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Changes in Private Health Care Fundingand the Impact on Health Services
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Introduction
• Private health services are noticing a reduction in activity.• Public health services are retaining patients with private health
insurance despite high levels of occupancy.• Patients are opting to wait until being treated at a public health
service despite holding health insurance.
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Private and Public Health Service Comparisons
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Medicare Rate Setting Process
Base Rate SetMax charge is base rate
Annual Review
Rates
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Health Funds Rate Setting Process
Rate reviewed with preferred
hospital periodically
Charges recommended but chosen by
consultant
Negotiation with
preferred hospitals
Rates
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Factors Incorporated into Health Fund Negotiation
Complicationsand
re-admissions
Specialisation ofthe service and size of health
service
ClinicalErrors
Average Lengthof Stay
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Gap Payments
• List of approved manufacturers for prosthetics and implants.No gap payment for these if consultant uses them.Consultant has choice to use approved list or another manufacturer.Patient required to pay gap if consultant uses non-approved manufacturer.Consultant potentially receives further benefits from using non-approved
manufacturer (kick-backs).
• Consultant can charge any cost for procedures but health fund will only the maximum of the base rate range.Patient required to fund the gap payment between consultant fees and
agreed rate.
• Patient must be treated in hospital where consultant is accredited.Hospital may not have an agreement with health fund.
Health fund will only pay Medicare agreed rates. The liable gap payment by the patient may be larger.
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Procedures Most Often Charged with Gap Fees Above $2,001Year: 2014/15
http://www.bupa.com.au/about-us/media-centre/media-releases/ci.revealing-the-gap-for-health-insurance-customers.7030news
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Public Services for Private Treatment
• Choice affected by:Complications and adverse events in private hospitals:
Prior experience of complications post procedure. Word of mouth from other patients/friends/relatives. Media articles and other negative publicity when high profile.
• Patients are not prepared to pay exorbitant gap payments.Use of health fund non-approved implants/prosthetics.Charges by Consultants above agreed rates.Proposed private hospital not having a health fund preferred agreement.A gap is not chargeable by public health services.
• Patients are prepared to wait on waiting list for treatment in a public health service.
• Urgent transfers of critically ill/unstable patients to specialist services in tertiary health services.
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Contributing Factors Reducing Activity to Private Health Services
Public hospitals actively retaining private patients to assist meeting revenue targets.
Patient perspective of private health service following prior bad experience or bad publicity
Patient exposed to potentially large gap payments• Fewer taking private health insurance.• Choice where to have treatment (public/private)
Lack of preferred agreement where consultant isaccredited
Agreements made with healthfunds that result in nofunding when errors are made or re-do work needed.
Use of non-approved implants and prosthetic devices.
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How to Retain Private Health Activity
• Collaborate with consultants to minimise gap payments for patients: Utilise approved manufacturers for implants/prosthetics.Align charged rates for procedures with remuneration value.
• Collaborate with public health services to provide support when their occupancy is high.
• Focus and drive improvement programmes and quality monitoring to identify key quality issues that may impact patient care and subsequent remuneration by health funds.
• Focus on efficiency improvements in departments and optimise the length of stay.
• Review procurement and stock control in individual areas, such as theatres and high acuity inpatient areas.
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Where Promentor can Assist in Meeting the Demand
Promoting sustainable improvement through provisionof mentorship to executive, management and others.
Process mapping of key areas to identify access block,process delays and inefficiencies based on metrics.
Workforce modelling to optimise staff numbers and skill mix in accordance with demand and activity.
Analysing data to identify trends and makerecommendations.
Review and recommend improvements to the governance framework.
Review and recommend improvements to data quality,collection and the use of information to supportoperations.
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