Policy paralysis: Private hospitals left to clean up the government’s mess on medical device reforms

Hospitals shouldn’t be forced to grovel to private health insurers to secure funding for essential, lifesaving medical devices. But thanks to the complexity of the Prescribed List (PL) reforms, that’s exactly where the private health sector now finds itself – entangled in red tape, delays, and policy dysfunction that defies logic and threatens patient care.

Catholic Health Australia (CHA), in its latest submission to the Department of Health and Aged Care, flagged serious concerns about the review of surgical guides and biomodels. These medical technologies cut down surgical time, increase precision, and speed up recovery.

Yet, instead of investing in this innovation, the government is proposing benefit cuts based on “questionable economic modelling, flawed assumptions, and comparisons to public sector prices that ignore how private hospitals actually operate,” said Dr Katharine Bassett, Catholic Health Australia (CHA) Director of Health Policy.

Under the guise of “cost containment,” the PL reforms have delivered savings totalling almost $290 million in the last two years alone. But where’s the benefit for patients? Health insurance premiums haven’t dropped. Instead, hospitals are left absorbing rising costs threatening their viability and the delivery of high quality care.

The listing of new medical devices on the PL has become a bureaucratic nightmare. The process is slow, clunky, and completely mismatched to the speed of medical technology innovation. Public hospitals are increasingly offering better access to cutting-edge devices than private hospitals – turning the very premise of private healthcare on its head.

Dr Bassett summed it up best, saying “It’s clear the policy framework is no longer fit for purpose.”

Stakeholders are seeking transparency and a functional pathway for timely access to new health technologies that doesn’t stretch across years or dump the financial burden on private hospitals and patients.

Take fibrin sealants – essential haemostatic agents used to prevent bleeding during surgery. They weren’t removed from the Prescribed List because they lost clinical value.

“It was because they were easy to cut,” explained Dr Bassett. “Never mind that surgeons still rely on them every day. Without a new funding mechanism that can ensure certainty and structure, it’s up to hospitals to absorb the cost or insurers to agree to pay – and neither is a sure thing. It’s reform by abdication, with patients and providers left to navigate the fallout.”

CHA has also raised red flags on proposed cuts to cardiac technical services – the programming and servicing of lifesaving devices like pacemakers. These services are essential for patient safety and continuity of care. But if private hospitals are forced to bear more of the cost or negotiate with insurers case-by-case, regional and public facilities could see these services disappear altogether.

The same dangerous logic is playing out in the review of General Use Items (GUIs) – surgical essentials like haemostatic agents and sealants. The review flags increased usage as a problem, without considering how surgical complexity and innovation have evolved.

The PL reforms expose a brutal disconnect: decisions about life-saving and life-changing care are being made in boardrooms, not operating rooms – by bureaucrats chasing cost cuts, not clinicians fighting for better patient outcomes.

The fallout? Private hospitals and insurers in conflict, innovation stifled, clinicians left with fewer tools, and patients stranded in a private health system that’s failing them.

“Let’s stop waiting for government to solve this critical challenge. As the private health sector, it’s time for us to work together to propose a new funding model that supports both innovation and accessibility and puts patient care at the heart of the process. Patients shouldn’t be left to navigate a broken system,” emphasised Dr Bassett.

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