Century-old architecture impacting national health system affordability

And it’s the most vulnerable patients who are paying the most in out-of-pocket costs, the AFR Healthcare Summit has heard.

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With healthcare ranked among Australians’ top cost-of-living pressures, healthcare affordability has firmly entered the national spotlight.

The panel at the Australian Financial Review Healthcare Summit debated how cost regulation, broader economic factors and the roles of GPs and specialists need to evolve to deliver accessible healthcare.

Independent Health and Aged Care Pricing Authority Professor CEO Michael Pervan highlighted that our health system was built on 19^th and 20^th-century architecture but trying to manage 21st century chronic disease.

“The architecture of the system we’ve got (is) around 100 years old,” Professor Pervan said.

“Hospitals, with the exception of the technology and the drugs that are there, the way that we think of a hospital with wards and specialists and doctors and so on, were put in place by Florence Nightingale.”

However, the society we live in is vastly different, he said. Thanks to medical research and medication, people with chronic diseases now live longer but require sufficient management both within the hospital and primary care system.

Patients Australia CEO Lisa Robins painted a stark picture of the reality of the cost of healthcare for Australians.

In surveys, they’ve found that patients pay roughly $50 out of pocket for a GP consultation and $200 out of pocket for a specialist.

“But it’s not uncommon for it to be $300, and about 75% are paying out-of-pocket cost,” she said,

If you make it past that and need surgery, that’s when the costs really skyrocket.

“The average out-of-pocket cost for elective surgery was $2000. What has taken my breath away … it’s not uncommon for me to hear stories about patients who are paying $15,000 out-of-pocket cost, and up to $35,000,” she said.

What is concerning is how some people are forced to pay for that surgery.

“Ten percent of patients who are having elective surgery that reported that they were drawing down on their superannuation early. That’s staggering,” Ms Robins said.

They’re also using services like Afterpay.

“It’s your most vulnerable patients who are paying the most for the cost of their care … it’s wiping some people out,” she said.

Family budgets are also impacting medication adherence.  

“One third of patients were reporting that they’re not taking their medicines because of the cost, or they’re not taking them as prescribed,” she said.

There are some policy changes that are making an impact on patient affordability.

The recent bulk-billing incentives are playing out as expected, Australian Medical Association President Dr Danielle McMullen told the audience.

“We have seen uptake of that … it did help stop doors closing. We were seeing practices close through lack of viability,” Dr McMullen said.

However, there is hesitancy about the future.

“This might work this year, but what about three, five, 10 years down the track? How will this incentive continue to allow us to run a high-quality care practice and do that without an out-of-pocket cost for patients?” Dr McMullen asked.

There also needs to be changes in the way primary care is funded, particularly around team-based funding, she said.

“Let’s get more nurses, allied health, pharmacists, others, working genuinely in a multidisciplinary team, so that … you don’t need to see me every single time. You might see my colleague in the room next door.” 

Another recent change is legislation being introduced to allow the government to publish details of what specialists charge on the Medical Cost Finder website.

“But we also need to make sure that the data is the full cost that the patient is paying,” Ms Robins said.  

“And we’ve campaigned heavily on fact that patients are sometimes paying fees that insurers and the government don’t have visibility over.” 

And because you have to pay up front and claim it back, Dr McMullen said, it’s also important that health insurance is involved.

“It’s so important that things like the Medicare rebate or like your insurance benefit are also involved in that decision. It’s important that people understand how much is their insurer contributing,” she said.

When considering specialist fees, Commissioner (Social Policy) of the Productivity Commission Dr Angela Jackson urged caution.

She said in the absence of good quality indicators, price becomes the proxy.

“If I’m getting heart surgery, am I going for the cheapest or the most I can afford? I can tell you, I’ve going to go for the most I can afford, the absolute peak,” Dr Jackson said.

“I think we just want to be careful about what we’re doing. Build a better system that is more transparent, yes. Patients need to know what they’re signing up for, but the way this market works is not like other markets, and I think where we get into real problems is where we treat it like that.”

Another change is moving to value-based pricing. Mr Pervan explained that until now, funding has been based on the National Efficient Price, which uses decades of hospital cost data (over 30 years’ worth) to set average prices for procedures.

Now it’s considering value to the patient and to the system.

“We are the first country to try value-based pricing in the world,” he said.

“So that’s not cost or price efficiency, it’s not that simple anymore. Now we have to embark on a process of determining what represents value for a public health system.

“How is it measured? And how are we going to determine the impact of those measurements of value on a price?”

For example, what might be a high-value outcome for a surgeon might be different to a patient.

“The orthopaedic surgeon will consider high value is minimally invasive, the prosthetic will last 30 years, patient stopped bleeding within four hours, and after some physio, they were able to go home in 24 hours.

“For the patient, high value is restored mobility and independence without pain.

“Reconciling all those and then all the financial considerations is not going to be easy, but I think it’s where the system needs to go,” Mr Pervan said.

The final point about improving healthcare and affordability was about investing in prevention.

“Governments have a short-term focus,” Dr Jackson said.

The Productivity Commission have recommended investing in prevention and early intervention to take a longer-term view.

“$1.5 billion greater investment over five years could deliver about $5.4 billion in economic benefits to the country,” she said.

“That’s worth us looking at.”