Private health insurers appear set to profit from the COVID-19 crisis, with a new report suggesting they will collectively reap a windfall of between $3.5 billion and $5.5 billion over the next six months.
The Australia Institute report suggests PHI benefit payouts will drop by between 30 and 50 percent, due to pandemic response policies, including the takeover of private hospitals.
Policy holders’ visits to dentists, physiotherapists, chiropractors and other services will also drop as a result of social distancing rules and ‘stay at home’ advice to older Australians, says a statement by one of the report’s authors, Roy Harvey.
While some health funds have promised to postpone the 1 April premium increase for at least six months, the Consumers Health Forum of Australia has called on the industry to return the funds they save as a result of the COVID-19 shutdown of elective surgery.
CEO Leanne Wells said:
The funds need to do more than give unspecified promises of returning surplus funds sometime in the future. There needs to be some form of accountable undertaking given to members now.
The industry would retrieve some credibility if it adopted a consistent and transparent approach. The ad hoc responses taken by the industry in response to the realities of COVID-19 show yet again a failure of funds to give priority to the best interests of their members.
If private health insurance in Australia was not previously under existential threat, it certainly is now.”
The report adds to important questions raised about the role of the private sector in this timely analysis by Jennifer Doggett, published recently in The Guardian, following last week’s announcement of an historic integration between public and private hospitals.
Doggett suggests the hospital deal is an opportunity to make long overdue changes to the role of private hospitals within Australia’s health system:
Despite the many challenges involved in implementing this historic agreement, one positive is the opportunity it provides to try new ways of working across the public and private health systems…
We should take full advantage of this opportunity to reduce the current fragmentation of the Australian health system and rethink the way in which we fund and deliver private hospital services in the future.”
Meanwhile, as Melissa Sweet reports below, concerns are being raised about whether the new hospital deal will benefit those most in need. This article is published as part of a collaboration with Inside Story, where it first appeared on 3 April.
Melissa Sweet writes:
Health minister Greg Hunt delivered a series of upbeat messages about Australia’s management of COVID-19 last week when he announced a deal to integrate public and private hospital resources during the pandemic. Not only were there signs of a slowdown in new cases, he said, but the hospital deal would ensure Australia had plenty of intensive care beds to deal with projected numbers.
About a third of the country’s intensive care beds are in the private system. The Government is seeking to increase the national capacity from about 2200 to 7500 beds, which the Minister said would be sufficient to meet the worst-case scenario.
His positive messaging may have been partly aimed at reassuring health workers, who have been following horrific accounts — particularly from the United States, Italy and Spain — of overwhelmed systems, shortages of personal protective equipment, and alarming rates of illness and death among health workers.
But at least one medical leader was not reassured.
Dr John Hall, president of the Rural Doctors Association of Australia, doesn’t think Australia is on track to have enough intensive care beds, and wants the military to set up field hospitals in areas of need, as has happened in Britain and elsewhere.
“If the international evidence is anything to go by, intensive care units across the globe have been overwhelmed, even when they’ve put good preparations in place,” he tells me. “I don’t think there’s any reason to think Australia is going to be spared.”
Hall is concerned about more than the number of beds; he fears that people in rural, regional and remote areas won’t get their share of beds and equipment. Private hospitals are scarce outside the cities, and intensive care units even more so. Yet non-metropolitan residents — especially in remote Indigenous communities — are especially vulnerable to COVID-19 because they are more likely to suffer from chronic health conditions and live in poor-quality housing.
“We’re concerned for rural Australians about that whole issue of the metropolitan beds being full,” says Hall. “They might have enough intensive care beds in total for the city, but that’s not to say that rural Australians will have access to those beds at any point in time. You might need a separate field hospital set up specifically for taking rural patients, so you’ve got guaranteed access for rural patients.”
Because they’re constrained by shortages of equipment, drugs and appropriately trained staff, rural hospitals have only limited capacity to ventilate critically unwell patients. Hall is worried by reports of some rural hospitals not doing enough preparation ahead of the surge in patients he expects to begin in late April or early May. He has observed a “delusional belief” among some that the novel coronavirus might not penetrate far into rural and remote Australia.
Even in the best of times, it can be difficult to arrange patient transfers from these areas to metropolitan hospitals, Hall says. During a pandemic crunch, retrieval services could easily be overwhelmed by demand at the same time as losing their valuable workforce to infection and illness. While work is under way to increase the capacity of retrieval services, he would like to see much more done, including involving the military in retrieval planning.
Urgent efforts are also needed to boost access to quality palliative care in rural, regional and remote areas. A recent statement from the Australian Covid-19 Palliative Care Working Group said palliative care is an essential component of frontline responses, and called for these services to be boosted as part of operational surge planning.
“There will be a significant demand for palliative care for some of the people who are elderly, frail and have multiple medical conditions, who don’t want to be resuscitated,” says Hall. “They may choose not to be retrieved or sent to an intensive care unit. Those people are going to need access to quality palliative care. We will need extra doctors, nurses, drugs to provide that. Many of these towns have only enough drugs and equipment to manage one palliative care patient at a time.”
At the National Rural Health Alliance offices in Canberra, chief executive Gabrielle O’Kane is also concerned about access to retrieval services and metropolitan intensive care beds, and is hearing from rural and regional doctors anxious about these questions. “Can rural health professionals be assured that there will be fair allocation of intensive care beds for rural people in metropolitan hospitals, should they need them?” she asks. “This situation has made it clear that there are considerable gaps in rural healthcare.”
The National Rural Health Commissioner, Emeritus Professor Paul Worley, is worried too. As he tweeted on 31 March: “Are you, like me, angry that rural Australia is having to fight Covid with one hand tied behind its back? The constricting rope is health workforce shortage. 61 GP vacancies in SA alone. We can’t just do more of the same. Let’s use this time to make our rural health system stronger.”
The Royal Flying Doctor Service is already feeling the impact of the pandemic. It transported forty-six patients with Covid-19, aged fifty-eight on average, between 20 February and 29 March, according to executive director Frank Quinlan. Transporting these patients takes longer and costs more because of the extra cleaning required for infection control.
Quinlan welcomed the news of public and private hospitals working together to expand capacity, and said the RFDS was also working hard to build its own capacity, bringing on additional resources, including locums, pilots, engineers, contractors and clinical crews.
“We’re planning for the worst and hoping for the best,” says Quinlan. “Planning for the worst means we have to consider the possibility that both aircraft crews and clinical crews could become ill and that will place pressure on already challenged resources. All of our planning has revolved around enhancing and building up that capacity.”
Quinlan believes it is too early “to be either comforted or alarmed” by trends in Australian case rates, but is encouraged by Australians’ response to calls for social distancing. “It is an opportunity for the community to take control of this crisis,” he says. “That creates the sense that we’re all working together.”
Challenges ahead
Under the deal announced by Greg Hunt, the private sector must act as not-for-profit organisations for the duration of the crisis, and open their books for audits. In return, governments are guaranteeing their viability during the life of the agreement.
Private hospitals will contribute 30,000 beds and 105,000 full- and part-time hospital staff, including 57,000 nurses and midwives, to the pandemic response. The Commonwealth was budgeting $1.3 billion for the arrangement, but the figure was not capped and, the minister said, “if more is required, more will be provided.”
Australian Healthcare and Hospitals Association chief executive Alison Verhoeven welcomed the deal as “a very necessary and sensible move.” “The whole arrangement is really good to see — state governments, the Commonwealth government and the private sector agreeing to work together in a really coordinated way for the benefit of the community.”
Dr Stephen Parnis, an emergency physician at three Melbourne public hospitals and a former vice-president of the Australian Medical Association, says there can be no one-size-fits-all in bringing the sectors together, not least because of the diversity of private hospitals, which range from small day surgery facilities to fully equipped tertiary services.
To work most effectively, arrangements will need to be made locally, he says. “It may be that the private hospital takes on the standard hospital load to enable the public hospital to become sectioned off and treat COVID patients.”
A massive logistics exercise is under way, together with urgent efforts to boost health workforce numbers and extend critical-care training. Health workers, academics and communities are discussing the ethical dilemmas that lie ahead, spurred by reports from Italy and elsewhere of health workers left weeping and traumatised from having to make life-and-death decisions. When ten patients need lifesaving ventilation but only one machine is available, who is chosen?
At times like these, some groups — including disabled people and Aboriginal and Torres Strait Islander people — are at increased risk from both COVID-19 and systems that have a long history of causing them harm.
The Australian Indigenous Doctors’ Association, or AIDA, has received reports of Aboriginal people experiencing racism and exclusion from health services during the pandemic. It has called for Aboriginal and Torres Strait Islander patients to be tested and treated ethically and equitably for Covid-19. “Aboriginal and Torres Strait Islander Peoples’ lives, health and wellbeing cannot be put at risk because of underlying racism and prejudice,” says the association.
According to Dr Janine Mohamed, a Narrunga Kaurna woman and chief executive officer of the Lowitja Institute in Melbourne, it is in high-pressure situations that non-Indigenous health workers are most likely to make kneejerk reactions based on embedded negative views of Aboriginal people.
“We have seen this already play out in our reduced access to transplants,” she says. “We know that Aboriginal people don’t get the same pathways of care. At this time, more than ever, cultural safety has to be at the forefront of health professionals’ minds. In September, when this pandemic is finished, what I don’t want to read is that Aboriginal and Torres Strait Islander people who needed intensive care were left to die. We have to do whatever we can to ensure that preventable deaths do not happen.”
Similar concerns are also worrying Professor Bronwyn Fredericks, a Murri woman and Pro-Vice-Chancellor (Indigenous Engagement) at the University of Queensland, who stresses that Aboriginal and Torres Strait Islander people must be involved in developing pandemic ethical protocols for resuscitation and allocation of lifesaving interventions.
“I’m concerned for my parents, my partner, other family, friends, community members, and even myself,” she says. “I know that if medical interventions become rationalised and if we have coronavirus that there is the possibility we wouldn’t be offered lifesaving treatment if pitted against others, and that we would be offered isolation and palliative care instead.”
Fredericks is also worried that age could be a factor in determining access to care. “[This] fails to consider that that Elder in front of them may not just be a partner, or grandparent, uncle or aunt, but also be a precious and rare repository of language or law, music, art, medicine, knowledge, philosophy and more,” she says.
“They might be one of only a handful of people who hold this knowledge not just in the community, but in Australia and in the world… It needs to be asked, are we prepared for us, and the world, to lose this by rationalising lifesaving interventions based on availability of resources and age?”
While Fredericks welcomes the hospital deal in principle, she wonders about the implications for Aboriginal and Torres Strait Islander people. “The coronavirus itself doesn’t discriminate; it is society’s structures and people that do. The deal to open up private hospitals for all must also now ensure access for all too,” she says.
Perfect storm
The perfect storm created by the pandemic is driving integration and cooperation across the health system in ways that were previously inconceivable. Suddenly, population-wide telehealth and other innovations that have been waiting in the wings for years are a reality. A Government better known for health cuts than health innovation may go down in history as having introduced some of Medicare’s most significant reforms.
The Australian Healthcare and Hospitals Association’s Alison Verhoeven is keen to ensure the momentum continues beyond the pandemic. While some not-for-profit hospitals have a long history of working for health equity, Verhoeven would like to see the wider sector stepping up.
“At the moment, private hospitals support a population group that can afford to pay for their services,” she says. “What we have seen with this week’s funding announcements is a recognition that they are part of the public system, partly subsidised by the public purse, so they have an obligation to contribute to the health of the wider system.
“We hope that, longer term, private hospitals might continue to support some of that social obligation. It’s important that they engage in the dialogue that we need to have at a national level about supporting the health of the most vulnerable people in our community.”
More broadly, Verhoeven hopes the pandemic will also lead to wider societal changes, tackling problems that have been thrown into sharp relief by the pandemic, such as the casualised, insecure health workforce and the privatisation of essential services.
The Rural Doctors Association’s John Hall hopes the groundwork is being laid for lasting changes in the relationship between private and public health services. He would like the public sector to be more responsive and engaged in collaboration with private services, including general practice, radiology and pathology.
“My view is that public and private haven’t collaborated well enough in the past; we have seen that play out in the regions. For example, a private radiology firm might want to co-locate with a public hospital in a rural town but the negotiations have fallen over because the public sector is notoriously bad at working out collaboration with the private sector.”
Hall also describes public patients being transported long distances from regional centres for essential cardiac services that could have been provided by private services locally. This has often meant huge additional costs for patients and families because of the travel involved. “For a public hospital to use the private catheter lab is a really good example of where the private and public sectors could work together to provide an evidence-based service to the community,” he says.
Hall says this must be a transformational time in driving greater cooperation between health systems and services. “This is going to be a war for rural doctors and rural health services. We would like to see barriers broken down so everyone can put in their best efforts to win the war.”
In Tasmania, Geoff Couser, an emergency physician in public practice, questions whether it is appropriate to refer to a “private hospital system” at all. He prefers the term “federal public hospital system” given the large public subsidy the private sector receives through Medicare, subsidies for private health insurance, support from the Department of Veterans’ Affairs, and tax exemptions for religious institutions.
The pandemic crisis is a perfect opportunity for making clear that any sector receiving a significant amount of public money has a responsibility to contribute to the wider public good, he adds. “It is about getting the best value for that public money every step of the way. We need to have that sense of stewardship and responsibility on a fiscal level to taxpayers, and responsibility to patients.”
Couser also highlights inequities built into the system. Patients with private health insurance can tap into the “federal public hospital system” and get a colonoscopy next week, he says, while those relying on state public hospitals face long waits.
Despite apprehensions about what lies ahead, Couser is enjoying some relatively quiet time before the storm hits.
Presentations in the emergency department are down, perhaps because more people are staying home. This has left time for preparation, and also reflection, including about how he hopes the crisis will bring transformational change for health systems and society more widely. “I hope that we will not waste the crisis,” he says.
Read previous articles published in collaboration with Inside Story
