PETER BROOKS. Movement on out of pocket expenses.

Over the last few years much as been written on the issue of out of pocket (OOPs) medical expenses in Australia including a number of contributions in this newsletter. There has been a Senate enquiry and much coverage in the media. The issue of out of pocket expenses is not new – the Grattan Institute conducted a review last year pointing out their rapid increase and that they were impacting on the most vulnerable in society . While a recent OECD Report (…/Health-at-a-Glance-2015-Key-Findings-AUSTRALIA.pdf) showed that in Australia OOPs account for 20% of expenditure on health care , slightly higher than the OECD average of 19%. By contrast, out-of-pocket costs account for only 10% of health spending in the United Kingdom, 13% in New Zealand and 14% in Canada, which have similar government funded health systems. Out-of-pocket costs also comprise a low proportion of health spending in France (7%), whose health system is largely funded by social security.  

Thus the recent announcement from Minister Hunt establishing a Committee to review OOPs should be welcomed as at least demonstrating a willingness on behalf of Government to continue the ‘conversation’ and come up with some solutions that will work for the benefit of patients. Whilst it is unclear what the time frames of the newly constituted Committee will be the AMA, a number of surgical groups and the Consumer Health Forum are all represented as stake holder groups.

While surgeons tend to be the focus of out of OOPs one should remember that that every specialist health professional group and not just doctors can effectively charge what they like without much reason and certainly no outcome measures – such as success of the intervention , length of time in hospital, post intervention infection rates on which the patient might evaluate price between various practitioners. There is no money back ‘guarantee’- and neither should there be – but we should also remember that about 20% of what we as health professionals do is what we call ‘low value care’ – it does not make any difference to the patient. So to charge an OOP for something that is unnecessary ( and may be associated with an adverse event – even occasionally a fatal one ) needs to be considered .Focusing on reducing low value care would significantly improve patient care and also reduce waste in the Australian health care system ( )

An extensive report on the variation of fees charged by some surgeons commissioned by the Royal Australasian College of Surgeons and Medibank Private ( ) is illuminating. These reports are very useful for informing doctors of what is going on but whether they can be helpful for patients in choosing their surgeon or physician is yet to be shown. The Report does show the significant variation in fees that surgeons charge for the same procedure and it is very hard to see why this should occur. The Report does acknowledge that while many surgeons do not charge out of pocket expenses significant numbers do. These OOPs can be up to seven times more that colleagues for the same operation leaving patients with thousands of dollars to find often in difficult circumstances. Physicians – and particularly proceduralists (endoscopists) also show great variation in ( up to 5 times ) in charges levied by physicians across 11 medical specialties for the initial consultation with the doctor- often in excess of three times the Medicare rebate (

When asked recently for a comment on these data the RACP President replied that the ‘ RACP does not comment on what individual physicians charge’. Sad that the organisation I have been proud to be a member of for over 40 years will not show the leadership in this debate while the RACS has at least raised the issue in the public domain commenting last year against high surgical fees (RACS pledges fee probe – MJA InSight 11, 29 March 2016 doctorportal) though little progress seems to have been made since then.

Doctors’ fees are always hard to comprehend : the Medicare rebate is determined by Medicare (85% of which is accepted by the Doctor if they bulk bill. The AMA sets another fee schedule significantly higher than Medicare and the individual practitioner charges what they feel ‘the market ‘can bear. This is most unfair to the patient who has no idea of what an appropriate fee is or even worse what other practitioners charge for the same or equivalent procedure. And of course the doctor provides absolutely no outcome data ( for example what is the success / infection rate of the procedure and the average length of stay ) which might be helpful in deciding who a patient might see let alone pay a significant out of pocket expense.

There was even a Senate inquiry last year (Report – Parliament of Australia › … › Out-of-pocket costs in Australian healthcare-)which sadly made few recommendations and non in relation to how doctors should transparently inform patients about the OOPs they are about to incur. So we do have a problem with OOPs. This issue has been around for a while and patients should understand they have a right to question these fees. However it has now come to the point where there is good evidence that OOPs are starting to impact on private health insurance rates and on the ability of patients (particularly those with chronic disease and with lower incomes) to access appropriate care. These two issues alone are likely to impact significantly on the public health system and upset the balance between public and private health care to the detriment of all. Not for the first time will the golden ‘goose ‘ ( an unchecked fee for service payment system ) be sacrificed by those who gain most under the current system – private specialists! And it will hurt everyone – but particularly patients.

But back to the Ministers Committee: its membership is very ‘professionally’ heavy – so much so that Jenny Doggett writing on Croakey this week suggests an alternative membership with consumers who really do understand the challenge of paying for health care ( )

Australia like the rest of the world needs to accept that the health system is for patients ( at least as the primary recipients)and patient participation with professionals in clinical decision making has to be the new health ‘mantra’.

The Minister and the Committee has an opportunity to make a real difference but must focus on what is best for patients and not for each individual craft group they might be seen to represent. Solutions must be found – what we have at present is unsustainable- particularly for patients.

Prof Peter Brooks. Centre for Health Policy, Melbourne School of Population and Global Health, University of Melbourne


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2 Responses to PETER BROOKS. Movement on out of pocket expenses.

  1. John Power says:

    The medical profession has worked its way into the classical open ended neoliberal structure. Fees either guaranteed by government and or insurance payments backed by the consumer to service an absolute need with minimal constraints on what is charged. The “market” without uncertainty or real competition.

  2. Good analysis, Peter. But I feel that some of the responsibility lies with the ACCC.
    I have observed carefully how the AMA ‘s annual ‘List of Services and Fees’ has been professionally determined by outside experts in accounting, finance etc.
    The AMA has never been permitted by the ACCC to publish this list – for logical fear that it would set a baseline below which no-one would charge. But Murphy’ Law has prevailed – without access to that list, patients have no idea what the AMA’s experts consider is a reasonable fee. Were the AMA permitted to publish the list, patients could reasonably ask why, for example, a surgeon’s, endoscopist’s or gastroscopist’s fee is higher that that ‘reasonable’ fee. Not a perfect (nor the only) solution (such things don’t exist), but it would give patient’s some ‘leverage’.

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