Private hospitals pose positive solutions to government's health crisis

AUSTRALIA'S private hospitals are on the brink of collapse. Over the last three years health insurance companies have been allowed to underpay private hospitals to the tune of $3.05 billion, while the Australian Government has been a passive observer.

This has seen some 20 private hospitals close their doors entirely, while over 70 services in other hospitals have closed. Over the same period, the health insurance companies have reaped record after-tax profits of over $5 billion.

"Today, we have taken the initiative in posing a cascading series of initiatives that either cost the government nothing or very little, but will keep hospital doors open," Australian Private Hospitals Association CEO Brett Heffernan explained.

"Health insurers can be compelled to ensure a ratio of 88 cents in the dollar from premiums actually reach hospitals providing care. Similarly, the government could tap into the rebate on private health insurance to redirect funds to where they are needed. These are cost neutral for government.

"Failing that, a temporary two-year government co-payment of $450 million to $650 million per year – equating to around $100 day-only and $200 overnight per admission fee – will be required. This would need to be applied in tandem with the government's mooted CEO Roundtable process to discuss longer-term systemic reforms.

"If the government baulks at that, then the Minister has the authority to allow private hospitals to charge these small gaps ($100-$200), while in contract with insurers, to enable hospitals to keep their doors open.

This means out-of-pocket costs for patients are minimised.

"However, if these sensible, cost-effective measures are rejected, then more private hospitals will be forced off contracts and, as a result, patient gap payments will be much larger as the default benefit insurers pay would only be 85% of costs. Patients would be up for the missing 15%.

"There is an urgency as the crisis is about to get worse. December and January are the worst time for hospitals. Understandably, no-one wants to have procedures or be recovering over the Christmas-New Year period or the holiday season. So hospital income is about to take yet another hit. Come February the situation will be even more dire.

"It's not all about money. In fact, we are proposing a slew of reforms that are relatively quick, easy and cost the government nothing. For example, lifting the moratorium on overseas-trained doctors, especially psychiatrists, providing in-hospital care. This alone would resolve the shortage of in-patient services.

"Federal Governments often complain that they pay state governments around $150 billion under the five-year healthcare agreement to fund public hospitals. But state governments typically prioritise private patients to get paid twice – by taxpayers and insurance companies.

"As part of the current negotiations for the next five years, the Federal Government should insist on withholding funding each year unless public hospital waiting lists are in check.

"Specifically, a public patient waiting on a list beyond the threshold for their clinical care will see their condition deteriorate, develop co-morbidities and their mental health often suffers. These patients should immediately be transferred and treated in a private hospital at the state's expense. This may motivate State Government's to pay more than lip-service to waiting lists.

"Similarly, across the states, the number of people on waiting lists each year is outstripped by the number of private patients public hospitals admit. If they prioritised public patients, waiting lists would diminish rapidly.

"Private hospitals are posing these initiatives in the absence of any suggestions, let alone solutions, from the Federal Government. So if the government will not address these initiatives, we look forward to their alternatives to ensure no more vital health assets close across the country."

Australia's private hospitals account for 5 million admissions each year (or 42% of all hospitals admissions), with 1.68 million surgeries including serious operations like hip and knee replacements, malignant breast cancer procedures, hysterectomies and eye surgeries.

Private hospitals also account for 1.58 million medical treatments each year, including the majority (54%) of chemotherapy. Across the country they employ 69,000 Australians, including 38,000 nurses. They are vital local, regional, state and national assets.

"Australians cannot afford for private hospitals to faulter. The public system simply wouldn't cope," Mr Heffernan added.

The APHA provided the document Private hospital viability: immediate response to crisis to the Federal Government last Thursday. The full document is available below:

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