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Medibank putting profits before patients, says AMA

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The nation’s largest health insurer has been accused of putting profits before patients amid revelations that it has refused to cover the medical expenses of a mother who dies in childbirth.

AMA President Professor Brian Owler told the National Press Club that maternal death in childbirth was one of the more than 150 ‘preventable’ clinical conditions Medibank Private was refusing to cover in hard-ball negotiations with private hospitals.

The AMA President said maternal death during childbirth, while rare, did happen, and Medibank’s position was “offensive” and betrayed a lack of understanding of medicine and the motivations of doctors and other health workers.

“I find it offensive that a private insurer would refuse to cover the costs of that patient and hospital in such a tragic event,” he said. “If someone thinks that a financial incentive will motivate doctors, nurses or anyone else in a hospital to prevent maternal death any more than they desire to do so now, then they have no understanding of medicine or the people in it.”

“They are putting shareholders before patients.”

The issue blew up last month after Medibank abandoned negotiations with the Calvary Health group on health cover.

Calvary was resisting Medibank demands that it pick up the tab for treating 165 medical conditions the insurer claimed would be caused by incompetence or neglect in the care patients received.

Medibank has argued that by insisting on a long list of exclusions, it is encouraging private hospitals to lift their standards of care. And it has received the backing of rival insurers Bupa and NIB, which argue it is time to hold hospitals to account for poor or inappropriate care.

Senior Bupa executive Dwayne Crombie told The Australian that insurers would take an increasingly hard line with private hospitals over costs: “I think you are going to see much blunter discussions. I totally support Medibank’s approach, and we would think similarly”.

NIB Chief Executive Mark Fitzgibbon told the same newspaper that “the trick here is to transfer the risk of poor quality to the person best placed to manage that risk, which is clearly the hospital. It’s right that the hospitals take that risk”.

But while the AMA accepted that hospitals should be held accountable for avoidable errors such as operations on the wrong limb or using the wrong blood type in a transfusion, Professor Owler said trying to avoid responsibility for complications like deep vein thrombosis that can and do arise despite the use of extensive preventive measures, was wrong.

The AMA President said the Australian Commission on Safety and Quality in Health Care already regulated the safety and quality of health care, and there was no evidence to support the items on Medibank’s list.

“What we should be doing is waiting for the evidence to come forward and then make recommendations. That is not what Medibank are doing,” he said.

A Medibank spokesman told News Corp the insurer rejected the criticism and said it would be rare for a hospital not to cover the cost when a mother died in childbirth, and if this did occur the insurer would “vigorously contest” the decision on behalf of its members.

“We understand it is a common industry practice not to pay for this event, because it is rarely charged,” the spokesman said.

The AMA President said the insurer’s decision to walk away from its talks with Calvary Group, which meant Medibank Private members would no longer be covered for treatment at the group’s hospitals, was in keeping with a shift in the health fund’s focus since being privatised from patient care to shareholder returns.

He said it was clear Medibank’s intention was to simply to shove costs off its books and instead dump them onto private hospitals, and would have the effect of forcing the most complex clinical cases onto the public hospital system.

Already, there is a well-established trend for private patients to be treated in public hospitals.

Figures released by the soon-to-be- abolished Private Health Insurance Administration Council show that public hospital admissions of privately insured patients surged from 20.9 per cent in 2003 to 28.8 per cent last year, and patient volume growth in public hospitals outstrips that in the private sector.

Professor Owler warned the Calvary hospital stoush was part of an aggressive and unwelcome push by Medibank to have a much greater say in the provision of care.

He said the nation had been well served by a private health insurance system which was open to all, regardless of health status. Under industry rules, patients can join the health fund of their choice even if they have a pre-existing condition, and they cannot be denied coverage (the principle known as community rating).

But the AMA President expressed concern that Medibank was trying to drag the system down a path toward US-style managed care, in which insurers were able to dictate what doctor a patient saw, and what sort of treatment they received.

“A US-managed care system is a system that places an enormous administrative burden on the patients and on the practices,” he said. “It actually increases costs and, at the end of the day, the only one that wins is the insurer. We don’t want to go down that system.”

“[But] I am concerned that as Medibank Private, given its float and new direction, that we are slowly heading towards that direction.”

While the private health insurance sector was not uniform, and mutual funds operated to benefit members, Professor Owler said Medibank’s relentless cost-cutting could create competitive pressures that would undermine the ability of other insurers to maintain their level of coverage and services.

Mr Crombie said that although Bupa did not have shareholders, it was facing cost pressures similar to those driving Medibank.

Adrian Rollins