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Thursday, 23 August 2012
Page: 6265

South Australia: Private Hospital Funding


Senator XENOPHON (South Australia) (14:51): My question is to the Minister representing the Minister for Health, Senator Ludwig. It is common practice for private health funds to pay less to private hospitals in South Australia than they pay for the same procedures elsewhere in Australia. The Private Hospital Data Bureau annual report 2010-11 reveals that, if all the care undertaken in South Australian private hospitals had been priced at the national rates, the revenue returned to South Australian private hospitals would have been 17 per cent or $75 million higher. Is the minister aware of this and, if so, can the minister provide information on any action the government has taken or is planning to take to address this apparent disparity and the immense pressure it is placing on South Australian private hospitals?


Senator LUDWIG (QueenslandMinister for Agriculture, Fisheries and Forestry and Minister Assisting on Queensland Floods Recovery) (14:52): I thank Senator Xenophon for his question in relation to private hospitals in South Australia. I understand that Minister Plibersek is aware of this issue and I understand that she has been and is corresponding in respect of it. As to the second question, the Commonwealth does not regulate private hospital charges.

Honourable senators interjecting

The PRESIDENT: Order! Wait a minute, Senator Ludwig. Senator Xenophon is entitled to hear the answer to his question and not have people immediately to his left and right debating other matters across the chamber. It is completely disorderly. Senator Ludwig, continue.

Senator LUDWIG: The Commonwealth does not regulate private hospital charges; the Commonwealth does regulate private health insurance benefits. Private hospitals are free to set their own charges. Private health insurers and private hospitals commonly contract for the provision of services and accommodation and these are commercial decisions negotiated between the parties. The government does not have any regulatory power to force the parties to agree to particular levels of benefits payable. Hospital case-mix protocol data shows that about 98.1 per cent of private hospital episodes and about 92 per cent of day surgery episodes were contracted, so the vast majority of these are contracted directly.

With regard to South Australia, it can be noted that the data released by the Private Health Insurance Administrative Council indicated that out-of-pocket costs are lower in South Australia for a hospital episode than in any other state. At June 2012, the percentage of services with no medical gap is higher in South Australia—at about 93.2 per cent—compared with other states and territories which range variously from 77 per cent right up to the 90 per cent mark. Additionally, South Australia has the lowest average gap payment across all services. In South Australia the average is about $5.33, while in other states it ranges from as high as $67— (Time expired)




Senator XENOPHON (South Australia) (14:54): Mr President, I ask a supplementary question. Does the minister concede that whilst the government does not have the power to regulate private hospital charges, it does have the power to regulate disputes between private hospitals and health funds? Does the government consider that there is a discrepancy in terms of the 17 per cent figure quoted and that this does disadvantage South Australian private hospitals given what private hospitals have told me about the pressure that it is putting on them?


Senator LUDWIG (QueenslandMinister for Agriculture, Fisheries and Forestry and Minister Assisting on Queensland Floods Recovery) (14:55): I thank Senator Xenophon for his supplementary question. One of the areas of course—and I will go to it again—is that, as previously noted, it is a matter that private hospitals are free to set their own charges. There is no role for the Commonwealth in that area. The Commonwealth only regulates the private health insurance benefits, but any contracted level of benefits that a private health insurer will pay to a hospital for an episode of treatment is and remains a commercial matter between the parties.

It should be noted for the purposes of private health legislation though, that each state and territory is, and is regarded as, a separate risk equalisation jurisdiction. In Australia private health insurance is not risk rated like most forms of insurance. Instead, the government requires all insurers to offer community rated policies to ensure that premiums paid by consumers— (Time expired)


Senator XENOPHON (South Australia) (14:56): Mr President, I ask another supplementary question. Does the minister not concede that private hospital charges are in part related to the amount of funding they get from private health funds? Can the minister provide payments information on whether there is a discrepancy between Medibank Private to South Australian private hospitals and what Medibank Private pays to other private hospitals in the rest of the Commonwealth?


Senator LUDWIG (QueenslandMinister for Agriculture, Fisheries and Forestry and Minister Assisting on Queensland Floods Recovery) (14:56): I thank Senator Xenophon for his second supplementary question. If we do go to Medibank Private, I can remind Senator Xenophon and the Senate that they would be commercial arrangements that Medibank Private would have with the relevant hospitals. Medibank Private is a government-owned enterprise but as a commercial entity it does operate—and I am sure that Senator Xenophon would be familiar with this—at arm's length from government, ensuring that there is a level playing field with other private health insurers. However I do understand that Medibank has offered to brief Senator Xenophon about these operations and I will certainly take any part of that question today to Minister Plibersek in respect of this matter for her to see if she wants to provide any additional information in answer to it. (Time expired)