Inefficient hospitals, ‘greedy’ doctors blamed for health fund woes

Private health costs could be cut by up to 10 per cent if private hospitals were more efficient and doctor ‘greed’ contained: report.

greedy doctors

Private health insurance premiums could be cut by up to 10 per cent if private hospitals were made more efficient and doctor ‘greed’ was contained. That’s the view of the Grattan Institute in its report, Saving private health 1: Reining in hospital costs and specialist bills.

Authors Stephen Duckett and Kristina Nemet say that a handful of ‘greedy’ doctors charge their patients more than twice the official Medicare Benefits Schedule (MBS) fee. Only about seven per cent of all in-hospital medical services are billed at this rate, they say, but these bills account for almost 90 per cent of all out-of-pocket costs for private hospital patients – and patients are often not told of these costs in advance.

Some doctors also charge ‘booking fees’ on top of procedure and consultation fees. “These covert fees are not recoverable from private health insurance or Medicare, with the patient left to foot the bill,” the report says.

“The higher fees have nothing to do with the skill of the surgeon or the adequacy of the Medicare Benefits Schedule. The small minority of specialists who charged more than twice the schedule fee are simply greedy.”

If these high-charging specialists had imposed fees at 50 per cent more than the schedule fee but no more, patients would have saved more than $350 million in 2018-19, the report estimates.

Another key recommendation is that patients get a single bill if they are treated in a private hospital, instead of an “avalanche of separate and often surprising bills from the hospital, the surgeon, the anaesthetist and pathology and radiology companies”.

The report also advocates that private health insurers pay less to private hospitals. It’s a myth that private hospitals are more efficient than public hospitals, it says, and notes that patients stay nine per cent longer in private hospitals than patients with similar conditions in public hospitals.

“Paying private hospitals for treating a patient, rather than for keeping the patient longer, doing more tests or ordering more drugs, could reduce costs by more than $1 billion a year,” the authors say.

They also calculated a further $1 billion in savings if private health insurers no longer had to play for low-value or no-value care typically given in some private hospitals.

The total identified annual savings of about $2 billion could fund cuts in private health insurance premiums of seven to 10 per cent, the report estimates, and potentially save private health care in Australia.

Private health insurance premiums are set to rise again from 1 April 2020, with Health Minister Greg Hunt struggling to keep the increase to three per cent.

A jump of 3.2 per cent would be double the current rate of inflation.

The Consumers Health Forum (CHF) says that a single bundled bill to cover all private hospital costs, including the surgeon’s fee, would be a significant step towards clearing a way through the complex, multiple bills that bedevil the private system.

 Chief executive Leanne Wells welcomed the report’s proposals. “As the report says, patients have little power to negotiate; they are at their most vulnerable and most trusting when dealing with their specialist, so the ‘egregious billing’ by some private specialists needs to be challenged by a more powerful entity: the private hospital,” she says.

“The difficulty for the consumer at the moment is that the myriad different bills often charged for a single episode in a private hospital makes it very difficult for patients to understand, let alone compare costs. 

“A single bill would impose more discipline on a sector whose prices now vary dramatically …

 “At the moment, it is the patient who is expected to bear all the risk of high unexpected costs. It is time for private hospitals and doctors to adopt 21st century standards of transparency and consumer care.”

 The report recommends:

  • From 2022, private patients should receive a single bundled bill for a hospital admission.
  • The bill should be issued by the hospital and include all the costs of the treatment – hospital, diagnostics, prostheses and doctor costs.
  • Private health insurers should pay private hospitals on the basis of a national fee schedule that takes account of the patient’s complexity. (This is the way public hospitals are now paid.)
  • Patients should choose their medical specialists the same way they do now, but specialists should send their bills to the hospital rather than to the patient.
  • Private hospitals should be able to charge patients an extra fee for each day of stay, or an extra bundle fee for the whole stay. These extra fees should cover any extra medical costs charged by specialists and patients should be told of these fees before they are admitted.
  • The Australian Commission on Safety and Quality in Health Care (ACSQHC) should determine what diagnosis-procedure combinations are low value, and private health insurers should not have to pay for this low-value care.
  • The ACSQHC should determine what diagnosis-procedure combinations are better performed in high-volume settings, and private health insurers should not have to pay for this care in low-volume settings.
  • The Independent Hospital Pricing Authority should determine what hospital-substitute programs are effective, and private health insurers should be required to pay for these programs.

Would savings of this magnitude give you hope that private health costs could be better contained?

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    COMMENTS

    To make a comment, please register or login
    Barbara Mathieson
    27th Nov 2019
    10:30am
    Oh well, next ( expected) large health insurance increase will be the end for me!

    Watch Health Funds/ industry workers “ fall over”, and more unemployment.

    Why don’t these people understand the repercussions of their decisions?

    Ultimately, the public heath system as we know it, will become untenable , and also collapse under the pressures from disenchanted previous Health Fund recipients .

    An “ unhealthy” Australia coming up !
    Priscilla
    27th Nov 2019
    11:39am
    It's the whole health system that is bad. Doctors AND nurses receive huge penalty rates over and above their salaries. On top of that they are not held accountable for the tragedies they cause/create. We need a system where they are accountable for their actions that cause harm and especially when they ignore parents'. If they don't get what they want they threaten to hold everyone to ransome.
    KSS
    27th Nov 2019
    1:18pm
    Why do you think health professionals are not held accountable for their actions? They most certainly are. And there are well signposted avenues of complaint to ensure they are held accountable if they are proven to have been negligent.

    Investigations into any incident or even complaint can drag on for months if not years. They are punished with a range of options depending on the severity of the consequences of their actions and this can culminate in losing registration and criminal charges if the accusations are proven. However, not all accusations of negligence are in fact valid but stem from the grief of the litigant who refuses to accept that sometimes tragedies happen and no-one is responsible.

    Having said that, there are also parents '(and indeed any other family members) who make impossible demands, refuse to accept a best-practice diagoses/prognosis, even refuse recommended treatments or demand treatments that are not approved, recommended or even available then cry foul if their child dies as a result.

    It is no where near as black and white as your comment seems to imply.
    Maggie
    27th Nov 2019
    1:35pm
    Well said KSS. We need informed people to talk some sense here!
    Mez
    28th Nov 2019
    10:38am
    As a nurse, I know that your comment is completely INCORRECT!
    What more can I say!
    Life experience
    29th Nov 2019
    2:31pm
    Pricilla. You are so wrong on many aspects. Obviously not worked in Health care and have no understanding of the processes.
    Trisha
    27th Nov 2019
    11:52am
    Private hospitals don't cover an emergency, even though a recipient has top hospital cover. I was charged $350 upfront to be seen with winter flu.
    KSS
    27th Nov 2019
    1:19pm
    Most private hospitals don't have an emergency department!
    Sal
    27th Nov 2019
    1:51pm
    Trisha, You shouldn't go to the emergency department or hospital unless it is an emergency.You should go to your GP first. This is why there is long wait times in emergency.
    Triss
    27th Nov 2019
    6:05pm
    I agree with you, Sal, but more and more GP surgeries are working 8/9 - 5/6 and closed at the weekend that many people are forced into hospital emergency departments.
    Suze
    29th Nov 2019
    4:54pm
    Also a lot of the GP surgeries charge you $37.50 on top of what they get paid by the Government for a two minute prescription.
    Snowflake
    27th Nov 2019
    12:30pm
    I was talking to a friend yesterday and he told me his anaesthetist flat out would not tell him what he was charging. He was like a politician and just would not answer a direct question. From what he told me I think the doctor was actually embarrasssed about how much he was charging and wouldn't admit it. Of course, when my friend gets the bill he will then know and then it will be too late. I got out of my health care hospital cover when I retired. I could see the writing on the wall with their annual price hikes. Eventually, it would just be too expensive and with no increase in the pension........and I am happy with my decision.
    Rosret
    27th Nov 2019
    12:32pm
    He probably didn't know what the charge would be - he gets the office staff to handle the billing.
    Maggie
    27th Nov 2019
    2:01pm
    Billing actually seems quite complicated because there is generally a set charge for the first x number of minutes and then a different charge for time following. I believe they also charge extra for differing complexities.
    MICK
    27th Nov 2019
    12:35pm
    Lets just put it down to greed all round. Specialists and surgeons especially together with their private hospitals are charging ridiculous prices because they have a captive audience. Where are our government? Nowhere to be seen when it comes time to fix a problem which is well understood and been running for years.
    Had Labor, Greens and the media not pushed relentlessly for a Royal Commission into banks the crooks in suits would still be behaving fraudulently in the knowledge they were a protected industry. Of course no crooked bank CEO were ever fined and none ever went to jail. Just imaging what would have happened to ordinary citizens had they behaved in a similar manner. 8 years non parole.
    pedro the swift
    27th Nov 2019
    12:36pm
    The main problem is private health insurance. These are business only, getting returns for shareholders. Doctors and specialists see an opportunity to raise fees cos you are "private insured" . Health should be a national health scheme where everyone is covered. Fess should be no more than an "award" system just like any employee. I dont begrudge doctors and nurses their overtime pay as they do work long hours. If you work overtime you should be compensated. And stop overseas health insurance ripping off our system. Far too much of our wealth is shipped overseas in many industries, health being one only.
    Do we want a US style health system where it costs over $29000 for an hospital birth. Because thats where we are headed!
    floss
    27th Nov 2019
    1:08pm
    Will never happen under a Liberal Government we all know that . But what we can be sure of a huge recession is on the way as the country can't keep being run the way it is at this time.
    KSS
    27th Nov 2019
    1:21pm
    Given this is not a new phenomenon, refresh my memory, and tell me what Labor did about it in their last turn in office?
    Dollars over Respect?
    27th Nov 2019
    1:36pm
    We need a Royal Commission into the charges by "specialist" doctors. Just how much over the medicare rebate are they really entitled to, after 'legitimate' costs? Also Health Insurance premiums are the only unsubstantiated increases we are expected to 'swallow' each year - all due to a total lack of transparency (how do they get away with this - we hope the Govt is representing our interests - obviously this is not the case). The Govt does the population no favours by caving in to their unjustifiable demands. People have been too 'scared' to let their private health insurance cover go...due to the over-taxed public system already. The private health insurance industry is not working for the average person - certainly not for those on restricted and limited incomes. 'Greedy' doctors are a disgrace to their profession - for this reason their 'industry' has lost the respect it once had. So few doctors seem to have a conscience now. Failures on their part are someone else's problem.
    If a 'specialist' fails to deliver on their promise to proficiently carry out a surgical procedure there is no 'cost' to them - they still submit their bills and expect payment. Who in their right mind would take legal action against their powerful insurance company lawyers? There should be in place a cost to themselves if they are not successful in delivery (as anyone else in business needs to do to stay in practice). This is not the case with 'greedy' doctors nor with 'unsuccessful' lawyers. The double penalty is borne by the patient/consumer - tough luck. It seems any change will need to be forced by a "Boomer Uprising" (we've done it before when pure vocal protests do not work)!
    Anonymous
    30th Nov 2019
    2:15pm
    Yes, a Royal Commission is an absolute MUST now, this private health industry (Insurers, doctors, allied services) is a complete FRAUD industry designed only to defraud customers. If the private insurance is a real insurance, THEY should bear all risks of costs, gaps & failures, NOT the patient.

    Also, there is NO justification for the Govt to allow annual rises over the inflation rate - I debunked their claim reported in YLC earlier about the costs of medical prostheses rising as an excuse as it is a miniscule impact on overall costs.
    floss
    27th Nov 2019
    1:55pm
    KKS IT MAY COME AS A SHOCK TO YOU BUT WE DO HAVE A LIBERAL GOVERNMENT IN POWER AND IT IS THEIR PLOBLEM TO FIX .
    KSS
    28th Nov 2019
    6:48am
    Yet it is the same 'ploblem' the other side had and yet they are not being criticised for the same level of inaction. Fairs fair floss, difficult for some I admit.

    27th Nov 2019
    5:09pm
    Private health insurance = SCAM. It's that simple.
    Jim
    27th Nov 2019
    5:17pm
    There seems to be little difference between not for profit insurance companies and for profit insurance companies, although I have done the comparisons between funds and the one I am with is certainly the cheapest, but I noticed during the comparison process many of the not for profit companies were as expensive as the for profit companies, how can this be. Also with my fund I have noticed a drop in items covered, and they are constantly asking if I want to change to the more expensive cover to match the new recommendations, seriously considering dropping out altogether, but it’s hard to make the decision after being insured for over 50 years, I am starting to use some of the things I have been covered for and never used, I guess that’s the risk we take when we originally took out insurance.
    Retiring Well
    27th Nov 2019
    6:29pm
    I got what they said was a cheap quote for another fund and it was over twice what I pay now.
    Bella54
    27th Nov 2019
    5:21pm
    I have been keen on seeing a single, itemized bill for years! Staggered invoices coming in causing undue stress to a patient recovering is a nightmare. One bill, paid to a central agency and distributed to the recipients by the agency would ease the burden.
    Retiring Well
    27th Nov 2019
    6:25pm
    I just spent a week in a private hospital and was told everything was covered and I wouldn't get a bill for anything.
    Retiring Well
    27th Nov 2019
    6:28pm
    Just pay for 12 months before 1st April and lock in rates before they go up. I do this every year and I now have 18 months at the lower rate.
    KSS
    28th Nov 2019
    6:51am
    Except this doesn't actually happen. All you do is kick the rise down the road. When the next year rolls round you have to pay the previous year's higher charges anyway. I agree you are ahead in the first year but after that you are simply a year behind in the rises i.e. pay before 1 April 2020 and pay the 2019 fees. Pay before 1 April 2021 and pay the 2020 fees etc. You don't avoid the increases, you just delay them.
    patti
    28th Nov 2019
    8:51am
    Private health cover does not represent value for money. I paid into a health fund for many years, and still had to find $6000 gap fee for a knee replacement - beyond me as an age pensioner. Taking my chances in the public system is less than ideal, but what other choice is there - no discretionary money on a pension. We used to have a great health system - what happened??
    Mez
    28th Nov 2019
    10:48am
    It is generally said that the public system is better in hospital care than many private ones for the past 2 to 3 decades.
    Less minor cases entering emergency departments would also be advantageous as there are locum doctors that visit homes after hours instead of overcrowding the hospitals and causing holdup with ambulance services who have to wait around for ages to hand over their patients to doctors there.
    Mez
    28th Nov 2019
    10:35am
    I had not known until recently when comparing health funds that like with super, the INDUSTRY funds are NON PROFIT & CHEAPER but still produce the goodies!
    For example, if you or anyone in your family have been a teacher, nurse, police officer or a postal official, then you can be in one of their health funds which do not advertise like with the Compare funds numbers.
    In fact, they got very nasty when I said that I've found one much better and cheaper and wanted to know which on SO do your homework.
    djminqld
    28th Nov 2019
    2:40pm
    I wish to comment on the following two paragraphs of the article on the greed of probably a minority of specialists, and whilst doing so, I agree with the report recommendations.

    Regarding the statement that "It’s a myth that private hospitals are more efficient than public hospitals (and) that patients stay nine per cent longer in private hospitals than patients with similar conditions in public hospitals", I do not understand how this conclusion can be arrived at. It seems to me that the longer stay in private hospitals could be that these hospitals are perhaps keeping patients in longer to keep their beds occupied, and the shorter stays in public hospitals is due to the shortage of beds.

    With regard to the statement by Chief executive Leanne Wells "the ‘egregious billing’ by some private specialists needs to be challenged by a more powerful entity: the private hospital”, I agree with the 'egregious billing', however, surely the private hospitals are not going to say to a specialist "We don't want you here if you are going to charge such high fees". As a sometimes patient, surely it's the doctors who bring in the patients that occupy the hospital beds and bring in the money. So perhaps it should be up to the AMA or some other appropriate entity to challenge these 'egregious billing' specialists.
    JoJozep
    28th Nov 2019
    8:50pm
    The greed of doctors Is unbelievable. More so the greed of private hospital owners, who are also the doctors/specialists themselves, and they get nice fat slices of the action.

    What do we have a government for? Where is the wimp GH when you need him? You mean to tell me when free enterprise is rorting the system, the government can't do anything to stop price rises? The sooner we kick ScoMo and Co out, the better everyone will be.

    The government can bring in fairness laws tomorrow if it wants. So why the wimpish response. It's called price control. How is it okay during wartime to enforce price control, but not peacetime, when the poor end up footing the profits bill? Tell me, have you ever seen a business man dressed like a homeless person, or driving around in a beat up car? I bet my life savings you won't.
    JoJozep
    28th Nov 2019
    8:50pm
    The greed of doctors Is unbelievable. More so the greed of private hospital owners, who are also the doctors/specialists themselves, and they get nice fat slices of the action.

    What do we have a government for? Where is the wimp GH when you need him? You mean to tell me when free enterprise is rorting the system, the government can't do anything to stop price rises? The sooner we kick ScoMo and Co out, the better everyone will be.

    The government can bring in fairness laws tomorrow if it wants. So why the wimpish response. It's called price control. How is it okay during wartime to enforce price control, but not peacetime, when the poor end up footing the profits bill? Tell me, have you ever seen a business man dressed like a homeless person, or driving around in a beat up car? I bet my life savings you won't.
    Blossom
    1st Dec 2019
    6:30pm
    Sal, If you have a very high temperature that you cannot reduce after trying for a few hours at the weekend you are not going to wait until Monday to try to get an appt. Not all areas have After Hours Doctors Services. You can dehydrate very quickly even if you manage to drink plenty of water. Especially a young child or an elderly person.
    If you go to a Public Hospital you are likely to wait hours to see a Dr. or be in a ramped ambulance for hours first when the hospital is overloaded. We recently had ambulances ramped at 2 hospitals for a few hours. People who had collapsed on the ground then had to wait longer for an ambulance to be available. We have either 2 or 3 private hospitals in Adelaide that have Emergency Depts. You cannot claim any of the fee you are charged from Medicare or Private Health Fund. Once if you were admitted to hospital you didn't have to pay the fee. Now if you are conscious they ask for your bankcard or whatever you use - sometimes before you even reach the treatment section. I know several people that procedure has been used. Too bad if Ambulance Crew don't pick up your handbag or wallet. I know a girl who was given a letter from her Dr. who contacted the hospital with her details for her to be admitted asap. Because she was taken in via Emergency first she had to pay the fee.
    Blossom
    1st Dec 2019
    6:30pm
    Sal, If you have a very high temperature that you cannot reduce after trying for a few hours at the weekend you are not going to wait until Monday to try to get an appt. Not all areas have After Hours Doctors Services. You can dehydrate very quickly even if you manage to drink plenty of water. Especially a young child or an elderly person.
    If you go to a Public Hospital you are likely to wait hours to see a Dr. or be in a ramped ambulance for hours first when the hospital is overloaded. We recently had ambulances ramped at 2 hospitals for a few hours. People who had collapsed on the ground then had to wait longer for an ambulance to be available. We have either 2 or 3 private hospitals in Adelaide that have Emergency Depts. You cannot claim any of the fee you are charged from Medicare or Private Health Fund. Once if you were admitted to hospital you didn't have to pay the fee. Now if you are conscious they ask for your bankcard or whatever you use - sometimes before you even reach the treatment section. I know several people that procedure has been used. Too bad if Ambulance Crew don't pick up your handbag or wallet. I know a girl who was given a letter from her Dr. who contacted the hospital with her details for her to be admitted asap. Because she was taken in via Emergency first she had to pay the fee.


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