Dr Kerryn Phelps, AMA President, Sydney

PHELPS: The AMA has never outright opposed the levy, we have never fully supported the levy. What we have said is that doctors would not accept a payment of a levy unless there was substantial reforms in place that fixed the problem, which is the system that has created the medical indemnity crisis in the first place.

QUESTION: So what those reforms?

PHELPS: We need the State Governments to take urgent action. They have to introduce reforms to the laws governing medical negligence. They have to introduce Statutes of Limitations so we can't have cases that could go on for 20 or 25 years. And the Commonwealth Government needs to fast track the development of a care and rehabilitation scheme for severely injured patients.

QUESTION: Is there any indication that they're moving closer to those conditions?

PHELPS: It depends on which state you're talking about. New South Wales has almost got the whole package together. They are moving on Statutes of Limitations later this year. Other than that, their tort law reforms are in place.

Queensland are looking at some limited tort law reforms. But not enough to satisfy the doctors in Queensland. In particular, they're not, at this stage looking, at a Statute of Limitations. That has been a recommendation that has been around since about 1992 for a Statute of Limitations of three years for adults and six years for minors.

I think that's perfectly reasonable and unless we get Statute of Limitations in place, then the whole crisis could just keep on rolling on.

QUESTION: If those reforms aren't forthcoming, and the Government is still insisting on a levy, could we see a walkout?

PHELPS: There's no question that the doctors in Queensland are likely to make decisions about whether they will continue in practice. And I think that around about July 1st we could be looking at a crisis date there.

QUESTION: Around the country, what do you think is the reaction in terms of doctors walking out?

PHELPS: As you know, the AMA held a national video broadcast on Wednesday night of this week, which was attended by the Minister and also by UMP's provisional liquidator. There's no question that there is concern right around the country, particularly amongst rural doctors, about whether they can continue.

What they're worried about is whether they can continue to do their procedural work. Things like obstetrics and anaesthetics, which quite often form the backbone of rural practice. And it's country doctors who are currently making the decision about what sort of work they can continue doing.

QUESTION: If those reforms aren't put in place and the levy is insisted upon, where do you go from there? I mean how realistic is the threat of a walkout?

PHELPS: It's not a threat by doctors, this is a threat to doctors. And the point is that nobody will be able to stop the doctors walking away from certain types of work unless these reforms are put in place.

We have until 31st December now, with the Government's guarantee in place. That should be enough time for the States and Territories and the Commonwealth to do what they must do to solve this crisis.

QUESTION: What sort of numbers could we be talking about of doctors feasibly just stopping work?

PHELPS: I think we could be looking at thousands of doctors who are deciding that they cannot continue because they cannot afford to continue to do certain types of procedures.

QUESTION: Why have you set the July 1st date when you just said that the cover is through until the end of the year? Why early July, early July for this potential walk out?

PHELPS: The issue in Queensland is the State Tort Law Reforms, which are perceived at this stage by the medical profession to be inadequate to solve the problem.

QUESTION: Are doctors prepared to pay the entire unfunded liability?

PHELPS: Doctors have never agreed to pay the total unfunded liability. Certainly doctors will not be prepared to pay a levy at all, unless there are substantial reforms in place.

QUESTION: Where should the rest of the country (inaudible) taxpayers money?

PHELPS: The Government should not agree to throw money into a black hole. The taxpayers should not let the Government throw money into a black hole and doctors certainly will not be throwing money into a black hole.

QUESTION: The Minister said at the on-line meeting you had the other day that you agreed before Easter with the Prime Minister that you would fund (inaudible) you would fund - you agreed to levy the entire unfunded liability. You're now reneging on that deal, are you?

PHELPS: The AMA is not reneging on anything. That's not our style. The Minister is misled if she believes that the AMA or other medical groups ever agreed to fully fund the unfunded tail by a levy.

What the medical groups at that meeting, and I have checked with the other participants in that group this morning, what the other groups agreed to was that they would go back to their groups and see what the reaction was to the possibility of a limited levy which would contribute towards the unfunded tail, provided that reforms are in place. So there was some very very specific covenance on any kind of agreement to any sort of levy.

QUESTION: If it contributes to the tail where does the rest of the money come from?

PHELPS: The tail depends on perceptions of what will happen in the future. It's an actuarial assessment of what might happen in the future and that could be 25 years down the track. So the unfunded tail, which at the moment maybe anywhere between $350-500 million with substantial reform at Commonwealth and State level could well come down to a very manageable level which the profession would be more than happy to contribute to.

QUESTION: Aren't you asking the State Governments to act respectively then to reduce the tail?

PHELPS: The State Governments will have to decide what they have to do to avoid a spike in claims that would further destabilise the indemnity industry. And if that means putting a time limit on claims, then that's what they're going to have to do.

QUESTION: Isn't there a problem though that when you say in certain states things are different in New South Wales, they're closer in Queensland. If it's all about then trying to figure out how the cost will be shared, the Federal Government is going to be tipping in.

What's going to happen if we're going to have different states with different systems, it means the Federal Government will be putting in more and less. It basically can't work that way can it?

PHELPS: The only way that this crisis can be brought to a solution is if everyone works together. And the State Governments have to get off their hands and they have to actually put in place the reforms that they've promised.

The Commonwealth Government must put in place the long term care and rehabilitation scheme. We need to look at subsidies for the higher risk specialties so that they can continue to work. The medical profession - we're doing our bit - the Commonwealth and State Governments need to do their bit. And if we can get it all happening all before the 31st and well before the 31st December, so that we can restore some stability to the system, then we can cure the disease which has afflicted medical indemnity.

QUESTION: Beyond July if the Government is promising that it will eventually act on reforms. Are you happy to recommend that doctors (inaudible)?

PHELPS: It's like saying to a member of the public are you prepared to pay a big tax, and you'll say well how much is the tax, and what is it for, and what exactly is it going to cover and could there be another one? The point is that there are more questions then answers.

The Prime Minister suggested the possibility of a levy so that the medical profession was making a contribution towards this unfunded tail. It was never discussed that the medical profession would fully fund that tail, and it was certainly never agreed to by the medical groups without the condition of reforms being in place. Because without those reforms nobody knows how big that tail is or might be likely to become.

QUESTION: There will be a potential walk out in July though. What if the Government gives you - I mean how much are you going to have to trust the Government if they say by September we will have reforms in place. Are you happy in July to pay those levies at least until those reforms may well be in place?

PHELPS: No, I have said the medical profession will not pay a levy unless they know what they're paying for and how much it's likely to be and whether there will be any further imposts upon them? What you have to understand is that medical practitioners in this country, and of course they have to pass their costs onto their patients, but doctors in this country are going to currently pay a call from December 2000, which they're still continuing to pay.

They're paying their current premiums. Next year they're looking at a 50% increase in their premiums. And now we're talking about an open-ended levy. Doctors cannot continue to pass those costs onto their patients without it starting to affect the accessibility of patients to health services.

But doctors are similarly having to make a decision about whether they can continue to afford to provide services. I mean we have groups of obstetricians all around the country who are saying we can't afford to keep on delivering babies. GP/Obstetricians who are saying we can continue to do our general practice work but we can't keep doing anaesthetics or obstetrics because we can't afford these enormous premiums.

QUESTION: What are doctors prepared to put up out of pocket, given that you say it requires a coordinated approach, patients are giving up the right to sue, they're having to accept tax. Governments are putting up guarantees, what are doctors going to put up out of their own pocket?

PHELPS: Once again, I have said on Wednesday night and I will say it again we have some tough negotiations ahead of us. This is not going to be an easy road. I know what doctors will or will not accept. But it depends on which specialty, which group and what they're being asked to fund. How much they're being asked to fund? How much they're being asked to fund? And whether that will be the end of the story, whether that will solve the problem. A levy for an open ended unfunded tail is not something that doctors will be prepared to accept.

QUESTION: Will different specialties and GPs, will they be expected to pay different amounts under the proposal, as you understand it?

PHELPS: Under the levy proposal nobody has seen any detail. So it's impossible to say will doctors accept this proposal because nobody has provided doctors with any details of the proposal.

QUESTION: That's one of your demands then?

PHELPS: I think that it's fair enough with the Government working closely with the AMA, that we do look at the elements of the levy. I mean we have to consider doctors who are about to retire. I mean some doctors who are retiring are being asked to pay three years subscriptions just to get out of medicine and so that they don't lose all of their assets in their retirement.

Now, that in some cases might amount to around half a million dollars. That is simply not fair if they were then to have to pay a levy on top of that. It's not fair to the junior doctors who are just graduating, just starting their careers in medical practice, for them to be hit with a levy.

The size of the levy, who has to pay it, how much they have to pay and when? These are all matters for negotiation. Without knowing the details it's just not good enough for the Government to say well we think we'll put a levy on doctors and we don't know how much it will be, but you'll agree with it won't you? I mean no group would ever agree to that.

QUESTION: Talking about fair, though. Is it fair for doctors to walk away from the tail or to demand that State Governments take away the rights of patients that they currently have to action against doctors?

PHELPS: Just as the medical indemnity crisis was not of the Government's making, the solution is in the Government's hands. And just as the medical indemnity crisis was not of the medical profession's making it is the entire community's problem and it is up to the entire community, State and Federal Governments, the medical profession and patients to all work together for a solution.

Now, to say is it fair for doctors to walk away from the tail? Nobody is suggesting we should walk away from the tail. We want to know how big the tail it is, number one, that's something we already don't know, and number two, we want to know what is being done to make sure that that tail is minimised. Now, we can't say that doctors will fully fund something when they don't know the size of it.

QUESTION: So what's an acceptable size for you then?

PHELPS: Who knows.

QUESTION: You must have given it some thought, you must have some idea about what is reasonable for doctors to foot.

PHELPS: It depends on which specialists you are talking about. Are you talking about a country GP? Are you talking about an obstetrician in the city? Are you talking about a neurosurgeon who's already paying $10,000 a month just to keep in practice? I mean it depends what group you're talking about and there are some groups that are going to be given special consideration.

Some groups are going to have to be subsidised. So it's not a matter if what will doctors pay, it depends on their speciality and it depends on the circumstances surrounding the size of this tail and it depends on what reforms are in place and whether they will contain future costs.

QUESTION: The Minister says, based on the current tail of $300-400 million and that's only a few thousand dollars a year for each member of UMP, is that affordable for doctors?

PHELPS: I think we need to look at what the actual size of the levy is. Nobody has seen any estimates of that yet - -

QUESTION: She says it's a few thousand dollars a year.

PHELPS: Nobody has seen that yet, nobody has seen that estimate.

QUESTION: That's what she said it is.

PHELPS: I think the Minister also said on Wednesday night that she was not aware of the progress on prudential regulation changes. So I think what we need to do is to see what the size of this levy is likely to be. You cannot estimate the size of the levy without knowing the size of the tail. So I think it's premature for anybody to be estimating what the size of that levy is likely to be.

QUESTION: Based on the assumption of $300-400 million, that's what she's working on. Several thousand dollars per doctor per UMP member spread of five years.

PHELPS: I'm not going to make any assurances back on back of the envelope etchings. I think it's unreasonable to expect the medical profession to agree to anything until we have substantial detail.

QUESTION: (inaudible).

PHELPS: The AMA has very close links with all of the different craft groups and we have a medical indemnity taskforce which is able to link very quickly to the representative groups right around the country. And as soon as there is a more detailed proposal in hand, then we will be able to discuss that and we will be able to come up with a response. Certainly the response at this stage is unequivocal and that is that doctors are not happy to agree to an open ended levy arrangement when we don't know the size of the tail and we don't whether that is going to contain the problem for the future.

QUESTION: It doesn't seem like a lot to me. People in the HIH collapse lots of people have lost hundreds and thousands of dollars and doctors are only going to lose a bit, why should they feel that they don't even have to pay that little?

PHELPS: We don't know how little or how big it might be. I mean doctors are already looking at a 50% increase. Now, if you're an obstetrician paying $100,000 this year, you'll be looking at $150,000 next year and you'll be looking at another 50% on top of that the year after. So we're not talking about small amounts of money here. And this money has to be passed on to patients.

And what a lot of people are failing to realise is that this increased cost on doctors becomes not only an increased cost on patients but it also is a cost in terms of loss of services. I mean at the moment the AMA is keeping the brake on doctors walking out because they're confused, they are frustrated, they are worried about their futures.

Unless we get the reforms in place and unless we get substantial answers, particularly from the State Governments within the next couple of weeks, then nobody is going to be able to keep the brakes on doctors leaving particular types of work.

QUESTION: What are the reforms that you want, that the State and Federal Governments aren't looking at, that haven't already basically committed to already?

PHELPS: There are a range and it depends on which state you're talking about. Some states haven't even begun the process in any substantial way. I had a meeting yesterday with the heads of Treasuries and that was very heartening to see that the Treasuries around the various states are now looking at tort law reform as a priority issue.

But some of them have come a long way, some of them haven't come very far. And I think that it's very important that the various State Governments bite the bullet, do the hard yards, do the things that might be a little difficult, but they haven't done them now so that we can let long term reform.

QUESTION: So what are those reforms?

PHELPS: There are a lot of reforms but if I could say the big ones. Capping of damages. We need to see threshold so we don't have a plethora of frivolous claims or small claims that really the legal system consumes most of the award and the patient gets a little bit of money and a small amount of satisfaction. What we need to do is clear up the procedural side of the legal system governing medical indemnity. Make sure that patients who need care then get care and they don't have to wait years and years in order to get to be able to start their rehabilitation.

We also must see the introduction of Statutes of Limitations and that needs to be in the area of three years for adults, six years for minors.

QUESTION: Why should we have a much tighter Statutes of Limitation than somebody injured in another situation? What justification is there?

PHELPS: This is not like a motor vehicle accident. I mean this is a situation where we are trying to preserve health services for Australians. And we are not going to be able to preserve assessibility and affordability of health services unless we get these sorts of reforms because otherwise medical care will become unaffordable just as running a country show, running a school fete, running a pony club has become unaffordable.

QUESTION: Sure, but are you saying that in those instances that it should be restricted to three years as well?

PHELPS: I do believe that there is a special case for medical indemnity and it's really not within my realm to talk about broader liability issues, but there is certainly a case for a Statute of Limitations right across the board if we are to make public liability and medical indemnity affordable. And that so the activities that we associate with being Australian can continue.

QUESTION: Could we see the entire medical insurance industry regulated do you think?

PHELPS: Yes, there needs to be more prudential regulation of the medical indemnity industry, yeah. I mean we've been calling for that as well. The whole industry was previously not at all transparent because of commercial in confidence restrictions they wouldn't allow claims data to be out there (inaudible). We've moved an incredibly long way in 12 months and I think we can move just as fast in the next six months.

But the reason that we're talking about this today, I suppose, is that there seems to have been some confusion about whether the medical groups agreed to the levy or not. And you can state unequivocally that they didn't.

Ends