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Private health insurance – its role in the Australian health system

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Women with private health cover are overwhelmingly choosing to use the public health system for their second baby, Medibank Private chief medical officer Linda Swan told delegates at the AMA National Conference.

In a policy session on the role of private health insurance in the Australian health care system, Dr Swan said expenditure and claims were exceeding patients’ willingness to use their private cover.

“People are very clearly telling us that affordability is their No.1 issue,” Dr Swan said.

Rising health care costs could not continue unless Governments and consumers were willing to pay more, or the expense of care could be reduced, she said.

Earlier that day, News Corp national health reporter Sue Dunlevy told the conference that she had been “forced” by the Government to take out private health insurance but was “determined not to use it” because of excessive out-of-pocket expenses.

“There’s something crooked at the heart of the private health insurance industry in this country,” Ms Dunlevy said.

But Professor John Horvath, the strategic medical advisor at Ramsay Health Care, had a more positive view of the future.

“Australia has an excellent health care system producing world-leading outcomes for patients,” Professor Horvath said.

“Australia spends around 9 per cent of GDP on health care, of which 30 per cent is from private sources. This is lower than the OECD average, yet our life expectancy and outcomes are among the highest in the OECD.”

Professor Horvath said the ongoing increase in demand for health care, and rising costs, meant payers – including governments – and consumers would continue to push for more value from their health care spend.

He said benchmarked performance reporting and clinician engagement, not “stick” approached like financial penalties, would drive real improvements in quality, while digital technology would improve patient outcomes and enable hospitals to extend their care beyond hospital walls.

“This is all good news for patients,” he said.

Ramsay has begun measuring and benchmarking with the International Consortium on Health Outcomes Measurement (ICHOM) to allow global comparison of specific medical conditions.

It is measuring outcomes in six specific areas:

  • Low back pain,
  • Hip and knee osteoarthritis,
  • Cataract surgery,
  • Coronary artery disease,
  • Depression and anxiety, and
  • Prostate cancer.

The measurements will take in readmission rates, returns to theatre, infection rates, falls, hand hygiene, pressure injuries, medication safety, and patient experience.

Ramsay is also adding new measures including quality of life following treatment, survival, and disease control.

It is also about to commence a trial of the Vanderbilt Program, to assess its effectiveness in managing poorly behaved Visiting Medical Officers who undermine a culture of safety and quality.

The Vanderbilt Program looks at behaviours such as not following a surgical checklist, not washing hands, and bullying of staff – all of which can lead to consequences such as surgical complications, high rates of infections or errors, lawsuits, and loss of staff.

The program is based on the principal of having a conversation with a physician around their behaviour and building up to authority conversations with clearly defined consequences.

Opinions from the floor were mixed. Some doctors said that the combination of more complex patients, procedures and medications would inevitably lead to higher expenditures.

Others said that in most industries, new technologies drive costs down, but in health care they increase costs.

Maria Hawthorne