ABC Radio Melbourne interview with Dr Rachel David re shake-up in the PHI industry

Station: ABC Radio Melbourne
Program: Breakfast
Date: 13/10/2017
Time: 07:17 AM
Compere: Red Symons
Interviewee: Dr Rachel David, CEO, Private Healthcare Australia


RED SYMONS: It’s Friday 13th today, it’s got to be unlucky I reckon. I scrolled through the headlines, saw a big shakeup in the industry in regard to private health insurance. I thought, oh I don’t have a good feeling about this. I couldn’t quite figure out- I couldn’t see anything for me – I’ll be honest. Maybe I can find out from Dr Rachel David, the CEO, no less, of Private Healthcare Australia.

Good morning, Doctor.

RACHEL DAVID: Good morning, Red. Sorry about the airport noise in the background. It’s a bit of hazard of my life at the moment.
RED SYMONS: You’re not a superstitious person are you?
RACHEL DAVID: Friday 13th? Not completely, no. But I think there’s some good news on the private health insurance front.
RED SYMONS: Hang on, hang on, let’ stay with the important issue first. It’s probably- I don’t want to put the jinx on your plane flight, but I’d wait ’til the end of the day before you actually decide whether Friday 13th is unlucky.
RACHEL DAVID: I’m not a nervous flyer which is a good thing.
RED SYMONS: Right. private health care. They’ve changed the rules about it in some way. I had a quick flick through and I thought there’s nothing in there for me.
RACHEL DAVID: Well look I think there’s something in there for everyone at all stages of life. But the issues that the Government and the health funds are trying to address are number one, the affordability of the premium because we know that’s the main concern that folks with private health insurance have. We’ve had problems for years with over priced medical devices and problems with the supply chain of medical devices – so there’s been a lot of money going off the track there with kickbacks paid to all sorts of people through the supply chain and the Government’s really done a lot of work to address that. So there are some savings that are being made there which are large and we’ve agreed on a process to pass all of those savings back to consumers in the premium announcement for next year which means that the premium increase will be much lower than it otherwise would have been. So we are addressing affordability at that level. Then the second …
RED SYMONS: Hang on, hang on, if I could just backtrack a little there. The sorts of things that you’re going to pay less for are things like hip replacements?
RACHEL DAVID: Yes. Basically all of the generic or widely used medical implants. So for example there are about 48 different hip replacements that are available in Australia and they all should be available at a standard market price. But the way that the system was working the price that private patients were paying were two to five times higher than people anywhere else in the world for the same device.
RED SYMONS: Was that because the patients themselves were not making the choice?
RACHEL DAVID: Yes. What was happening was the Government had regulated back about 10 years ago the prices for all of these things and they set the level much too high. So what would happen is the health fund would pay those high benefits to the hospitals for the medical devices and then they would purchase them from the companies. The companies got a lot of money, mostly multinational companies, but also some of the hospitals were able to procure the devices at much lower cost and actually keep some of the cash. So we’ve actually …
RED SYMONS: Well that’s sort of inherently good up to a point isn’t it? I mean it’s better that the money goes to the hospital itself rather than the supplier of the device.
RACHEL DAVID: We never knew whether that was happening or not, whether it was actually going to patient care or not. We were not able to find out. So the reality is that at the moment we are addressing this by making sure that real market prices are paid for all of the implantable medical materials and devices in Australia rather than these inflated prices – which is actually having a real upward impact on premiums, particularly as we have an ageing population and are putting in more hips and knees now than ever before.
RED SYMONS: You can’t 3D print your own hip replacement can you?
RACHEL DAVID: Not yet but I think some of that, you know, we are looking to a future where some of that bespoke medical treatment is possible which means that even more we have to make sure that we’re not wasting any money.
RED SYMONS: Alright, as long as you don’t replace the surgeon with a computer. I’m not so keen on that.
RACHEL DAVID: I think we’re a long way, a long way from robotic surgery.
RED SYMONS: Good. But most of the emphasis seems to be on people between the age of 19 and 29. Now I value my privacy but I’m prepared to volunteer, I’m not between the age of 19 and 29.
RACHEL DAVID: Well neither am I but I think the important thing about this is the whole integrity of the health insurance system depends on having a broad range of people in it who all have different levels of risk of claiming. Now, if the worse thing that can happen in either the Medicare system with taxpayers or private health insurance system because the only people you have in it are people that make a minimum contribution and claim all the time. So you need a broad spread of people with all sorts of different products with all sorts of different claims- who make all sorts of different claims. Now at the moment we know that younger people who tend to claim on extras rather than a hospital cover – which is a lower cost area – are facing a lot of financial pressures. And even though we know there is pent-up demand or that people want private health insurance in their 20s, with housing affordability, energy cost, education cost, they’re really struggling to take that first step.
RED SYMONS: I believe it’s also the case there comes a point in time somewhere in your 20s where you’re no longer covered by the family private insurance, yes?
RACHEL DAVID: Yes, about 21.
RED SYMONS: Okay, good to know.
RACHEL DAVID: So at that point a lot of people have just got to work out whether they can afford to leave home and what issues they might have with their education and finding a job. So to give people some help to take that first step is important because there are things that can happen to people where they might struggle to get care in a public hospital. There’s a mental health condition, sports accidents, getting your teeth knocked out, these are things that happen commonly and…
RED SYMONS: You’ve touched on something there which I think is worth promoting, it’s an idea. If you do want your children to leave home, by all means pay their private health insurance and they’re more likely to go [laughs]. Thank you Doctor. Doctor Rachel David, CEO of Private Healthcare Australia.
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