Around half of Australians have private health insurance. Most of us know that if we need to see a private specialist, we may face some out-of-pocket fees between what the doctor charges and the rebate we receive from Medicare and, if we’re having a procedure or operation, our private health fund.
But why is it so difficult to find out exactly how much it’s going to cost to have that suspicious mole removed or to be admitted to hospital for that colonoscopy or hip replacement?
Outside of public hospitals, most clinical health services are essentially private markets. The Commonwealth government, through Medicare, provides a variety of subsidies to reduce the cost burden on patients but does not regulate prices. Doctors can charge what they like – or what the market will bear.
Patients can learn their local GP’s fees relatively quickly and make informed choices about whether to switch practices. Our recent researchsuggests GP practices facing strong local competition were more likely to keep their prices low.
But specialist prices are more obscure. Patients often rely on their GP to make the choice of specialist for them through the referral process, with little or no discussion of prices. And patients see specialists less frequently than GPs, so they don’t have the opportunity to learn about prices through repeated use.
There is a simple way of increasing price transparency so we all know how much services cost at alternative providers: make this a requirement for all specialists and publish the data on a government website such as the My Hospitals portal.
Specialist consultations
Prices for specialists are high, with only around 30% of consultations bulk-billed and an average out-of-pocket cost of A$65.73 (for those not bulk-billed).
The size of out-of-pocket costs may be influenced by the list of recommended fees published annually by the Australian Medical Association. The AMA-listed fee for initial specialist consultations is A$166, almost twice the Medicare Benefits Schedule (MBS) fee of A$85.55.
For initial consultations with consultants, the listed fee is A$315, more than twice the MBS schedule fee of A$150.90.
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Recently published research by health economists at the University of Technology Sydney confirms that many specialists practise “price discrimination” – they charge higher prices to patients who can afford to pay more. This is often seen as an indicator of a lack of competition in an industry.
Specialists are less price-competitive because of the high barriers to entry into these professions. This leads to long waiting lists for consultations as well as high prices.
Health Workforce Australia has identified psychiatry, obstetrics and gynaecology among important specialities with a current shortage that are likely to be under-supplied in the future. Causes include a lack of specialist training places, long training programs and falling working hours.
Procedures and surgery
Most patients who have private in-hospital elective procedures have health insurance that pays their hospital costs, subject to an excess on the insurance policy. But doctors’ fees are more complicated.