Rising costs, poorer health: treatment prices increasingly unfair

The Australian Government needs to take further action to ensure Australian health care remains affordable, and to avoid us heading down the path to health care calamity that is being taken by the United States (eg, in maternal mortality, here and here).

Although I recognise the opportunity for profit greatly incentivises innovation and change, and can deliver great benefits for a community at large, there are inherent dangers for society, let alone a health care system, driven largely by the pursuit of profit. This was explored by the chief economics commentator at the Financial Times, Martin Wolf, in his book The crisis of democratic capitalism.

Unfortunately, in the US and elsewhere, there are some who believe that only their opportunity for unconstrained free enterprise can deliver a healthy economy. They can come to equate their personal success as one and the same with that of their community.

This is a pattern that has been repeated throughout human history, and a theme of The Earth transformed: an untold history by Peter Frankopan, a Professor of History at the University of Oxford. All too commonly, the pursuit of more wealth by the already wealthy slides slowly into them exerting their power to control the rules of their community to advance their personal interests at the expense of the rest of the community.

No human community is immune to these risks – they are a product of what we are.

As a complex and poorly understood system awash with government (taxpayer) money and vulnerable patients, the US health care system is perhaps the fattest of easy targets for capture and profit. In Wolf’s cautionary words:

“The US … spends far more on health care than any other high-income country (not much below a fifth of [gross domestic product]) and yet has far worse health outcomes, because the health system nourishes rent-extracting monopolies: doctors, hospitals, insurance companies, and pharmaceutical businesses all feed at this overflowing trough.”

Theirs is a system that has led to much misery for so many in the US: a vastly profitable network of businesses largely shaped by special interests to extract as much money as possible from individual patients and taxpayers (here).

Here in Australia, with little awareness or impediment, I fear we are allowing our health care system to drift slowly in a similar direction. Over time, we have seen a progressive disconnect across the funding, the costs and the prices of health care in Australia.

As I have described in earlier writings (here, here and here), the contribution by government and the prices that many can afford to pay for primary care have been decoupled from the actual cost of its provision. The consequence is that primary care (not to be confused with high throughput, bulk-billed, episodic visits) is failing or becoming inaccessible for less affluent people in many communities.

At the same time and in the opposite direction, some specialist doctors in private practice, particularly procedural specialists (here), have managed to decouple their charges from the rates that governments, and even their own specialty groups, deem to be reasonable, and from what the community that funded their training might reasonably expect them to earn.

For example, bariatric surgeons commonly advertise their prices of between $5000 and $10 000 (about five to ten times the Medicare rebate) for an approximately one-hour procedure, and can perform about half a dozen per day. Perhaps surprisingly, not-for-profit faith-based hospitals where many such procedures are done do not seem to comment on the ethics of such pricing because such surgery is very lucrative, about $15 000–$20 000 for a three-day admission (here and here).

Government has also been sucked in to filling the growing Australian health care trough by allowing patients to take money from their superannuation account to pay for high priced (rather than high cost) health care (here). In doing so, it accepts taxpayer responsibility for the future cost of pension payments for those with lowered superannuation balances.

Large health care businesses, and the private equity firms that own some of them, now appear commonly in the business sections of Australian newspapers.

When the benefits of improved health care technology are captured by entities for whom the primary goal is profit, whether individual doctors, pharmaceutical and medical device manufacturers, private hospitals, National Disability Insurance Scheme (NDIS) providers, or private equity funds, the interests of patients and employed health workers (including doctors) become of secondary importance.

Last month, I was told of a group of Australian medical students discussing how they would earn their fortunes after training as procedural specialists. Perhaps those students who dream of their lives as proceduralists should read this story from The New York Times and the article that prompted it.

“Doctors on the front lines of America’s profit-driven health care system were also susceptible to such wounds [moral injury], Dean and Talbot submitted, as the demands of administrators, hospital executives and insurers forced them to stray from the ethical principles that were supposed to govern their profession. The pull of these forces left many doctors anguished and distraught, caught between the Hippocratic oath and ‘the realities of making a profit from people at their sickest and most vulnerable’;” The New York Times, 15 June 2023.

All doctors should consider how they might lose professional autonomy when the health care services that employ them are progressively swallowed by for-profit businesses.

Recently, I was sitting in the waiting room of a group of specialists when I overheard one of the receptionists telling a prospective patient over the phone that they would have to obtain a referral – the problem appeared to be that the patient could not find a GP for an appointment to create the referral that is essential for specialist practice. And from next year, I will have to have a note from my GP to be able to drive a car – what would I, or a patient will less agency, do if no GP is available?

The Strengthening Medicare Taskforce signalled that the government has begun an attempt to give direction to Australia’s health care services. It recommended increasing access to primary care, encouraging multidisciplinary team-based care, modernising primary care, and supporting change management and cultural change.

However, these actions are barely pecking at the problem.

Where are the mandated comprehensive structural/financial designs for the whole health care in Australia that will create sustainable structures and functions for all the components of our health service?

Where is the practical acknowledgement of the importance of public health and preventive care? If GPs are integral to a viable system, why are they not treated as equally important to specialists? If that is not the model, then what structures and roles are envisaged that meet the diverse health care needs of the community?

How can government incentivise innovation, collaboration and excellence while reining in the sense of entitlement to huge incomes (dare I say greed?) of some in my profession of medicine, and of those who would exploit health care generally?

I also ponder what measures will be necessary, such as limits to some services and the reallocation of resources, to create a sustainable and equitable health care system.

Government could use the current mid-term review of the National Health Reform Agreement Addendum to look beyond hospital funding and consider health as a whole – an interconnected codependent system that bridges primary care, aged care, disability services and our hospital systems.

Health care provides a great model for understanding the foibles of human nature. It exposes the hazards that arise when self-interest trumps the interests of the whole community and ignores the necessity for a balance between equity and incentivisation in a healthy society.

We should heed the lessons of the past and the present, try to understand who we are, and work out where we might want to be and how to get there.

Not doing so will leave us rudderless and vulnerable, subject to the self-serving influences of players whose primary goal is not the provision of health care.

Dr Will Cairns has retired from clinical practice as a palliative medicine specialist.

The statements or opinions expressed in this article reflect the views of the authors and do not necessarily represent the official policy of the AMA, the MJA or InSight+ unless so stated. 

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