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Mr Koce used data for 2016-1­­7 from the Private Hospital Data Bureau and the National Hospital Cost Data Collection published by Independent Hospital Pricing Authority (IHPA) in an attempt to compare prices for prostheses in the public and private sector. The information on costs for both these data sets is based on analysis of Australian Refined – Diagnosis Related Groups (AR-DRGs). One dataset is for private hospitals and one is for public hospitals and each are compiled by different agencies.

The 2016-17 data does not fully reflect the cuts imposed on prostheses across four main categories in February 2017, and also precedes the cuts implemented as part of the MTAA-Government Agreement signed in October 2017.

The latter cuts are estimated to be worth $1.1 billion over the life of the Agreement and resulted in the lowest premium increase in 19 years in 2019. This is even before a further round of Prostheses List benefit reductions under the Agreement, which will take place in February 2020. MTAA estimates that the February 2017 and Agreement cuts have delivered $450 million in savings already in the 2017-18 premium years, higher than forecast under the Agreement.

It is, therefore, inappropriate and completely disingenuous for Mr Koce to quote three-year-old statistics to make his case.

Furthermore, DRGs are not an appropriate tool to compare prostheses costs. DRGs are used to determine hospital funding in Australia. A DRG will not explain which prostheses was the best for the patient, including whether a more expensive one makes more sense based on the many factors that could impact treatment under that DRG. They describe averages, not specifics, and will not take into account legitimate differences in volume mix between prostheses use between public and private patients.

The numbers floated by Mr Koce are similar to those used time and again by the PHI industry in their attempts to get the device industry to temporarily rescue it from difficulties. MTAA has demonstrated that they are not correct, and by the time the last cuts under the Agreement are implemented in February 2020, there will be very little continuing justification for the comparison.

Private health insurers should rather pay heed to APRA’s recent warnings that “often [their] strategies are vague, fail to address the material risk or rely heavily on actions by others”, that “waiting for a third party to ‘serve-up’ a solution is not a defensible strategy” and that “APRA would expect that better prepared insurers are taking actions to improve the value of services for members”.

Insurers must focus on providing value – access to a comprehensive range of life-saving and life-changing medical devices, with generally no out-of-pocket costs for those devices, is a key contributor to the value proposition of private health.

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What to know:

The Government’s health investment includes a $2.7 billion dollar spend on top of $24 billion in recurrent spending over the coming year – taking the total 2019-20 health budget to $26.7 billion.

The recurrent funding investment will focus on families with additional funding to provide an extra 8,000 paediatric operations and 10,000 cataract surgeries, over four years.

What Minister Hazzard had to say:

“This record Budget will see the first stage of an unprecedented boost to the frontline workforce with an extra 8,300 staff over the next four years under a $2.8 billion commitment – 45 per cent to staff to go to the regions.

“This record Budget will ensure patients, their families and those in regional communities already doing it tough in drought-affected areas continue to get timely, world-class care, no matter where they live.”

The health highlights:

• $2.8 billion to recruit a total of 8,300 frontline health staff over four years;
• $10.1 billion over four years to invest in NSW’s health infrastructure to continue current works and commence upgrading and building a further 29 hospital and health facility projects, as well as ensure compliance with new leasing standards;
• $70 million over four years to provide 35 new free mobile dental clinics allowing access to dental checks and basic dental care for up to 136,000 primary school children in Western Sydney, Mid North Coast and the Central Coast each year;
• $42 million over four years to provide women with greater choice around IVF services and a partnership with the University of NSW for the first state-wide fertility preservation service for young cancer patients at The Royal Hospital for Women;
• $76 million over four years to boost elective surgery, focusing on children and cataract patients, with delivery of an additional 8,000 paediatric operations and 10,000 cataract surgeries in addition to the investment in frontline staff;
• $27.1 million to employ 221 paramedics and call centre staff (second tranche of record 750 workforce announced last year) to improve response times, reduce paramedic fatigue and support safety;
• $23.5 million for mental health to expand the capacity of Lifeline and Kids Helpline over four years;
• $45 million over four years in palliative care for 100 palliative care nurses, Aboriginal health workers, digital health solutions and the refurbishment of existing facilities. This is in addition to a $100 million package for palliative care that was announced as part of the 2017-18 Budget; and
• In 2019-20, the Government will invest $2.9 billion in the Health capital program, which includes $148 million from the Ministry of Health’s recurrent expense budget and $78 million for lease acquisitions.

Health infrastructure investment:

One of the largest health projects in NSW is on track to deliver world-class care to local communities for decades to come. This includes a $2.7 billion spend on health infrastructure in 2019-20, up 27 per cent on last year.

The record $2.7 billion health infrastructure investment in 2019-20 will enable the following works:

• Commencement of new works John Hunter Hospital ($780 million), the Children’s Hospital at Westmead ($619 million) and Tumut Hospital ($50 million);
• Continuing works at Griffith Hospital, Goulburn Hospital, Hornsby Hospital and Mona Vale Hospital;
• New hospital car parks at Liverpool, Shellharbour and Wagga Wagga; and
• Planning for major projects including Sutherland Hospital, Sydney Children’s Hospitals Network at Randwick and the Comprehensive Children’s Cancer Centre, and Royal Prince Alfred Hospital.

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