Exorbitant prosthesis prices, rising premiums and greedy surgeons are all to blame for the private health system’s “death spiral”, according to a new report from the Grattan Institute. The report says Australia’s multi-billion-dollar private health industry urgently needs a rescue plan if it is to survive and calls on the Federal Government to action immediate steps to stop surgeons over-charging patients and ensure private hospitals aren’t keeping patients longer than they need to.
It also highlights the need to end “rorts” in the prosthesis and device supply chain, which often leave private patients paying far more than those in the public system.
Dr Stephen Duckett, Grattan Health program director, said the current structure was crippling the industry.
“The industry was in a death spiral before the pandemic and it’s still in a death spiral today,” he said.
For the past 20 years, private health insurance premiums have been rising faster than wages and inflation, but according to the report, Australians are getting less for their money. Findings attributed the rising cost of premiums to the increasing cost of care in Australia and the country’s ageing population, saying that insurers are increasing prices in line with rising costs.
However, the report urged the private health industry to “face up” to its responsibility – namely in regards to the number of surgeons overcharging for their services.
“A small number of surgeons charge patients way more than they should,” the report says. “About 6 per cent of specialists’ services in hospitals are billed at more than twice the Medicare fee, and these services account for 89 per cent of patients’ out-of-pocket costs. Patients who have been paying insurance all their lives are understandably angry to get these surprise bills.”
The higher fee on insurance premiums is also causing younger, healthier Australians to opt out of private health, which has a trickle down effect for those left in the insurance pool, whose premiums are increased to account for the loss in members.
The report says that exposing the prosthesis market to competition could help reduce the cost of hip and knee replacements and further reduce private health insurance premiums across the board.
Earlier this year Private Healthcare Australia (PHA) reported similar issues within the industry, calling on support from the government in its budget submission in February. The PHA submission found that the greatest opportunity to increase savings without disadvantaging patients came from reforms to the funding of medical devices.
The PHA called for urgent reforms which would redistribute the “excessive profits from multinational medical device companies to Australian doctors, Australian hospitals and Australian families”. Despite its blueprint for reforming prosthesis funding in Australia, there was little assistance offered in May’s Federal Budget announcement.
Duckett says the industry and the government need to work together to action the changes and called on Minister for Health Greg Hunt to be more willing to reject premium-rise applications from insurers that can’t show they offer their customers good value for money.
“Together, the government and the industry can create a viable future for private health in Australia,” Duckett says. “This report charts the path.”
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