5AA program interview with Dr Rachel David on “More Affordable Health” campaign

Station: 5AA
Program: Mornings
Date: 24/06/2021
Time: 11:36 AM
Compere: Leon Byner
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


LEON BYNER: We talk a lot about private health insurance and I know that there have been those, particularly in the younger age group, who might say, oh, I don’t reckon I need it. Although I know of one family recently I can tell you about that took out the cover about 12 months ago – their son, who’s 18, had a pretty serious injury, sports injury, and they’re now saying, thank God we took private health.

The Private Health Australia CEO, Rachel David – you’ll meet her in a sec – she’s announced a new campaign. And this is really something that I wanted you to know about because the campaign is more affordable health at the Health Insurance Summit, because they’ve just done one in Sydney. And it’s been calling for urgent changes to the way medical devices used in surgeries are priced in Australia. Because, I don’t know whether you know this, but one of the big kahunas in price are some of the more sophisticated pieces of technology that are absolute life-saving and many pain-saving, but they cost a poultice.

And so, what the, the private lobby is doing, and I commend them for doing this, they’re looking for reform to the way that these devices are priced on the prostheses list, because some of them are really, really expensive. And the argument is, of course, this will deliver savings to consumers who are paying at least 30 per cent more for the same medical devices used in surgeries compared to other countries like New Zealand and the UK. So, the question is, why did we cop- When we were negotiating in Australia for the costs of these prostheses why didn’t we do as good a deal as humble New Zealand or indeed our friends in the UK?

So, let’s talk to Private Health Australia’s Dr Rachel. David. Rachel, thanks for coming on. Are we somewhat weak at negotiating? In cracking a deal?

RACHEL DAVID: Well look, we’ve had a flawed system in place for a number of years, and the Government in the last budget, the last federal budget, has agreed to change it and take some very important measures to put downward pressure on these prices, which, as you’ve said, Australia is paying 30 to 50 per cent more for commonly used medical devices than most other countries around the world. These devices, we’re quite happy to be paying for them. These are good and effective things like hip placements and cataracts and the artificial lenses used in cataract.
RACHEL DAVID: But there’s no reason for consumers in Australia and patients in Australia to be paying 30 per cent more for the same thing. That’s why we’re doing this campaign – to inform consumers about the link between these extraordinarily high prices and high premiums.
LEON BYNER: Who crunches the deals on behalf of the consumer, or indeed, your group that says we’re going to pay a much higher price than New Zealand? Because it seems that much better at playing poker, aren’t they?
RACHEL DAVID: Well actually, it’s regulation that’s administered by the Federal Department of Health – they hold the key to this. They hold the pen in these negotiations, not the health funds. And one of the key announcements that the Government made in its budget is that they’ll be handing this over to a group called the Independent Hospital Pricing Authority in Canberra that will be able to do a much more effective job at driving these prices down to the point where they’re equivalent with what’s paid in public hospitals and in other countries around the world.
LEON BYNER: Give me an example. Give me an example of a typical prosthesis device that you might have put in – and you know, we used to watch the Bionic Man and laugh and call it science fiction and now, it’s, it’s almost a fact, isn’t it? Give me an exam- give me an example of this sort of this stuff.
RACHEL DAVID: I will give you, I will give you an example. Because possibly one of the best, the most effective surgical procedures that private health pays for is a hip replacement for arthritis. And this is technology that is extremely effective, it’s been around for a number of years. But it’s, it’s effective, but it’s essentially generic technology in that, you know, it’s been around for a number of years and it can be, you know, these hip replacements, it produces a commodity. They’re not, you know- the cost of goods is not particularly expensive.

Now in Australia, in New Zealand, this technology, it costs about just under, under $2000 for, for a hip to, for a hip to be replaced, and that’s the nail thing that does down into the bone to hold it in place. In Australia, it’s about $4200 for the same thing.

RACHEL DAVID: There is no reason except that this is a kind of Australia tax that’s crept in over the years simply because no questioned it. And I think now this is why health funds are doing this campaign on behalf of their members to ensure that people know we support the Government’s reforms, and we want them implemented quickly, but also to inform consumers that there is a link between this pricing and higher premiums. And our objective is to bring premiums down, while still providing people with the best medical technology [indistinct]…
LEON BYNER: [Interrupts] I can get Greg Hunt on the show tomorrow, Health Minister. But I want to ask you, surely you guys, you meet with health authorities and the Minister.
LEON BYNER: When you, when you’ve put this to Greg Hunt, what has he said?
RACHEL DAVID: Well, look – the Federal Government has had a couple of goes at reforming this, but it really hasn’t gone far enough. And I think in the last budget, the response that we got from Minister Hunt and from the Morrison Government was, enough is enough. We need to reform this system on a number of levels. It’s not just too expensive, in some cases it’s been, it’s been shown to be unsafe. And so what they’ve decided to do is to take a number of steps. One is to reduce these inflated prices, and the second is to remove some of the things that are actually not implants but are kind of consumable [indistinct]…
LEON BYNER: Now a lot of people’s ears would have pricked up when you said some of these are not safe. Surely, if a device is being offered, even at a price that’s too high, it’s got to be safe, doesn’t it?
RACHEL DAVID: Well, it does if it’s used according to the manufacturer’s instructions, and according to the indication that has been agreed with the Therapeutic Goods Administration. But what we’ve seen with a couple of things is that because the system and the prices in Australia are so lucrative, some of these devices have been promoted for off label use. And we saw that in a situation where-
LEON BYNER: [Interrupts] What is- Just explain what off label use means?
RACHEL DAVID: Well, off label use means you use- the device is available in Australia for a particular use. But with some encouragement from the sales reps, the clinician uses it for other things in other parts of the body, for example. And this is what happens with the hernia mesh – you might remember the controversy around the hernia mesh. It suddenly became used in women for pelvic organ prolapse after childbirth. And that was shown to be not a good use for the product, but it was strongly encouraged because it was on the prosthesis list. And, you know, before we knew it, we started to hear reports that these really, really dreadful side effects, because it was they used to the wrong part of the body.
LEON BYNER: So the message out of all this is what?
RACHEL DAVID: The message is that the Government has taken some steps to fix this. But we need it implemented soon so that we can reduce the pressure on premiums and start to stabilise premiums. So we want consumers to know about this so they know why these changes are taking place.
LEON BYNER: So who’s getting these products the cheapest? Which country? Is it New Zealand or the UK? Who’s getting these things cheaper?
RACHEL DAVID: Look, I think there are a number of countries that are doing significantly better from Australia. I’ll rattle a few off. I’d say France, Germany, the UK, New Zealand, and South Africa are on a par in that, you know, they’re paying about a third to a half of what Australia’s paying for these commonly used generic medical devices at the moment.
LEON BYNER: So we’ve got to get some better bargaining happening, don’t we?
RACHEL DAVID: We do. And I think that’s the intent of the Government’s budget announcement. And we want to see that, you know, that put in place pretty quickly.
LEON BYNER: Rachel, you’ve been most helpful. That’s the CEO of Private Health Care Australia, Dr Rachel David. Interesting that a lot of other countries, some, you might argue not sophisticated as Australia, are actually cleverer, because they’re paying less for the same thing, a lot less.
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