Transcript – produced by Media Monitors

Station: 3AW

Program: DRIVE


Item: CEO of Private Healthcare Australia Dr Michael Armitage explains that the 5.6% increase in health premiums helps cover the increase in several healthcare costs which far exceed this amount. Dr Armitage says that there are certain doctors and hospitals in the system that are costing more than they should, and that he would like to be able to identify them.

TOM ELLIOTT: Private healthcare costs. Now Tanya Plibersek, the Federal Health Minister has announced today that there’ll be an average 5.6 per cent increase. Now that is average – I mean, it could range from 1 per cent to 15 per cent, depending on your individual circumstances. Apparently that translates to $3.70 a week which is around about $180 a year. Can you afford it? 96 900 693.

Joining me now is the chief executive of Private Healthcare Australia, Dr Michael Armitage. Dr Armitage, good afternoon.

DR MICHAEL ARMITAGE: Hello, how are you doing?
TOM ELLIOTT: Good thank you. Now are healthcare costs going up by more than 5.6 per cent per annum?
DR MICHAEL ARMITAGE: Healthcare costs that we pay on behalf of consumers and members of the funds are actually going up by over 9 per cent a year. We paid doctors 9.9 per cent more last year, we paid 7.5 per cent more for prostheses, that’s things like cardiac pacemakers and new hips and so on, we paid 9.3 per cent in hospitals.

So the bottom line is the money that we pay out – or the funds paid out on behalf of members for their healthcare is going up at a pretty rapid rate. And so the Minister analyses all of the requests and then at the end of the process, she makes sure that the funds won’t go broke, which means there has to be an increase to pay for that sort of costings, and that they’re not charging too much. So it’s a balancing act, I guess, between those two considerations.

TOM ELLIOTT: If we look beyond the perhaps simplistic issue of just saying how much they go up, why is it that medical costs seem to rise so much more rapidly than just, say, the normal consumer price index?
DR MICHAEL ARMITAGE: Look, that’s a great question. One of the really difficult issues that we have to put up with is that the law states that we don’t have what we think is an appropriate control over our costs. For argument’s sake, we are forced to pay no matter what happens.

We might know, for example, that a particular hospital gives people golden staph, that the doctor who we’re paying the money to uses a hip that doesn’t work as well as others, and we might also know that that particular doctor has a whole lot of people go back into intensive care after the operation – many more than others – and we’ve still got to pay him the same amount.

To us that seems crazy. We think we ought to be able to be – on behalf of the members – an intelligent purchaser, rather than someone who just forks out the money no matter what the invoice is. So we would like to have more control, and we think then that at least we could put a cap on this ever-increasing costs spiral, which is sometimes – must look as if it’s getting out of control, really.

TOM ELLIOTT: Have you ever thought, perhaps, that there’s a role for funds or for, you know, someone like yourself to perhaps start exposing some of these inequities in the system?
DR MICHAEL ARMITAGE: Look, we would love to do that but we are constrained by privacy. I have actually spoken to the Privacy Commissioner, and I’ve asked permission to identify some of these things that go wrong. And I’ve said that I wouldn’t identify anything about the individual, I would be identifying things about the individual’s business practice, would that allow me to get around it?

The Commissioner’s response was well look, I think it probably would and you’ve got a very valid point and people should know this, but look, what you should do is just identify them anyway, they’ll take you to court, you’ll have to go into the High Court to get a decision and then we’ll all know. That’s not a response.

TOM ELLIOTT: No. And of course then if it goes against you and you’ve got to pay costs, then that just hurts the other members of the fund, doesn’t it?
DR MICHAEL ARMITAGE: Exactly right. I think you’re absolutely right. My belief – our belief in the industry – is that your listeners would like to know, would like us to be identifying this, so we’re quite cross that we’re not allowed to.
TOM ELLIOTT: I can understand that. We’d better leave it there, Dr Michael Armitage from Private Healthcare Australia. Thank you so much for joining us.
TOM ELLIOTT: That was pretty interesting there. I mean, it’s all too easy just to say oh my god, healthcare costs are going up, we’ve all got to pay and we won’t be able to afford it. But what he was saying there – if I understood it correctly – is that because there’s a few bad eggs, that the costs for everybody goes up and the healthcare funds have no choice but to pay it. I might pursue that a bit in the future.


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