Right options needed for reform to be positive

APHA's column in Australian Doctor magazine.

REFORM. It sounds positive. We hope it is. But the proof is yet to come.

The Federal Government's agenda for Private Health Sector Reform has the potential for positive change for patients, value for 12.8 million Aussies with private hospital cover, and support for the 640 hospitals that treat them.

We raised these reform areas four years ago. While noting these changes do not address the viability crisis caused by contracting abuses that see health insurers underpay hospitals for treatment and services, they can benefit patients and hospitals.

The alarming lack of psychiatrists across the country has for too long undermined patient access to the acute mental health care they need.

Bizarrely, there are 300 psychiatrists in Australia prevented from practising in private hospitals due to antiquated bureaucratic red tape. This situation, during a prolonged acute mental health crisis, is tragic for sufferers and their families.

We are aware of stranded, would-be patients who have suicided while awaiting much-needed care, unable to get a consult with a psychiatrist. At the same time, acute private mental health hospitals have 40-60% vacancy rates.

So it is disturbing that the government's agenda includes an inexplicable option that would deny those 300 psychiatrists already in Australia from working in private hospitals, but instead allow psychiatrists from overseas countries to migrate to Australia to fill positions.

It is illogical, would be costly, time consuming and possibly face legal challenge akin to the previous government's discriminatory Backpacker Tax fiasco. It would distort the labour market in favour of only the largest and best-capitalised hospital operators. Smaller hospitals would, effectively, be excluded.

At some point the government must address the Medical Benefits Schedule (MBS). It currently pays a psychiatrist less to treat acute patients in hospital than to provide lesser services in consulting rooms.

Out-of-hospital care attracts 85% of the schedule fee, while more severe and complex mental disorders treated in hospitals attract just 75%. It makes no sense.

It directs the workforce away from the sickest, most acute patients, leaves already over-burdened GPS to medicate patients as best they can, but when a mental episode occurs, sufferers end up in inadequate public hospital EDs or worse.

The government should apply a positive loading to MBS items for in-hospital psychiatrist attendances, to reflect acuity, travel and after-hours demands.

Maternity reforms are long overdue. We have lost 18 private maternity units in the past decade, 13 of them in just the past three years. Changing waiting periods for insurance cover from the current 12-month to six-to-nine months makes sense.

While we support maternity being available at cover less than Gold, we urge caution. Over the last year the health insurance lobby has positioned for 'midwife-led' births as cost-saving response.

But with the majority of births in Australia requiring an obstetrician – i.e. via caesarean or instrument deliveries, as well as for complications during birth – reduced patient wellbeing and unexpected out-of-pocket costs could be the perverse result.

Health insurers' reform ideas are typically based on their desire is to cover less but be paid the same or more. The have form. We've seen this playout with the appalling phoenixing loophole and insurers actively canvassing members to downgrade their cover.

Consolidating health insurance tiers must lift the floor of what remains, otherwise it will reduce participation and transfer patients onto public waiting lists.

The reform focus on contemporary models of care and value for consumers is welcomed. But consumer value cannot be assessed only by reference to product simplicity or nominal benefit design.

A private health insurance product has little real value if the hospital service it purports to cover is no longer viable, unavailable in a patient's region, or only accessible with hefty out-of-pocket costs.

You can redesign insurance products, change waiting periods and create new models of care, but none of that keeps a hospital services open if the funding doesn't cover the cost of providing it.

That is the elephant in the room.

The government must legislate a minimum 90% payout ratio. The single most effective value-for-consumers reform is a guarantee that 90 cents in every hospital premium dollar goes to patients as benefits.

In the last year, ABS data shows private hospitals suffered an operating loss of $756 million, while the health insurance industry reaped operating profits of $2.7 billion, as well as taking $3.4 billion in so-called 'management expenses'.
The funding system is broken and being abused by insurers to the detriment of patient needs and the viability of the hospitals who serve them.

We are pleased our call for a Mandatory Code of Conduct for hospital and insurer contracting; with an arbitration model, price transparency and oversight by the ACCC, is slated for Tranche 2 of reform measures.

The wait continues.

Brett Heffernan is chief executive of the Australian Private Hospitals Association. Published in the September/October edition of Australian Doctor magazine.

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