THE GREAT HEALTH FUND DEBATE!

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1 PRESIDENT: John A. Buntine SECRETARY SENIOR VICE- PRESIDENT: Peter Hughes TREASURER: Richard Deveridge JUNIOR VICE-PRESIDENT: Stephen Clifforth Australian Association of Surgeons ABN: September 2015 NEWSLETTER THE GREAT HEALTH FUND DEBATE! Will community rating be under fire again? Most reasonably all people who have an insurance background are most unhappy with community rating which forms the basis of Australia s private health insurance arrangements but which makes it difficult for insurance companies to trade profitably. Community rating is a, perhaps, deceptive term which actually means that private health insurers cannot risk rate the people they insure, e.g., an overweight hypertensive person with a bad family health history must be accepted for the same yearly payment as another person of the same age who would appear to have an excellent prognosis for continued good health. Cover can be excluded only for pre-existing conditions. Therefore health insurers compete by indirect means to attempt to manipulate their memberships so as to improve the risk ratings of their members. At times a particular health fund has been more fortunately placed than the others, e.g., a new fund tends to attract younger and thus healthier members and health funds try to attract healthier members by offering additional services they expect healthier members to appreciate. Those who join a health fund via some organization to which somewhat younger and healthier, or at least working people, belong are also likely to be good members. Another technique has been to offer schedules which exclude high cost services such as cardiac procedures or joint replacements. Selling such schedules to aged people has been questioned although some well informed older people might be pleased to accept such a schedule because of its lower cost as they plan to use private health insurance only for a procedure such as a laparoscopic cholecystotomy but intend to go straight to a public hospital if they have a heart attack or, alternatively, they may be prepared to wait for years for a major joint replacement at a public hospital. Hospital health fund contracts Private health funds remain keen to contract both doctors and hospitals and, recently, the greater pressure to accept a contract has been applied to hospitals.

2 2 Calvary Health Care accepts Medibank contract The following quotes from The Canberra Times article of , Calvary Health Care and Medibank heal rift over contract negotiations say it all:- Thousands of ACT patients have avoided the possibility of paying more for hospital care with Calvary Health Care and Medibank resolving a bitter dispute on Sunday. The two parties signed a three-year contract just a day before an existing contract expired and after a protracted and at times ugly public spat over public safety and expenditure. Negotiations between Australia's largest health fund and the hospital chain broke down in July when Medibank declared it would no longer pay for 165 "highly preventable adverse events". About 4700 Medibank Private members used the territory's Calvary hospitals last year, at Bruce and John James. There are no alternative Medibank-contracted hospitals for obstetrics and psychiatry. The health insurer was sold by the federal government in a $5.7 billion float last year. In a joint statement released on Sunday, both parties said the agreement would deliver improved outcomes and affordability for members and patients despite previously accusing one another of not acting in patients' interests. What was at stake was quite extraordinary! Consider the following scenario:- A part drops off an endoscopic instrument. After its withdrawal the deficiency is immediately noticed. What needs to be done? X-rays are not entirely useful because the part is mostly plastic. More complex and so expensive imaging will be required but the health fund would not support this nor any additional time in hospital for an open operation. Unless the patient can afford the additional expense, it s off to the public hospital! Psychiatrists, in particular, were concerned about Medibank s proposals. The following media release of is self-explanatory:- The Royal Australian and New Zealand College of Psychiatrists (RANZCP) is extremely concerned regarding recent media reports of a refusal by Medibank Private to cover key psychiatric incidents in their proposed contract with Calvary Health. RANZCP believes that the impact of this refusal will be deleterious to the mental health of private patients and their families. Medibank Private s efforts to shift the cost of care at times of tragedy is poorly informed and incompatible with their claims to provide

3 3 peace of mind for clients, or to advocate for an improved health system that produces quality health outcomes. As leaders in mental health treatment and care, psychiatrists are keen to see Medibank Private reconsider its current proposal for the benefit of private hospital patients everywhere, and we will be writing to Medibank Private to express our views. Our Fellows look forward to continuing to work with Medibank Private, alongside other private health insurers, as we support the delivery of quality mental health care in Australia s private hospitals. Stephen Parnis, the Vice-President of the Federal AMA, had stated in the edition of Australian Medicine:- With the float of Medibank Private in 2014, the largest single health insurer (29.1 per cent market share and 3.8 million members) now has the primary goal of maximising returns for shareholders apparently at the expense of patients who are their members. The current dispute between Medibank Private and the Calvary Health Group underlines the problem. As things stand, Medibank Private members will no longer be fully covered for treatment in a Calvary Hospital. This is particularly concerning for patients in the ACT, Tasmania and South Australia, where Calvary Hospitals are most prominent. Medibank Private has asserted that they will not pay for treatment in the instances of a number of so-called preventable complications. With the signing of a contract it seems that at least the worst aspects of Medibank s proposed actions have been averted. However, the Consumers Health Forum remains highly critical because both Calvary and Medibank claim the contract to be confidential. A further quote the Canberra Times article states:- Consumers Health Forum chief executive Leanne Wells said the secrecy was "not good enough". "Consumers pay thousands of dollars a year in health insurance premiums and the health fund involved is a publicly listed for-profit company." "For all members know, Calvary may have weakened and agreed to 160 or the 165 claims hardly a big win for consumers because differential costs will still fall to consumers. Basically Medibank private members don't know what they don't know." One can but wonder what effect recent manoeuvrings could have on the Medibank Private share price and how many doctors might still be keen to take up Medibank Private shares.

4 4 Appointments of surgeons to private hospitals If private hospitals effectively employed surgeons, health funds could include hospital and surgeon in the one contract! One hears talk of such arrangements which could limit choice for some people. ELECTRONIC TRANSFER OF MEDICAL DATA When they think of important electronic applications to medicine people often think of the wrong things. What will be most useful will be improvements to presently widely used but inefficient systems for storage and transmission of data, not tele-medicine, tele-operating, etc. What is needed might be compared to some supermarkets improved electronic checkout systems. In computerized public hospitals there is presently an extraordinary waste of doctors time and effort changing from program to program while consulting a patient, e.g., to find an histopathology report. Perhaps the doctor will try to remember the report thus introducing a high probability of error? A patient has a whole raft of tests locally and then attends a hospital the results ought to be easily and immediately available but, because they are not available, all are repeated! There are various ways such information could be stored and transmitted but tying the information to each individual s computer record is certainly a highly logical solution. Hacking is a risk we must all face just as a doctor must face the ever present risk of being sued. However, because of its complexity, a PCEHR like system might be harder to hack into than any number of doctors and hospitals record systems many of which are far from secure and, although it is frowned upon, data is still communicated by insecure facsimile and . Privacy is important but is a patient at greater risk when it is not known that the muscle relaxant their anaesthetist is about to inject is likely to kill them than when someone else finds out that they have the responsible genetic abnormality? People obsessed with privacy should not allow anything to be placed on their computer record which they absolutely would not want others to know about. Knowing a person s HIV status is important but there are many more important pieces of knowledge which people would be much less sensitive about. In a number of areas of medicine, obsession with privacy is causing unnecessary risk.

5 5 The intended arrangements which allow people to make part of their personal record not available to some people has been poorly understood the plan is for only whole sections of the record to be made unavailable, e.g., when a person does not want their HIV status to be widely available, something like the following would appear on their personal record - PRESENT SIGNIFICANT ILLNESSES BLANK A doctor who looked at the record would then enquire and, if the person did not provide the hidden information, the medical staff would at least be alerted to the presence of a special risk of some type. People who have supported the PCEHR have stressed the above strongly and, if it did not eventuate, it would be most reasonable for a doctors organisation such as the AMA or one or more of the Royal Colleges to advise their members not to use the system until the problem was corrected. Certainly, if I had some type of smart card medical record which could be accessed by a doctor or hospital, I would want to have some control over what, e.g., a physiotherapist could access and I might want to suppress some stupid or misleading statement that had somehow found its way into my record! Arguments about electronic applications to medicine should now be about which particular system or systems should be introduced, in which regard it should be remembered that, providing its IT basis is sound, it may sometimes be better to modify and to build upon an existing system than to go on searching for one green field after another. The baby should not be thrown out with the bath water! Access to knowledge is fundamentally more important than concerns that the knowledge might be misused. There still appears to be doubt as to whether or not the PCEHR would be the best way of achieving improved electronic transmission of some very basic data what is important is that the system to be used must be decided upon very soon! John A Buntine President