Media releases

January 2, 2000


At Medibank, we understand that our members are relying on us to provide them with access to top quality healthcare at an affordable price.
We take this responsibility very seriously and are constantly working behind the scenes to make this happen.
Keeping healthcare affordable for our members
Australia is spending more money on healthcare than ever before. Healthcare costs are increasing by over 8% every year and have doubled in the past nine years . Australia's total healthcare expenditure is growing at more than twice the rate of the government's revenue from tax . This cannot be sustained for the long term.
This growth is due to a number of reasons, including our ageing population and improvements in healthcare technology. It is also due to an increase in chronic diseases - illnesses that are lengthy in duration and often require long-term management, such as diabetes and arthritis.
Rising healthcare costs affect all of the Australian community. They also mean that the amount of money that private health insurers pay out on behalf of their members is increasing. This puts more pressure on health insurance premiums, causing them to increase at a sharper rate.
At Medibank, we are serious about making sure our members get the best quality healthcare within a system which remains affordable for all Australians.
Here are five things we are doing behind the scenes to keep health affordable.
1. Paying hospitals a fair rate to look after our members
Medibank has agreements in place for our members to attend over 450 private hospitals, making up 81% of all private hospitals and 96% of all private hospital beds in Australia. Each year, we pay over $3.6 billion to hospitals on behalf of our members to cover a range of procedures.
This includes procedures such as hip replacements, which was the fifth most common overnight procedure amongst Medibank members last year with an average cost of $28,000 per person. Childbirth was the most common overnight procedure amongst our members last year, averaging at $8,000 per person .
We need to ensure that we negotiate the best agreements with hospitals so we can provide value for our members and their premiums.
Before we begin our contract negotiations, we look at our contracted hospitals to identify those which receive much higher payments from us than other hospitals. Often, this variation in payments occurs without reason. For example, a recent report found the difference in the cost of a gall bladder treatment could vary by more than $4,000 between hospitals, while the difference in the cost of a hip replacement was more than $16,000 .
Medibank uses this price comparison in our negotiations with hospitals to ensure our members can get the same level of quality healthcare, no matter which hospital they attend, without unnecessary increases to premiums.
2. A focus on quality and outcomes
Each year, more than 8,250 Medibank members have an unplanned readmission to hospital within 30 days of their original admission, which adds over $50million to the amount we pay hospitals. A proportion of these readmissions are as a result of preventable hospital related adverse events or errors.
Medibank believes that the cost of preventable adverse events in the healthcare system should not be a cost to members or Medibank.
In simple terms, when more adverse events happen in hospitals, private health insurers must pay more money to the hospitals to cover these events, which puts greater pressure on premiums, and more importantly creates unnecessary inconvenience, discomfort and potentially serious health consequences for patients.
At Medibank we are introducing measures into our hospital contracts to address this issue.
For example, we have announced an agreement with Healthe Care - a major provider of private hospital services in Australia - which puts quality patient outcomes at the forefront and will lead to the better health of our members.
The contract includes specific agreements about the quality of care provided at Healthe Care hospitals, with specific targets around preventing unplanned hospital readmissions and avoiding preventable adverse events when our members undergo treatment.
Other initiatives to improve quality include implementing service reviews and incorporating quality based reporting requirements in our hospital contracts.
3. Supporting our members and their doctors outside of the hospital
This is about supporting our members to stay healthy in the community to prevent unnecessary or avoidable hospitalisation.
People of all ages are seeing doctors more often. They are having more tests and more operations. While some of this is necessary, independent research shows that some could be delayed at no impact to the patient or may even be completely unnecessary. In 2002, there were 0.33 hospital admissions per capita in Australia. This has increased by 24% to 0.41 hospital admission per capita in 2012 .
We are seeing the same pattern across our Medibank member base. For example, since 2010, we have recorded a 34% increase in inpatient rehabilitation admissions and a 107% increase in the number of rehabilitation services performed as same-day procedures. This is linked to increases in admissions for knee replacements (up 15%), and hip replacements (up 12%) during the period .
Many of these hospitalisations are related to chronic disease and lifestyle factors. For example, more than 90% of people requiring hip and knee replacements have osteoarthritis. Chronic disease can very often be managed in the community by general practice and a broader care team. This is even true for our sickest members who often have multiple chronic conditions. These people only account for 2-3% of our member base but recurrently account for nearly a third of all annual hospital claims that Medibank funds. Our own research shows that these patients often feel confused by the range of options available to them and find it difficult to navigate the health system which is not set up to provide the integrated care they need.
Medibank has funded several pilot programs to address these many challenges. For example, we are working with GP clinics in Queensland to improve access to GP services for our members, with no out of pocket costs and faster access. This pilot recognises the fundamental role that GPs and primary care plays in the future of health costs and is aimed at promoting prevention and self-management.
We are also working with two State governments to create a single service, jointly funded by public and private payers, which will enable GP-led, system-wide integrated care for high users of the healthcare system, focusing on reduced hospital admissions and readmissions.
These initiatives are aimed at making sure our members get the treatment they need to avoid unnecessary hospitalisation through better access to preventative services.
4. Helping eliminate the payments of benefits where fraud or abuse has occurred
Medibank is increasingly active in identifying unauthorised insurance claims and then working to recover them and also to prevent them reoccurring.
We are building real time detection capabilities and already look at billing patterns that appear to be outside of usual activity.
This ensures that Medibank is only paying for appropriate services which have been properly authorised and which benefit our members.
Failure to eliminate misuse of private health insurance benefits would otherwise lead to unnecessary pressure on member premiums.
5. Working with governments to continually improve the functioning of the healthcare system
Medibank is playing an active role in keeping Australia's healthcare system efficient and relevant to the needs of the Australian community.
Private health insurers can't change the system independently; we must work together with GPs, hospitals, peak bodies and State and Federal governments. Properly coordinated primary care, including collaboration across the health sector to incorporate prevention, health literacy and social services, can have a real impact on disease progression and hospital admissions.
At Medibank we are working to change government regulations on private health insurers which are not acting in the best interests of all parties. Examples of areas where Medibank is advocating for change are:
- Prostheses: private health insurers pay a regulated rate for prostheses which are not reflected in the costs of such devices. The costs are coming down and these savings should be passed on to our members.
- Rehabilitation: we make compulsory insurance payments for rehabilitation when such a service may not be needed. We have experienced a 107% increase in rehabilitation payments performed as same-day procedures (2010-2013).
At Medibank, we understand that our members are relying on us to provide them with access to top quality healthcare at an affordable price.
The costs and insurance aspects of healthcare are necessarily complex, but at Medibank we see no need for this complexity to stand in the way of improved outcomes to keep health affordable for all Australians.


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