that would finally cement the managed care experience before actually deeming what services and treatments the funds will pay for?
  • Are there restrictive business rules imposed? (Forms of controls over the way you manage and run your business to ‘fit in’ with insurer processes or preferences.)

There is also the question of what happens into the future when the insurer seeks contract renewal after the medium/long term.  Once a relationship is formed, the power equation might shift to the insurer because the doctor finds themselves ‘locked in’; unable to return to their traditional practice model. This may occur because patients have become accustomed to a particular market price, method of service or the practice set up, which has changed to efficiently accommodate the existing model.  If these circumstances apply, the insurer is well positioned to make new demands, with permanent effect, that may not favour the doctor or patients’ best interest. Potentially, insurers may seek to pay less and/or become more involved in directing managed care by determining what treatments the patient would receive.

With any new direction in the delivery of health care, predicting all the pitfalls (and benefits) can be tricky. In the case of no-gap pilots arising in obstetrics and gynaecology, we can look to the US experience and say we should prefer to retain the current Australian system. In saying this, we must be aware that in the craft group of obstetrics and gynaecology, work expectations are changing – public appointment opportunities are becoming more limited, there is some preference to have a genuine work and life balance, and less enthusiasm to run a small business model of practice. In that sense, these new pilots do appear attractive as they can be perceived as simplifying practice and offering practice opportunities. 

Nonetheless, it important for the profession to consider broader implications; there is an often stated truth that from little things, big things grow. An evolved model has the risks of dictating the nature of treatment, and even artificially inflating the cost of services from ‘non-preferred’ doctors. Therefore, we must defend against all instances of managed care in the interest of our independence and patient outcomes.


Published: 15 Feb 2018