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Private patients in public hospitals

20 Sep 2017

The AMA has made a submission to the Commonwealth Government's consultation paper, Options to reduce pressure on private health insurance premiums by addressing the growth in private patients in public hospitals.

The submission highlights that Australia’s health system relies on a mixture of public and private service provision. Compared to other countries, Australia appears to have struck the right balance, delivering high quality outcomes for patients at a relatively modest cost in comparison to similar countries. Patient choice is a fundamental feature of our health system, which includes the option for patients to use their private health insurance in a public hospital. 

There are very good reasons why a patient may choose to use their private health insurance for treatment in a public hospital. For example, in regional and rural areas there may be no other option available due to the lack of private sector services. Public hospitals are also equipped to handle the most complex of cases and, in many cases, may represent the most appropriate clinical setting for treatment. It may also be the most cost effective option for a patient, particularly in light of the growing number of private health insurance policies with exclusionary features or excesses and co-payments.

There are also significant benefits that flow to public hospitals. In a constrained funding environment, the supplementary revenue generated from private patients makes an important contribution towards the recruitment and retention of medical practitioners (through specific arrangements reflected in industrial instruments), improved staffing, the purchase of new equipment as well as teaching, training and research. These all support the delivery of high quality care to public and private patients alike. 

The option for patients to use their private health insurance in a public hospital is not new or remarkable.  It is a longstanding feature of our health care system and is currently dealt with under the National Health Reform Agreement, which guarantees the right of privately insured patients to elect to be treated as a public or private patient in a public hospital. 

The submission states that the AMA supports this choice for patients and rejects efforts by Private Health Insurers to limit this choice. In discussing the issue, the AMA covers a number of points including

  • Concerns over the value of private health insurance;
  • Value through choice of doctor and hospital;
  • The extent to which private health insurers have overstated the issue of private patients in public hospitals;
  • Inadequate funding for public hospitals; 
  • Carefully targeted measures to address concerns over cost shifting, without impacting on patient choice.

The AMA criticises the options outlined in the paper, arguing that most of them are blunt options that would simply reduce the level of funding available to public hospitals in favour of private health insurers as well as reduce the choice available to privately insured patients. 

According to the submission, the development of a durable solution to this issue needs to be proportionate and considered in the context of broader private health insurance reforms and future public hospital funding arrangements. This will require extensive consultation, including with the states and territories who, in relation to private patients in public hospitals, appear to have had very limited input to date. 


Published: 20 Sep 2017