CONSUMER advocates are calling for health system reforms to enable patients to shop around for the best value specialists, as new figures reveal huge variations in out-of-pocket costs.

The amount paid by patients for an initial outpatient consultation varied more than five-fold in some specialties, according to a study of Medicare billing data in the MJA. The difference in average out-of-pocket costs between the least and most expensive practitioners was $100 or more for eight out of 11 specialties – cardiology, endocrinology, gastroenterology, haematology, immunology/allergy, neurology, respiratory medicine and rheumatology, the study found.

The most expensive initial consultations were in immunology/allergy and neurology, with average out-of-pocket costs of $128.70 and $123.70 respectively.

Most specialties bulk billed 30–42% of visits. The lowest bulk-billing rate was in geriatric medicine; however, geriatricians also charged the lowest average fees, with much less fee variation compared with other specialties.

Patients in the ACT paid the highest average fees for five of the 11 specialties.

Study authors Gary Freed and Amy Allen from the University of Melbourne said that the wide variation in fees could not be justified by the quality of care provided.

“Without data on quality of care in private outpatient services, the rationale for the marked variations in fees within specialties is unknown,” they wrote.

They called for greater transparency in specialists’ fees, and also suggested that Australia was lagging behind other nations in developing programs for assessing the quality of outpatient care and making that information publicly available.

Furthermore, they said that the federal government should consider overturning legislation enacted in 1983 prohibiting health insurers from covering outpatient visits.

“It appears that the goal of this policy – to limit outpatient fees – has met with limited success at best,” they wrote.

The MJA research comes on the back of a series of reports showing extraordinary variation in the cost of surgical procedures. Hip replacements, for instance, ranged in total cost from $18 309 to $61 699, including the sum of hospital, surgeon and other providers’ fees, the prosthesis and pharmaceuticals.

Patients’ out-of-pocket costs for hip replacements ranged from nothing to $4057. The price of the prostheses themselves also ranged enormously, from $4908 to $16 178.

The figures come from the 2014 Surgical Variance Report for Orthopaedic Procedures by the Royal Australasian College of Surgeons (RACS) and Medibank, which has also published reports on general surgery, otolaryngology, urology and vascular surgery.

In a Perspective in the MJA, prominent orthopaedic surgeons Professor David Watters and Dr Lawrence Malisano, together with Medibank, noted that there was “no correlation between the size of the fee charged and the quality of the surgery”.

They cited an unpublished analysis by the Royal Australasian College of Surgeons and Medibank showing surgical fees charged were not correlated with length of hospital stay, which they said was a reasonable surrogate for quality.

Consumer Health Forum (CHF) CEO Leanne Wells told MJA InSight that the latest figures revealed a system urgently in need of repair, with patients facing a “random maze of costs for which there is no transparent explanation or justification”.

“Given the degree to which the cost of medical specialists’ services are paid for by the taxpayer through Medicare and private citizens through out-of-pocket expenses, we would argue that their fees and performance measures should be easily accessible to the community at large,” she said. “The establishment of an authoritative and independent website containing this information would be an appropriate platform.

“This transparency system should be accompanied by a new approach to specialist referrals, whereby the referring GP can still recommend a particular specialist, but the referral process should make it clear that patients have the option to go to another specialist of their choice,” she said. “Specialists who do not wish to participate in this transparent approach should not be eligible for Medicare or subsidised health insurance payments.”

Ms Wells added that some specialties may also need to increase the number of training places, to improve access and reduce costs.

“The possible consequence of spikes in unnecessary surgery could be countered by transparency that shines a light on individual practices and outcomes,” she said.

Royal Australian College of General Practitioners President Dr Bastian Seidel condemned excessive specialist fees and supported the call for greater fee transparency; however, he rejected measures such as ratings websites which he said “turn doctors into a commodity”.

He also resisted the proposal to reform the referral system to give patients greater choice, telling MJA InSight: “It gives the illusion of patient choice, but really it leads to fragmentation of care, poor communication, potentially worse clinical outcomes and potentially more costs to the taxpayer as, for example, imaging and pathology tests end up being repeated”.

Specialists who charged above the Australian Medical Association’s (AMA) recommended fees should be transparent about this to their patients, he said.

“In my own practice, I’m often having uncomfortable conversations with patients about the costs of surgery,” he said. “I’m not a specialist broker. Unfortunately, this is becoming more and more problematic with patients saying that they can’t afford to see private specialists and so are having to endure long waits in the public system.”

A study during 2013–14 found that 7.9% of people who needed to see a specialist or consultant physician delayed the appointment or did not go at all because of the expense.

Out-of-pocket costs account for 20% of expenditure on health care in Australia, compared with only 10% of health spending in the UK, 13% in New Zealand and 14% in Canada.

AMA President Dr Michael Gannon told MJA InSight that where patients were charged gap fees for private services, it was often because insurers paid substantially less than the AMA recommended fee.

“I don’t think we have a massive problem of excessive specialist fees in Australia,” he said. “A minority of patients face bill shock and a minority of doctors charge well above the AMA fee, which is unacceptable.”

Dr Gannon singled out medically-indicated cosmetic surgery and robotic prostate surgery as areas where patients often reported “bill shock”, but said that in general, specialists were transparent about their fees.

Most patients pay no gaps for in-hospital services (86%),” he said. “A further 7% are charged a gap they agree to in advance with their health insurer.”

“It’s important doctors maintain the right to set their fees,” he said. “If they don’t, that’s a key component of the US-style medical care, where insurers own every decision in the health care provided and determine the level of care patients get. It takes away one of the key positive components of our system, which is choice.”

Dr Gannon argued that there was no need to reform the referral system to improve patient choice, as specialists could already accept referrals not addressed to them – a fact the CHF said was not as widely known as it should be.

Responding to the push to publish individual specialists’ performance data, Dr Gannon warned it could lead to discriminatory patient selection.

“If, for example, we were to start publishing reports on rates of wound infection or venous thromboembolism after surgery, you would very likely see surgeons refusing to provide care to obese patients,” he said.

“The other problem with performance data,” he said, “is that you’re often comparing apples, with oranges, with pears.”


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Specialists should be required to publish their fee schedule so patients can make a free choice
  • Strongly agree (51%, 174 Votes)
  • Agree (23%, 79 Votes)
  • Disagree (10%, 34 Votes)
  • Neutral (8%, 27 Votes)
  • Strongly disagree (8%, 26 Votes)

Total Voters: 340

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18 thoughts on “Fees: let patients shop around for value

  1. Anonymous says:

    Bravo Ian H! We are being rounded up and penned into a debate that is only about price, and we will lose that fight in the public arena as the Government “protects patients from rich doctors”.

    Health Funds sit by licking their lips waiting for us to be forced to publish price lists and then bargain each other down like the Good Guys vs Harvey Norman.

    Our representatives should constantly and always talk about quality and the great outcomes that GPs and specialists get for their patients. Compare our skills and outcomes to lawyers, plumbers, accountants and electricians. Keep reminding the public what great value it is to see a GP compared to any of these. Keep reminding the public that it costs less to see a medical specialist than to get a dishwasher repaired.

  2. Ian Hargreaves says:

    It is disturbing that some highly educated professionals have trouble differentiating between ‘cost’ and ‘value’.

    I own a T-shirt costing $5 from Lowes, as well as a down jacket costing $600 from Mountain Designs. The T-shirt is ideal for the gym, and the down jacket was last used for snow camping in Tasmania. We could theorise about why there is such a great difference in price between retailers, or ask for regulatory involvement–perhaps the T-shirt should have a warning saying “inadequate protection from blizzards” or the down jacket “unsuitable for Bikram yoga”. If the regulator mandates that each item should cost $300, I suspect that there would be more shirtless chaps in my gym, and the importer of high-end down jackets would close his business.

    In either case, the garment works perfectly fine for its intended purpose, but choosing the wrong garment would have serious health consequences, most likely fatal within the hour. I get my value from each, used appropriately, and am grateful there is no Clothicare to confuse the purchaser or argue that ‘one size fits all’.

    While my choice of garment is strictly on a caveat emptor basis, specialist referrals are initiated by highly trained GPs. If my GP sends me to the dermatologist for a 2 minute consultation to ask “is this particular spot a melanoma?”, or to a neurologist for a 1 hour-plus consultation to ask whether my vague symptoms and contradictory signs may perhaps be MS or a brain tumour, these are each a specialist physician initial consultation, but it would seem ludicrous that each should cost the same. The workload is different, although each assessment requires the specialist skills of the relevant physician, beyond what my GP can do.

    Each consultation may have the value of reassuring me or providing me with a diagnosis, possibly saving my life by early diagnosis of my tumour. Similarly, if my life is saved by the administration of flu vaccine, or by hemi-hepatectomy for primary liver cancer, the value is the same to me (i.e. my life has been saved) but the cost is quite different. Whether it is suturing a down jacket or an inferior vena cava, ultimately the only sustainable business model is to reward appropriately for effort, skill and time required. It is no surprise that neurologists had higher than average fees in the original study, given that there are few literal ‘spot diagnoses’. They can only continue their business if their average cost of consultation makes them profitable.

    There will always be discrepancies and inequities in any government based system, such as the fact that if I do excise a melanoma from my patient, the item number is much more generous than if I spend precisely the same amount of time, care and skill excising a lesion which the GP and I thought looks like a melanoma, but turns out not to be.

    Googling “cost of initial consultation” is about as useful as Googling “cost of upper body garment for aerobic exercise”. It is unlikely to provide you with the information you really want, which is “value to me, having regard to my individual circumstances”. If your trekking guide tells you that you need a box-wall, Gore-Tex down jacket to survive your Himalayan expedition, few would argue “but I can buy a T-shirt which is a kg lighter for only $5”? So why would a prudent consumer question the expertise of not a 20yr old guide, but a highly trained and experienced GP?

  3. Anonymous says:

    Interesting comment above about using multiple item numbers in Orthopaedics. As an Orthopod, I am obliged to ‘accurately and thoroughly describe’ the procedure performed. The AMA schedule is an attempt to provide a framework to cover the costing of the various procedures that we perform. We, as surgeons, try to help out the public & private insurers by providing numbers that cover the procedures performed. I believe that our true legal obligation is to ‘accurately and thoroughly describe’ the procedure performed. The provision of a number [even a proper AMA schedule number] is not compulsory, especially a manipulated and inadequate CMBS insurance rebate number.
    I wonder how the public & private systems would allocate a number to the 4+ hour procedure that I did last week which was a dirty angle grinder injury to a wrist and forearm that required extensive wound debridement followed by repair of 7 flexor tendons, major peripheral nerve repair [ulna nerve] and arterial reconstruction along with deep bony stabilisations. ….. pray tell, which single item number describes this scenario? ………… This is my lot every working week. I would be happy to just extensively describe the procedure [which I do anyway] and let someone else work out how to classify and remunerate for it.
    If you just allocated a single number, the hospital & OR would not cover their costs. This surgeon would also quit and take up some other skilled trade like plumbing or being a commercial electrician.
    I suppose that the system would then try to find a Nurse Practitioner to do the job instead.

  4. Anonymous says:

    When I was starting out in private practice I was told it was “anticompetitive” to ask other specialists in my area what they charge, so of course there is huge variation! The problem as I see it, is that the health funds don’t pay anything for outpatient consults, which is ridiculous. That needs to change immediately!

  5. Anonymous says:

    Regional Rheumatologist charges $540 for initial 45 minute consultation!! $260 rebate from Medicare, + $280 for himself.

    Is this the average amount charged?

  6. Anonymous says:

    I wonder if this article takes in to account the “fraud” that does occur with billing. That is, asking the patient to only pay “the out of pocket gap” but then “bulk billing Medicare” the difference. This is illegal but is done commonly (particularly in the sleep apnoea/ portable sleep study arena).
    In medicine COST does not = QUALITY (unfortunately)
    I have no problems displaying my fees – they are on my website, they are sent out to patient in a letter before the appointment, the patient is told when booking an appointment.

    Easy to doctor bash. If this is to become mandatory then ANYONE in receipt of public funding (public servants, university employees, those getting grants) or subsidies (eg negative gearing) should be made to publish their names and incomes.

    I could go on a rant – but what’s the point?

  7. Anonymous says:

    number 2 – I worked in one of these “privatised outpatients” as a registrar in a public hospital. Classic case of cost-shifting from State to Federal Government. As far as I could tell, there was a disincentive to EVER discharge any patients from the clinic – always got “review in 3 months” when could easily have been followed up by their GP. Had to keep the clinics full! Also, the specialist had to “sign off” on all the medicare forms to say that they had reviewed the patient. Seemingly this included all the ones I saw by myself! Apparently this requirement no longer exists – I have heard that now “supervision” of the trainee who saw that patient is all that is required. Does anyone out there know if this is actually the case?

  8. Greg the Physician says:

    Surely a medical practitioner with considerable experience and recognised expertise in a field should be able to charge more than a younger, less experienced colleague.In the legal profession, leading Queens Counsels charge vastly more than a junior, newly qualified barrister. As long as the patient is informed of the fees when booking the appointment, I can’t see a problem.

  9. Anonymous says:

    Patients’s out of pocket costs are a result of a mix of poor Medicare Rebates(frozen for 4 years with another 3 years to come)and private health funds not covering doctors’ out of hospital fees.
    Bulk billing is a massive discount to fees that are needed to be charged by private doctors to keep up a high standard of service.
    Doctors who bulk bill are massively subsidizing patients’ health care and bulk billing will make solo GPs and small group GP practices nonviable in the near future.
    The private health funds’ list of no gap specialist doctors is discriminatory and not based on quality of practice. Patients should always check their insurance cover to prevent bill shock.

  10. Anonymous says:

    Will they also include the consultation time allowed for each patient in a practice? I normally see new patients for 30 minutes and follow up’s for 15. However, I am aware some colleagues only allow 15 or 20 minutes for a new patient and 5 minutes for follow up.
    Does the quality matter or just the price? If I take a better history and actually examine the patient (instead of the practice nurses) plus take the time to answer their questions, probably around 5 to 10 percent of patients could have a better outcome, and more importantly may avoid unnecessary further tests and potential complications of treatment that may be inappropriate for their particular problem and circumstances.
    As there are no accurate measures of quality practice I know where this is going to end if specialists don’t have the courage to charge an appropriate fee to cover their education and practice costs.
    In the case of orthopaedics it is apparent that using multiple item numbers to inflate the Medicare rebate is occurring to provide a no-gap service, but to my knowledge it is fraud as we are supposed to only use one item number which best describes the procedure, in most cases. Eventually Medicare and government will act and many of our colleagues will be prosecuted, thus placing our profession in a very poor position. Their defence will be the same as looters after a riot–everyone else was doing it, so its OK!

  11. Anonymous says:

    I practice in two locations privately.

    The rent and overheads at the CBD location is double that of the outer metro location.

  12. Anonymous says:

    All patients should be given information about gaps before a specialist episode, be it a consultation or a procedure. When making a first appointment, any fee gap should be advised. GPs should tell patients to ask about a discount if the fee is not easily affordable.

  13. Anonymous says:

    Variations in cost are largely due to variations in overheads with substantial differences in room rent which is typically a lot higher the closer your practice is to the CBD. After covering the cost of rooms rent and secretarial salaries the earnings from private practice is not very high.

  14. Anonymous says:

    In a situation where a great many patients cannot consult a psychiatrist because the profession has chosen to refuse treatment for a broad class of problems , where the waiting times for other specialties such as rheumatology and neurology have waiting lists which are in fact indeterminate (greater than 12 months )and where a great many have closed their books for new patients, publication of Schedules of Fees is a hollow gesture in the fact that patients have no effective choice except to travel interstate and take a punt.

  15. Anonymous says:

    Correctly said. These bulk billing specialist are shameful to the profession. They are the same as bulk billing GPs with high turnover. See how many visits they have for each patient, and how duration of visits each time.
    They cost the same as bulk billing GPs as far as the public or anyone with a sense is concerned. Some bulk bill out of fear. Many specialists charge lower than the AMA fees.

  16. Anonymous says:

    Don’t forget that the Medicare rebate was indexed at 50% of the CPI for 26 odd years before it was frozen. Compound that over that period of time, the current Medicare rebate does not reflect what should be the true market value. Many specialists are caught in a catch 22 as they usually run a clinic i.e. A small business, so they need to generate enough income to cover their overheads. In the public system, the State government picks up the tab.
    With bulk billing, it increases demand for medical services from patients because they do not need to pay a gap. This adds to the bottom line of the Medicare budget.
    Unfortunately, high class medical care is expensive of which many patients do not realise because they think it is free. Then again the cheapest option may not also be the best option, something that we see in all industries, not just medicine.

  17. Anonymous says:

    All data and figures on ‘specialist’ bulk-billing rates are totally and utterly confounded by public hospital clinics in state-run hospitals which have moved to Medicare bulk-billing format in order to retain ‘free’ care for patients, whilst cost-shifting from state to federal health budgets.
    These so-called bulk-billing specialists are not reflective of what goes on in an actual private practice setting, but distort expectations of consultation costs and lead to accusations of greed amongst private practice specialists.

  18. Anonymous says:

    How many elderly people would be in a position to choose their geriatrician?

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