Comment

Patients and profits in health care

What we need now are penetrating analyses of what we are spending of our own and taxpayers' money in health care and whether it is delivering the best bang for the buck, writes Leanne Wells.

The latest above-inflation rise in health fund premiums prompts questions about the emergence of big for-profit health care companies and the competing interests of patients and profits.

In recent weeks, we have seen this play out in two multi-billion dollar industries: reporting of high profits in health insurance at a time when consumers pay more for less in health cover; and in pathology services, the questioning by both government and researchers of the role Medicare plays in generating revenues to for-profit companies.

It seems likely that the growth of for-profit companies in the delivery of health care will continue, on the arguable grounds that the private sector delivers a more cost-effective result than public services. For governments and politicians, private sector health care may also afford the attraction of distancing government from the daily clamour of health crises.

The trend towards the involvement of for-profits in health care, requires governments, taxpayers and consumers to support strategies that ensure the goals of access to cost-effective health care for all are protected and promoted.

We need an open and dynamic system that will require the light of transparency to be shone into all corners of our health arrangements, and real competition for the billions of taxpayers' dollars made available for what we expect to be evidence-based care.

Australia's mixed public-private health system is showing itself more than ever vulnerable to the power of profit, with profound implications for what is meant to be a universal health system offering quality care to all, regardless of income.

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The Productivity Commission in a report some years ago found private hospitals were more cost effective than public hospitals, although defenders of the public system argued that while private hospitals tend to concentrate on quick, routine, pre-planned procedural medicine for otherwise healthy patients, the public system is left to battle with emergency trauma and the often drawn-out, complicated cases of those with complex and chronic conditions.

The pursuit of profits by the growing private health corporates is not of itself something that the Consumers Health Forum opposes. What is of concern, however, is that we ensure that pursuit of profit does not result in an inferior outcome for patients and consumers.

There are disturbing developments which are already showing that the combination of a government action and profit-seeking corporates can produce negative outcomes for consumers.

An analysis of recently released APRA health insurance data shows that the gap between the premium revenue health funds receive and the benefits they pay members is growing wider. As the profits of health funds and private hospitals have increased, so have the premiums consumers pay for what can often be shrinking cover.

The pressure for profits has also been pointed to in a report by the Grattan Institute into Medicare financing of pathology. It suggested that far from needing to charge patients a co-payment in response to cost cutting by the Government, the pathology companies should be delivering hundreds of millions more in savings to Medicare.

The arresting feature of health care provision is that the cost of even routine funding allocations can rapidly bloom into billions, as in the case of pathology, which costs Medicare $2.5 billion. Much of that goes to just two companies which provide 75 per cent of the services.

All the evidence tells us that the world's strongest performing health systems have comprehensive and accessible primary health care. That is where we need to start reforming.

The reflex response of the current government in its efforts to reduce exposure of those billions has been to seek to shift the burden to consumers, through co-payments.

This, however, is not a good, or for that matter, health-promoting policy. What is needed is a clear approach to health expenditure that takes a close and careful look at how and where the health dollar is spent along with a fundamental rethink of the design of our health system.

All the evidence tells us that the world's strongest performing health systems have comprehensive and accessible primary health care. That is where we need to start reforming.

The federal Health Minister, Sussan Ley, has shown a preparedness to begin the process of rethinking health care and costs. She's starting in the right place through her reviews of primary health care, pharmacy and Medicare.

There are other developments which are also significantly improving our knowledge about the performance and value of current health services, such as the recently published Australian Atlas of Healthcare Variation and the detailed results of the Independent Hospital Pricing Authority and the National Health Performance Authority reports into access to, and use of services.

The Consumers Health Forum has proposed that the $6 billion health insurance rebate be deployed to spur transparency and competition among health funds by requiring that only policies which are comprehensive and easy-to-compare should qualify for the rebate.

In the past, various reasons have been given to explain the lack of transparency in health care costs, including divided federal-state responsibilities, the complexity and variety of treatments, doctor-patient privacy and commercial-in-confidence considerations.

Surely those arguments should have declining validity when we consider the vast sums of money swallowed by the health system and the public interest.

What we need now are penetrating analyses of what we are spending of our own and taxpayers' money in health care and whether it is delivering the best bang for the buck.

Leanne Wells is CEO of the Consumers Health Forum of Australia.