More private patients in public Australian hospital beds

Dec 30 2008

According to a new report more Australian privately insured patients used the public hospital system last year than previously and there are concerns that encouraging people to take out private health insurance is doing little to reduce the burden on the public health system.

According to the report by the Private Health Insurance Administration Council (PHIAC), private patients spent an extra 150,000 days in public hospitals in 2007-2008, an increase of 10% which equates to 1.8 million and represents twice the growth of recorded by private hospitals.

With private health funds lobbying for a reported 6.5 to 7.3% increase in premiums for next year, these latest figures will add fuel to the debate over whether private health insurance does in fact take the heat off public hospitals.

Some believe the statistics merely reflect pressure from the public sector for people to identify their health insurance and it has been suggested that public hospital administrators are enhancing state health revenues by requesting that the privately insured admit themselves as private patients.

This has been rejected by the Australian Healthcare and Hospitals Association, which represents the public health sector, as not a true picture of what the figures show and action which would be illegal.

At present Canberra requires that all patients be given access to free public hospital services, and they are not forced to use their private health insurance to fund their treatment and other states want the same level of health fund payments for private patient stays in their hospitals as received by the private sector.

The PHIAC report indicates that daily health fund benefits for acute patient beds in 2007-08 rose by 2.1% to $294 for public hospitals, compared with 4.9% to $798 for private hospitals.

Dr. Michael Armitage from PHIAC says health funds expenses had soared and 10.4% more was paid out in total benefits this year than last year - some health funds have in fact record negative net margins in 2007-08 which has prompted the AHIA to commission its own analysis of funds' investment returns, capital adequacy and long-term viability.

This will be useful tool with which to lobby the federal Government on the level of health funds' annual premium increases, which are expected to rise this year and changes to private health policies are likely to result in the industry losing hundreds of thousands of members.

The Government usually examines the industry's management expenses before agreeing to politically sensitive premium increases and the PHIAC report shows management costs vary tremendously across the industry.

According to Australia's biggest health fund, Medibank Private, expensive and complex surgical operations which were once carried out in big public hospitals, are being performed more often in private hospitals.

This has a knock on effect as it is exacerbates problems public hospitals have in finding and retaining surgeons and nursing staff and is a concern within the public system as staff shortages in public hospitals impact on waiting lists and the delivery of treatment.

There have been calls for the $3.6 billion health insurance rebate to be reconsidered which was introduced by the Howard government to boost private health fund memberships,encourage the use of private hospitals, thereby relieving the pressure on public hospitals.

The PHIAC report says an ageing population and increasing health-care bills and use of insurance cover by members are driving up costs well ahead of general inflation.