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Monday, 21 November 2011
Page: 9095

Senator EGGLESTON (Western Australia) (21:19): It is very important that we recognise the need for different kinds of experienced people on this pricing authority board. We have heard already in the course of this debate that there will be somebody with regional and rural experience. People who have anything to do with medicine know that regional and rural hospitals are different kinds of places from the big metropolitan hospitals, especially the big public hospitals. If recognition has been given to the fact that there is a need for somebody with regional and rural experience on this pricing authority board, we really have to think also about the need, as the Catholic Health Australia spokesman Martin Laverty has said, for someone who has operating experience in the private hospital sector.

Private hospitals are very different from public hospitals. Public hospitals work on public money, obviously, which is not accounted for in the same way as is money in a private hospital. Martin Laverty, CEO of Catholic Health Australia, made the point that the Catholic hospital system represents about 10 per cent of hospital beds in Australia, amounting to something like 2,700 Catholic hospital beds, mostly on the east coast but very strongly represented in Western Australia where we have two St John of God hospitals which are major, very large private hospitals in the metropolitan area, one in Subiaco and a new one south of the river in Murdoch. There is also St Anne's hospital, formerly the Mercy Hospital and another big Catholic hospital. St John of God has hospitals in the major regional centres of Western Australia in Bunbury, Geraldton and Kalgoorlie. So St John of God is a major hospital provider. Its funding models and business models are quite different to those of the public hospital system, where there is obviously a bigger flow of money coming in.

Private hospitals have to account for capital depreciation, insurance, council rates, long service leave, information technology—even down to whether or not a Microsoft licence per user is applied to the cost of each patient's admission—because the private hospital system requires cost accountability, which really is not an issue in a government run system. There are very different considerations when you come to the private system and, given that, the case for having a person on the board with private hospital, private sector, experience is very hard to argue with. In the end, in the private sector every cost has to be recovered. You have to work out each individual item of cost within the whole system because in the end that cost has to be recovered in the fees charged to the patients. That requires a different approach altogether. You cannot just assume that some things will be 'given', that some services will be provided because they always are in a big government hospital. In the private system they are not. You have to think of the cost of every towel by a basin, every needle and every syringe, the cost of electricity for the use of electrical goods within a hospital—it all has to be accounted for.

The entire approach in a private sector operation is very different to that in a government sector operation, where people are less concerned about costs. They probably should be more concerned but, because it is a government operation, nobody bothers too much about the use of power or the provision of drugs, dressings and supplies, which can be done in a fairly easygoing way. The cost of the nursing staff required to support a surgeon in an operation is not taken into consideration as much, in the sense that the cost is borne by the government and it does not have to be accounted for in the same way. In the private sector, just as in any other private business, every item of cost has to be considered in terms of the ultimate unit cost to the patient. It is a very different approach.

For that reason the coalition's proposition that there be a person on this board who has private sector experience is one that, in terms of simple common sense, is very hard to argue against. These hospitals are major organisations incurring, day by day, very high costs, and in the end it has to be brought down to a unit cost for an individual patient for their day in the hospital. I strongly support this coalition amendment and trust that the committee will find it does as well.