When Medibank is privatised, will it really advocate for patients or just a stronger share price?
There is no doubt when it comes to healthcare quality, affordability is a key consideration and one we should all strive to achieve. However, two big ticket items on the health agenda at present could combine to create the perfect storm that discriminates against the poor and the very sick.
“We are now in the world of “big insurance”, with health funds squarely in the business of providing financial returns to shareholders.” Photo: Glenn Hunt
The first item; the GP co-payment, will act as a disincentive for the poor to access the care they need. Similarly, the notion of a sharemarket-listed Medibank – focused on establishing contracts exclusively with cheaper health providers – could see Medibank patients who are very sick unable to access the private hospitals that have the expertise and infrastructure to treat their specific needs.
It is interesting to reflect on comments from Medibank recently as it promotes the “value proposition” of the taxpayer-owned company to potential investors. It hasflagged the fact that down the track it sees itself as not being in contract with all the private healthcare providers, particularly those that don’t meet their “affordability and quality criteria”.
It is a simple truism that the best people to determine the needs of patients are health care professionals, not insurance officers. Atpresent doctors – usually GPs – look at which doctor and hospital can provide the best care for their patients.
GPs put cost second and quality first in this process and identify which is the most appropriate hospital and the best doctor for the job. The insurer’s job is to pay for this service – not control it.
The Federal Government may have good policy reasons to divest itself of a business that is not a core government activity. However, the sale will herald the end of an era when private health insurers advocated for their members. We are now in the world of “big insurance”, with health funds squarely in the business of providing financial returns to shareholders. That means making decisions that benefit their shareholders above all else.
For a long time it has been a myth peddled by the private health insurers that they only act in the best interests of their members.
This could not be further from the reality today. Private health insurers serve their shareholders, meaning that they don’t necessarily seek to actively protect or advance models of care that result in the best health outcomes for their members.
A simple example is that some of the least progressive funds won’t fund the latest health technologies; to access them, you have to pay the price yourself.
In theory, privatisation should lead to greater competition and the best customer service will differentiate providers in the eyes of health-insurance purchasers. That will be the challenge to Medibank Private and the other health insurers whose ability to innovate and encourage hospitals and health professionals to provide the best care for their members will be the point of viability for each of them. That is best done in partnership, not by dictating pricing and quality models that have little evidence of working in Australia.
Who will drive this innovation that provides excellence in care and service of the patient first? It won’t be investment-fund managers, who will be pushing for higher returns on their investments. The insurers will follow their funders, so they won’t either.
So, it will be the hospitals and not-for-profit health-service providers who will serve as the community’s true patient advocates – safeguarding their best interests, proposing innovation in care and supporting the needs of their family. This focus on person-centred care will no doubt pave the way for robust engagement with Medibank Private and other insurers who have a tendency to window dress their efforts to drive profitability by lowering payments to hospitals as “championing lower premiums for their members”.
As the population ages, innovation will be essential in providing the level of care we expect. Make no mistake, our hospitals, like many others, lead the way in driving efficiencies and reducing costs. Sustainable models of care are in the interests of all Australians and the private-health sector plays a pivotal role here. Focusing just on driving prices down and profits up, however, will limit the imagination of Australian health and hospital providers. After all, the last thing we need in Australia is a US style of “managed care”. World Health Organisation data shows that Australia’s spend per capita is less than that of the USA, with far better health outcomes.
What Medibank and other insurers would be better off doing is sitting down with the hospitals to establish jointly a set of quality standards and to implement efficiency programs in partnership with hospital operators.
Inflicting the American-style insurance model of lowest cost wins dressed up as quality is the wrong path for our community’s health and this needs a rethink fast if Medibank is to succeed as a listed entity.
Toby Hall is the group chief executive of St Vincent’s Health Australia