AMA Denies Doctors Pushing Up Costs of Private Medical Care

In a submission to the Productivity Commission, BUPA Australia says doctors in private hospitals are driving up the cost of healthcare by ordering the most expensive drugs and medical technology.

But the AMA says that's exactly what you'd expect to hear from a health insurer hoping to keep its costs down.

Jayne-Maree Sedgman reports.

JAYNE-MAREE SEDGMAN: If you found yourself in hospital in need of surgery, would you push for the most advanced technology available or would you be happy with a more modest version, provided it could do the same job?

One of the country's largest health insurers claims too often, doctors in private hospitals are choosing the more expensive option, thereby forcing up the cost of patient care.

BUPA Australia, which operates the health insurers HBA and Mutual Community, says it's happening both with drugs and medical technology.

Spokesman Eric Granger says the choice of prostheses when it comes to cardiac surgery is one such example.

ERIC GRANGER: In the public system virtually all cases where people have heart surgery and they need a pacemaker, they get a pacemaker which is valued about $9,000. In the private system there are defibrillators that do a slightly different job but certainly one that is not needed for all patients but it's almost exclusively used and they cost $50,000 each.

So, it's a fair example of how the difference in costs between what we're paying in the private system compared to the public system have come about, because the doctor is able to use it, and of course the patient says well they want the latest and the best.

JAYNE-MAREE SEDGMAN: But the Australian Medical Association rejects that notion, saying each decision is made on a case-by-case basis.

AMA President Dr Bill Glasson says doctors don't plump for the more expensive option for any reason other than it being better for the patient.

BILL GLASSON: If I was getting double the money, if I put a $5000 in, instead of a $1000 hip or a $2000 hip, and I got double the fee then you can argue well listen I've got a perverse incentive there.

But if I'm getting the same fee whether I put a $5000 hip in or I put a thousand dollar hip in, there's no real incentive for me to actually put the most expensive in. What's the incentive for me is to make sure that Mrs Jones who needs her hip, who probably may live for another 50 years has the most appropriate hip to give her the best quality of life, the best outcome. That's what governs or drives me to a particular choice of a prosthesis, whether it be an eye prosthesis or a hip prosthesis.

JAYNE-MAREE SEDGMAN: But the Royal Australasian College of Surgeons disagrees, saying it's not unreasonable for insurers to remind doctors to be critical when comparing the relative merits of one technology over another.

The College's Vice President Dr Peter Woodruff says problems can also arise when patients put pressure on doctors to use the most sophisticated technology available.

PETER WOODRUFF: I think there's a reasonable expectation when you take out private insurance that that opens avenues to the very best that money can buy, both in hospital services, medical services and the purchase of medical prosthetics and equipment.

JAYNE-MAREE SEDGMAN: BUPA says when it comes to prostheses, which could be anything from an artificial limb to an artery stent, since 2001 there's been a 65 per cent jump in the benefits paid to members. But the AMA's Dr Bill Glasson says there's a very simple explanation for that.

BILL GLASSON: I'll tell you exactly why that's occurred - because there's a deregulation up in about 2001 or about that time, there was a much tighter regulation on what you could purchase actually various implants for. And then there was a deregulation that occurred where there was a giant increase in the cost of these prostheses. Now, that wasn't doings of doctors. That was between the manufacturers and the government at the time, and probably the likes of BUPA itself.