Private health insurers' vertical integration push rejected

Private health insurers' latest push for vertical integration has been rejected by Australian Private Hospitals Association (APHA) CEO Michael Roff as a "distraction from the real work of healthcare reform".

The insurers lobby group, Private Healthcare Australia (PHA), released a report ('There's no place like home: Reforming out-of-hospital care'), calling for more out-of-hospital care and citing 'regulations' as a barrier to more ambulatory care occurring.

Mr Roff has disputed this claim.

"Private hospitals welcome health insurance companies' new desire to fund out-of-hospital care, but experience shows they can currently do this, they just choose not to.

"The report from the Improved Models of Care Working Group in 2018, which examined how to expand non-hospital services paid for by health insurance and provided advice about reforms to the Government, found there were no regulatory barriers to insurers paying for alternatives to traditional in-hospital care," he said.

Releasing the report, PHA CEO Dr Rachel David said the health system was under strain and called for flexible options for patients.

"We're living in a new and rapidly-changing environment, not only in terms of demography and technology, but societal expectations have shifted," she said.

"Consumers are demanding and expecting different healthcare options, convenient care, which is often best delivered out of the hospital environment."

Mr Roff said private hospitals were well-placed to deliver exactly this, but that private health insurers were only interested in funding their own services – a conflict of interest in being both payer and provider.

"The experience of private hospitals which have developed innovative, out-of-hospital models of care focused on the needs of their patients is overwhelmingly that no private health fund will support them. But while insurance companies refuse to pay for out-of-hospital services provided by hospitals, they are quite happy to pay for similar services they own and operate," he said.

"It appears this report is a shameless attempt for health insurance companies to expand vertical integration, where they pay themselves for providing services to their members. At the same time, they deny their members choice of service provider which is one of the key reasons people take out health insurance.

"We have to be careful that the push by insurance companies for 'innovative care models' is not about pushing customers to use services those same companies own. I don't think Australians want a system where patients are being directed into a particular care pathway because it is in the financial interests of the insurance company rather than the best clinical interests of the patient."

Mr Roff warned against vertical integration by health insurance companies that went unchecked, as it could lead to the same situation banks found themselves in when they owned wealth management funds.

"The Hayne Royal Commission into the banking sector found that vertical integration by the banks – offered as a 'one-stop shop' – was not in the best interests of consumers, and this push by insurers wouldn't be either."

He agreed that Australia could provide more out-of-hospital care and that private hospitals were well placed to deliver it.

"Private health insurance companies could give their members access to innovative out-of-hospital care today, they just choose not to.

"Just as health insurance companies refuse to fund innovative out-of-hospital services provided by private hospitals, the report from their lobby group seems to ignore private hospitals as valid providers of these services.

"It is frustrating to once again see the health insurance lobby put the financial interests of their member companies ahead of the interests of the Australians who buy their products to access high-quality care," Mr Roff said.

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