Henry Woo: Abuse of self-pay patient system widespread

ADMINISTRATORS juggling budgets in cash-strapped public hospitals and senior surgeons who feel underappreciated and underpaid can provide the ideal circumstance for an unhealthy alliance between the two.

The “self-pay” patient system brings these normally combative groups together as it is one of the few “win–win” arrangements between them, yet it is something most would rather not mention publicly.

Most Medicare patients are aware that, when they are admitted to a public hospital, they do not have the choice of doctor but will not have to wear the cost of treatment.

If they do want to exercise the right to choose their own doctor but don’t have health insurance, they can become private self-pay patients, but this will come at a price. A typical facility fee levied by public hospitals in NSW is $660 to become a private patient for 2 days. Additional costs include out-of-pocket fees for their surgeon and the anaesthetist, so it can end up being a costly exercise.

Hospitals are very happy to see patients exercise this right as it means additional funds that they would otherwise not have for their budgets. Government funding is essentially fixed, so these funds are a bonus.

Hospitals have indirectly encouraged this process by issuing memos to doctors reminding them that this service is available and encouraging doctors, particularly surgical and procedural specialists, to let their patients know about it.

So why would a surgeon want to encourage patients to go into public hospitals as private self-pay patients?

A visiting medical officer working in the public hospital system or a staff specialist earns about $120–$180 an hour, which really does not cover the background costs of running an office in the private sector. Using my specialty of urology as an example, if a public patient undergoes a radical prostatectomy, the surgeon might earn about $600 at these hourly rates.

However, if the patient comes in as a self-pay patient, the minimum a surgeon would earn would be $1396, which is 75% of the schedule fee paid by Medicare (as of the November 2010 MBS published rates). More often than not, the fee charged will be much higher.

From a financial viewpoint, it seems to be a no-brainer for the surgeon.

It is when the self-pay system is abused that it becomes a problem. Surgeons have enormous power in the doctor–patient relationship. The suggestion of potential harm or inadequate outcomes if the procedure is performed by a registrar if the patient remains “public” can be a potent influence on a patient’s decision to go self-pay.

Administrators, naturally, just love seeing more revenue come through as each patient pays their $660 that the system otherwise would not receive.

Many patients in the public hospital system are successfully convinced to become self-pay patients. However, we would be totally naive to think there would be ideal counselling of each patient about the benefits and costs of self-pay.

But it is not just the patients who pay the price. There is also the loss of surgical experience for training registrars. While many will complain in confidence, none have the courage to speak out against the practice.

In response to my online blog on this matter, I received a confidential message from an eminent university professor who said: “I am aware of some surgeons that abuse the self-pay system by accelerating the patient on the waiting list. That is, if they pay, they get done sooner.”

Sadly, the abuse of the self-pay system is widespread in the NSW public hospital system. We may be aware that it is happening, but nothing will change unless patients complain, and this is hardly likely.

Surgeons who aren’t happy with this arrangement appear unwilling to come forward in fear of political retribution, professional isolation and stymied career progression.

If we were to abolish self-pay, would we risk throwing the baby out with the bathwater? We have to balance the risks to our professional standing, our inability to regulate this behaviour and the financial risks to those who can least afford it against the risk of removing patient choice.

I would like to see this practice abolished, but if we cannot speak out about this when it involves unethical behaviour, the balance is heavily tilted against ever eradicating the self-pay system in our public hospitals.

Associate Professor Henry Woo is a urological surgeon and associate professor of surgery at the University of Sydney.

Posted 21 March 2011