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News & Trends - MedTech & Diagnostics

We’ve got to address the elephant that’s not in the room: Healthcare leaders and patient group debate new funding models

Health Industry Hub | April 3, 2023 |

MedTech News: Healthcare leaders explored the current funding models of care and the future evolution of new funding models during a panel discussion at the Australian Private Hospitals Association (APHA) congress 2023 last week.

Panellists included Dr Elizabeth Deveny, CEO of Consumer Health Forum, Luke Toy, General Manager of Advocacy at Australian Medical Association (AMA), Professor Henry Cutler from Macquarie Business School and Julie Andrews, Chief Officer Member Health for HCF Australia. Christine Gee, CEO of Toowong Private Hospital moderated the discussion.

The panel members agreed that our current healthcare funding models are antiquated and broken.

Professor Henry Cutler said “Medicare was introduced in 1984 and that hasn’t had any significant structural reform to it. That’s led to silos and fragmentation in the delivery of care. It’s stopped the integration of care across specialist, GPs and hospitals. We also see issues relating to cost shifting amongst state and federal services.

“We have issues with private health insurance. There is a $7 billion subsidy that’s given to private health insurance each year to maintain membership and there are some questions as to whether that’s worthwhile.”

New funding models must implement the right incentives to align provider and clinicians behaviour with the care that patients prefer and expect.

Ms Andrews from HCF Australia said “We need to look at new funding models that facilitate scarce resources as well as addressing the fragmentation. Models that facilitate short stay surgery which provide the best use of physical labour and skills of our workforce, and blended care models that optimise one to one and peer support with online CBT programs and digital support are important.”

Dr Deveny from Consumer Health Forum highlighted that from the consumer perspective healthcare is becoming more unaffordable, more inaccessible and almost un-navigatable. “So you end up with people who delay care. Funding models need to support the healthcare of consumers. Consumers don’t really care who’s paying. They just want to know it’s not them, because they’ve paid enough [through private health funds and tax],” she said.

Mr Toy from the AMA referred to the elephant not in the room – the government – who sets the groundwork for the funding models across Medicare and private insurance that are no longer fit-for-purpose.

He said “We had a Medicare freeze for five years which continues to grow the gap that we have in the underlying rebates. At the same time government sets the ground rules for how many consumers find health insurance affordable and set the premium increase as well as the Lifetime Health Cover loading and Medicare levy surcharge – mechanisms that have not been changed in years.

“The government sets the ground rules for a lot of this work. That’s where the money comes from, that’s where the squeeze starts and then flows through the system to insurers, hospitals and doctors. insurance. The government needs to be involved in the conversation on fixing it.”

The current funding models are largely opaque to anyone outside of the health industry. Consumers are looking for more transparency and assurance around value for the system they pay for through their taxes. They want to better understand the relationships between Medicare, health funds, public and private hospitals and a range of other costs associated with the healthcare system.

Dr Deveny said “Consumers commonly say that they thought their private health insurance would cover the cost of the specialist consultations that were related to the procedure that they are going to undertake. Another common thing they say is that when they’re trying to find out how much something costs after being referred, it’s impossible. The GP doesn’t know the costs. A specialist might give the cost of what they’re doing, but then consumers are told they need to speak to the hospital, insurer and possibly others to understand what the costs are. There are assumptions that consumers speak English, read, write and can understand all these things.

“I often have trouble understanding how to navigate through all this. Imagine the people that aren’t in the healthcare system and how much harder it is for them.”

Consumers expect one quote, one bill, one interaction, according to Consumer Health Forum research. They expect that the complexity and transparency of healthcare costs relating to their surgery or procedure is borne by the hospitals, health insurers and the clinicians ie the healthcare sector, not by the individuals.

Models of care have been evolving rapidly and technology and workforce pressures will continue to drive pressure for further evolution.

“New models are developing but certainly not consistent or transparent across the nation. It happens in pockets of innovation with limitations on what you can do under the rules and the legislation that exists for private health,” Mr Toy commented.

He said “If we’re going to move to the next wave of delivery of services, it’s about working together as a sector to bake in some key principles. At the moment, we don’t have health insurance. We have hospital insurance with some extras on the side.

“Clinicians are looking for a systems-based approach that gives them surety that if they go down new models of care and funding, they’re not going to be told that 60% of their patients must go down this path, regardless of whether it’s going to be appropriate or not. They’re looking for reassurance that they can pick the best provider that meets safety/quality standards and the needs of their patient, and that they’re going to have the choice.”

While insurers do not own and run hospitals, the sector is starting to see private insurers own and run hospital-in-home programs. Clinicians not only want to choose the service that is right for their patients, but want transparency around these new care delivery models and its measures.

Mr Toy added “My question is back to the private hospital sector. How are you dealing with the fact that if a private health insurer might own 50% of the market in any particular state decides they’re going to be the delivery of healthcare services as hospitals substitute programs? Where does that leave you? What public policy protection are you relying on to be able to compete in that space and also drive innovation?”

The AMA is continuing to call for a Private Health System Authority to ensure a cohesive regulatory model by relieving the Department of Health of its conflicted role as a regulator and policy maker and incorporating new functions to fill gaps in the current regulatory environment. The authority would create a platform for everyone in the health sector, including government, to move away from combative debates and work together to deliver better outcomes for consumers and the key stakeholders.

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