Big health corporates win, but who keeps your family out of hospital?

Big health corporates seem to be doing well at the expense of grassroots general practice. This raises concerns about the delivery of patient care in our communities – including keeping people out of hospital.

Last month shares in Primary and Sonic jumped around five per cent after the government promised a number of carrots, including a potential rent reduction for their pathology collection centres within GP surgeries.

Last week the government struck a deal with the Australian Diagnostic Imaging Association. The Sydney Morning Herald: “The Turnbull government forged a deal with the sector late on Friday, promising to delay the cuts for non-concession holders till next January if elected, and to evaluate commercial pressures on the sector.”

Today The Australian reported: “There are groups that are doing well from the status quo, notably the health insurers and pharmaceutical companies. Last year, Medibank Private increased its operating profit by 32.5 per cent. Not bad during a period it lost policyholders.”

“There has been a percentage decrease in spending on hospitals and general practice medical attendances in recent years. At the same time, private health care premiums continue to beat inflation.”

The Australian Newspaper: “The big winners, however, are the pharmaceutical companies. The government funds $10 billion a year (up from $7bn in today’s money a decade ago) and on top of that, consumers stump up a whopping $10bn in over-the-counter preparations. Saving even a fraction of this increment would make an enormous difference to hospitals, general practice and outpatient care.”

Meanwhile, GPs and patients are still faced with the freeze on Medicare rebates. As RACGP president Dr Frank Jones has pointed out on many occasions, this situation has placed GPs and their practices in an invidious situation whereby all patients will have to financially contribute to their consultation and practices will have to curtail some quality patient services to survive financially.

It seems to me there is something seriously wrong with the priorities in our healthcare system.

Warning: digital challenges ahead

There were a few interesting tech news facts this week. I thought this one was interesting: a Dutch campaign group used a drone to deliver abortion pills to Polish women, in an attempt to highlight Poland’s restrictive laws against pregnancy terminations.

There was scary news too: a private health insurer encouraged its members to use a Facebook-owned exercise app to qualify for free cinema tickets. Not surprisingly, Facebook was entitled to disclose all information shared via the app, including personal identity information, to its affiliates.

But there was also this: Telstra has launched its ReadyCare telehealth service. For those willing to pay $76, a doctor on the other end of the phone or video link is ready to care for you. No need to visit a GP or emergency department.

The telecom provider will offer the service to other parties like aged-care facilities and health insurance funds. Telstra is aiming for a $1 billion annual revenue.

Digital revolution

Digital developments increasingly create new opportunities, challenges and risks, but we have yet to find ways to incorporate the new technologies in our existing healthcare system.

In an interview in the Weekend Australian Magazine Google Australia boss Maile Carnegie warned that the digital revolution has only just started and that Australia is not ready for the digital challenges ahead.

Carnegie said that 99% of the internet’s uses have yet to be discovered and although Australia is the 12th largest economy in the world, it ranks only 17th on the Global Innovation Index.

She said that Australia has become a world expert at risk-minimisation and rule-making. Unfortunately this seems to slow down innovation.

“We are either going to put in place the incentives and the enablers to create the next version of Australia as a best-in-class innovation country or we’re not,” she said. “And I think it’s going to be a very stark choice that we have to make as a community.”

Who’s taking the lead?

In the last ten years we have seen major progress in for example mobile technology, but my day-to-day work hasn’t changed much. Healthcare has difficulty harnessing the benefits of the digital revolution.

Is the industry leading the way and letting governments, software developers and other parties know what is required? Do we have industry-wide think tanks to prepare for the near future? Have we listened to what our patients need and expect from us in the 21st century?

6 key conditions for private health insurance in in general practice

Private health insurers are gearing up to enter the general practice market. But it appears their plan is a copy of the dreaded US-style ‘managed care’ approach.

It’s best to keep health funds at arm’s length or else they will decide what care can, and can’t be given – instead of the patient and the healthcare provider. Therefore, I suggest that six conditions must be met before private health insurers can engage with general practice:

#1: Universal access

Every Australian should have equal access to a GP, independent of insurance status.

#2: Freedom of choice

People should have the option to choose their GP and private specialists; this cannot be dictated by health funds. Patients together with their doctors are best at deciding which tests and treatments are appropriate, not third parties like insurance companies.

Patients should always be given the option to choose and change health funds and insurance products.

#3: Transparency 

Health funds must provide a straightforward package covering GP and/or basic private hospital care – as well as more comprehensive packages. Exclusions should be kept to a minimum. Health funds should make patients aware of exclusions and any other limitations before they buy a product.

To assist consumers choosing the best health insurance that suits their circumstances, an independent Government website should monitor, compare and publicise all available insurance packages.

#4: Professional autonomy

GPs and practice staff need support to be able to provide good care; this also means they should not be overloaded with red-tape, reporting requirements and KPIs. For the same reason health funds should not cause delays in treatment. GPs have the right to set fees to ensure practice viability.

#5: Evidence-based care

Only proven, appropriate, and cost-effective care should be covered.

#6: Stakeholder involvement

Health consumer organisations and the medical profession need to be engaged, as this will likely lead to better outcomes. New regulation should be put in place to safeguard compliance by all parties.

What the Dutch can teach us about private health insurance

The Dutch healthcare system has received international praise. This year the Netherlands are again topping the chart of the Euro Health Consumer Index. What makes the system so good? To get some answers, I caught up with old friends from the Netherlands.

Dutch philosophy

The country’s philosophy is to cut costs and stimulate quality by introducing regulated competition. The Dutch have attempted to create a system that ensures universal health care, offers transparency and choice for consumers, and avoids risk selection. GPs play a key role coordinating care and preventing unnecessary use of hospitals.

‎Dr Pieter van den Hombergh, GP trainer and a former senior policy adviser at the Dutch Association of General Practitioners (LHV), is full of praise:

“In 2006, the country switched to a regulated market-oriented healthcare system: Insurers got purchasing power and the Government withdrew from healthcare, but set strict regulations for insurers and providers.”

Dr Jettie Bont is a GP and former board member of the Dutch Association of General Practitioners. “The Dutch health system is accessible to anyone, rich or poor, old or young,” she says. “Patients don’t have to pay a co-payment or excess payment to see their GP and we’re making sure it stays this way.”

How does it work?

The 6 key elements of Dutch healthcare:

1. Health insurance funds are not allowed to deny coverage because of illness, age or gender. A risk-equalisation system compensates health funds for accepting high-risk individuals.

2. Healthcare covered by the compulsory basic health insurance package is the same for every insurance provider. Basic cover includes GPs, medical specialists, hospital care, basic dental care, most prescriptions, and ambulance. Additional insurance packages can be purchased.

3. All Dutch citizens and residents contribute via a flat-rate premium set by competing funds – in 2014 the average premium was €1120 ($1626) – and an income-dependent payroll tax contribution. The Government covers premiums up to the age of 18, and people who earn less than a specific amount are entitled to a tax credit.

4. People are free to choose their insurance fund and have the option to change once a year. People are free to choose their GP, but must be registered with a nominated family doctor.

5. Doctor’s fees are set, there is no co-payment or excess payment for GP-care (except for travel vaccinations). Dutch GPs are paid via an annual lump sum per patient (capitation) as well as fee-for-service payments.

6. To help consumers, the Dutch Government collects and publishes price, quality and consumer satisfaction records of insurers and providers.

What are the strengths?

According to the authors of the latest Euro Health Consumer Index report, the Netherlands has the best healthcare system in Europe. The authors feel one of its strengths is consumer participation: “The Netherlands probably has the best and most structured arrangement for patient organisation participation in healthcare decision and policymaking in Europe.”

Other positives mentioned in the report are the availability of 24/7 GP care, and the fact that ‘financing agencies and healthcare amateurs such as politicians and bureaucrats’ are not directly responsible for operative healthcare decisions. The Dutch national health budget is €71.3 billion, of which €63.8 billion is funded by insurance premiums. Various levels of Government contribute €7.5 billion.

Euro Health Consumer Index (EHCI) 2014
The Euro Health Consumer Index (EHCI) 2014 compares healthcare in 36 European countries and looks at the following domains: Patient rights and information, accessibility (waiting times), outcomes, range and reach of services, prevention, and pharmaceuticals. Image: EHCI 2014 report.

Van den Hombergh: “General Practice revenue has increased since 2006 and as a result GPs were able to invest in premises, staff and infrastructure, including ICT and communication equipment. Their personal income increased as well.”

“Along with the change to market-oriented financing the total budget for general practice rose from €1.92 billion in 2006 to €2.37 billion in 2010, an increase of 14%. In 2011 all insurers invested another 10%. Before 2006 the macro budget for general practice had been constant.”

“More group practices appeared; solo practices dropped between 2006 and 2012 from 46% to 39%. The availability of nurse practitioners for chronic disease management rose from a few percent to over 90%, managing diabetes, heart & lung disease and mental health. Diagnostic and therapeutic activities were incentivised: About €50 ($73) per service for minor surgery, spirometry, ECG, joint injections etc.”

Incentives and penalties

Until 2006 GPs received capitation payments for their public patients (about two-thirds of their patients), and fees per consultation for their private patients (about one-third), but this two-tiered system is now history. 

“GPs are paid by insurers according to a mixed payment scheme: Partial capitation plus fee-for-service for basic care.

Van den Hombergh: “Regulated competition between healthcare providers and between health insurers was introduced for specialist care, but family medicine provided in general practices was exempted from this competition. GPs are now paid by insurers according to a mixed payment scheme: Partial capitation plus fee-for-service for basic care.”

“GPs receive ancillary payments, mainly on a fee-for-service basis, for additional or special services such as care for people with chronic diseases. They are compensated on an hourly basis for care during out-of-office-hours. The incentives were negotiated with the profession and were closely aligned to professional values, which limited the risk of perverse consequences.”

“In 2008, the Dutch Association of General Practitioners accepted new benchmarks on availability and accessibility. Insurers offered €4 ($5.81) for each patient when the KPIs were met. Practices should minimally be open six hours a day, five days a week and address emergency calls by a medically trained person within 30 seconds. The GP had to visit the emergency patients within 15 minutes. It was incentivised but also checked by the Dutch Health Care Inspection and failure to meet the standard was financially penalised: Practices with more than 2500 patients could miss out on over €10,000 ($14,514). In the end, only three practices did not meet the target.”

Bont: “A combination of capitation and fee-for-service in a 40/60 or 60/40 ratio incentivises effective and efficient care. A consultation should have a financial stimulus, but not too much, and at the same time the prerequisites should be there to deliver optimal care.”

“Mandatory patient registration works well and helps GPs to coordinate care. GPs are paid to do this via an annual registration fee per patient. We have our own quality assurance system and our own national general practice guidelines.”

What are the weaknesses?

Australian politicians claim that Australian health care is too costly (9.1% of GDP), but the Dutch system is even more expensive: 11.8% of GDP is spent on health (note that the US devote 16.9% to the health sector).

Dr Marith Rebel-Volp is a GP and Member of the Dutch House of Representatives. She says: “GP-care is cheap. The total health budget is €71.3 billion and General Practice costs only €2.67 billion. At the same time GPs are dealing with the majority of health problems and act as gate keepers to more expensive parts of the health system. However, long-term chronic care is expensive and one of the reasons the system is being criticised is its costs.”

“Insurers can set the benchmarks and, as collective bargaining by GPs is not allowed, this is a problem.

The Dutch Association of General Practitioners is concerned that health insurance funds are becoming too powerful, limiting choices of doctors and patients. A survey showed that most GPs are unable to negotiate or discuss their individual contracts with insurers.

Rebel-Volp shares this concern: “Although General Practice has a relative protected position within the healthcare system, there is friction between insurers and GPs. Insurers can set the benchmarks and, as collective bargaining by GPs is not allowed, this is a problem. GPs feel pressured to sign on the dotted line. Recently, a parliamentary motion was accepted which called for re-introducing collective bargaining – this is an interesting development.”

Bont: “Compared to many other countries Dutch GPs are in a strong position, but our workload has increased. Sometimes the expectations are unrealistic. For example, GPs will be required to manage people with serious mental health conditions like ADHD, and we have to hire mental health workers, but I don’t have the physical space to accommodate more staff in the practice.”

“Another result of the current system is the focus on KPIs. I often don’t have time to look at my patient during a consultation as we have to register so many details for the health funds.”

Private health funds require ongoing scrutiny by watchdogs. Last year the Dutch Healthcare Authority (NZa) had to intervene to make sure insurers offered the basic package to everyone without discrimination. The mission of the Healthcare Authority is to guard quality, efficiency, market transparency, freedom of choice, access to healthcare.

“The senate blocked proposed legislation changes which would have opened the door to risk-selection by insurers,” Rebel-Volp says. Although risk selection by insurers is not allowed by law for the basic health insurance package, this doesn’t apply to complementary packages. Insurers will try to push people to take out more expensive insurance products, for example by making it harder for certain patient groups to obtain the basic package online or directing people to the expensive packages on their websites.

Rebel-Volp: “Another issue is the level of the excess payment. This is high and many GPs feel patients are avoiding specialist care as a result. Currently the Health Minister has proposed a new plan in which a lower excess payment is an option if patients choose insurer-preferred, contracted specialist care.”

Vertical integration of care, where health insurers provide health services, is a topic of political debate in the Netherlands. Although it is cost-effective, risks are loss of quality, consumer choice and professional autonomy. Doctors and consumers often argue that insurers should not interfere in the patient-doctor relationship to avoid managed care situations as seen in the US. At the moment the Dutch Health Minister and the majority of the House of Representatives do not support vertical integration.

Conclusion

It is not surprising that the Netherlands is topping the international healthcare charts. Although their system is not perfect – and still a work in progress – the Dutch have solved some major issues such as access and equity. The Government has become the regulator and withdrew from the operational side of healthcare – this appears to have been very beneficial for the industry. On the flip side, the system is not cheap, private health funds need to be watched closely, and Dutch GPs have had to sacrifice at least some of their clinical autonomy.