Publications

August 6, 2015

Private hospitals must share the load

By George Savvides, Managing Director of Medibank. 

At Medibank, we are determined to take a stand to shape the future of healthcare in Australia. In particular, we have recently been at the forefront of the drive to deliver even better outcomes for our members as well as an affordable private healthcare system. For this, we have attracted a significant amount of attention.

We, like many in the sector, want to answer the question: “how can we ensure our members receive the best care possible when we know mounting cost pressures on the health system calls into question its very sustainability?”  

An ageing population, an increase in chronic conditions, costly new medical technology and the absence of integrated care are driving complexity and costs up. At the same time, people expect, rightly, the best care possible, especially from the private hospital system.

The current system is not dealing well with the challenge. At the recent Council of Australian Government’s meeting in Sydney, our political leaders pledged to work cooperatively to tackle the rising healthcare bill. There is, however, no consensus yet for a way forward.

A complete solution will not be found by politicians alone. The discontinuity between public and private, between acute and primary care, and state and federal funding, demands a broader approach to a more affordable, sustainable health system for the future.  That means health insurers, private and public hospitals, doctors, and other healthcare professionals must tackle the big issue of affordable healthcare and better outcomes for patients. We all need to share the load.

Working collaboratively with private hospitals and doctors is a key part of the solution.

Let me make it clear. We do not believe this is a choice between cost saving and quality outcomes. Enhancing the quality of healthcare means making fewer unfortunate mistakes. To do so is good for patients, and saves the healthcare system unnecessary costs. It is good for all Australians. There is no tension between quality and cost saving in healthcare. They are not mutually exclusive.

We want to work with hospitals to minimise unfortunate mistakes that cause readmissions, and significant grief to patients. The flow on impacts from these mistakes are an increased likelihood of prolonged illness, delayed return to work, increased number of visits to specialists and increased cost. There are also psychological and social impacts to consider. Many of these mistakes, which are typically acquired in hospital, are preventable with effort from all parties.

This is why Medibank has proposed some changes to the way we work with private hospitals that we believe are better for patients, better for our members, will make health cover more affordable and the system sustainable.

We believe it is time for hospitals to share the load and play their role in improving outcomes for patients.

We recognise that these mistakes can and do occur. We want, however, to make sure we are encouraging our hospital partners to take every care to avoid or reduce them.

If we do nothing, and passively accept the cost of errors, then premiums will continue to rise and, at some stage, cover will become unaffordable. The industry average of 6 per cent premium increase this year is closer to 9 per cent when the reduced government rebate changes are taken into account. We have already seen this place pressure on the health cover people can afford, eroding the value it offers.

With nearly 50% of Australians contributing over $17 billion a year in insurance premiums, the public health system is relieved of a substantial cost burden. Any reduction in private health coverage will shift costs to the public system.

As a market leader, we see Medibank playing a role in helping to fix what is not working – in partnership with others.

We want to help shape a long-term vision for better health outcomes, a better patient experience and keeping healthcare affordable. We believe many healthcare organisations are prepared to take the hard decisions. This is why we started this conversation with private hospitals more than twelve months ago. Some of the best known and largest healthcare providers and hospitals have already signed up with us. They understand that sharing the load means facing the challenge of improving care, and tackling the issues together.

This will be a long process, which will have difficulties. But we are committed to getting it right.

Because, at the end of the day, it is about getting the best outcomes for patients and for our Medibank members. We were created for this purpose. That is our mission.

Health insurers, however, cannot do this in isolation. The challenge we face is that some organisations are stuck in the past. They refuse to change. They want to maintain the status quo, even though this will no longer wash.

We are not asking our members to pay more, because their cover continues to protect them. Yes it’s true, if we get it right, Medibank’s bottom line and shareholders will benefit, but this is not our primary objective. It’s about improving care outcomes, and reducing avoidable costs.

We are already looking at combining quality and affordability in many of our programs in primary and integrated care. We are, for example, pioneering a pilot program centred on GP care that targets chronic disease. Positive outcomes for people are achievable when they and their families, community partners and health professionals are informed, motivated and working together. The program, therefore, includes a care navigator to help patients navigate appointments, a GP practice based clinical co-ordinator to manage care needs holistically, and a 24 hour nurse triage service for all queries and advice.

We also operate a program, underpinned by sophisticated data and technology, which complements the hospital discharge process. It addresses the needs of those most at risk of unplanned readmissions. It does so by supporting patients to better understand their condition and become active participants in their care.

These are just a few examples of where we are taking a different approach to ensure better outcomes for patients, and build a more sustainable system.

To suggest, as some organisations have done, that we don’t understand healthcare is wrong. We provide health cover for four million people and spend $5 billion a year on their needs. Our people work every day in healthcare. They want the best for our members. To say otherwise is a misunderstanding of the thousands of healthcare professionals who work for us and other health insurers.

We want “better healthcare”. That is what we are striving for, in partnership with private hospitals. 


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