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Wednesday, 23 March 1994
Page: 2064


Senator LEES —My question is to the Minister representing the Minister for Health. I refer the minister to the comments of the National Association of Nursing Homes and Private Hospitals on Senator Richardson's paper on private health insurance. Is Senator Crowley aware of the restrictive trade practices being exercised by some private health funds? In particular, is she aware of the practices of the HBF in Western Australia, including demanding the right to access the private hospital's documentation detailing all operating costs and profit margins as well as details of the patients and procedures undertaken; restricting the level of fees a hospital can charge patients regardless of whether they are HBF members and indeed preventing any reductions for pensioners; and insisting the hospital discuss any `unusual fees' with HBF before a bill can be issued? Does the minister agree with these practices? Is it now government policy? Is it not a fact that Senator Richardson's package will worsen this situation?


Senator CROWLEY —I am not aware of the specific matters in relation to the HBF in Western Australia, but I can comment in general. Some health funds have attempted to adopt unacceptable restrictive practices. Health funds in Tasmania, other than Medibank Private, have sought to force hospitals to cease giving discounts to the Department of Veterans' Affairs. The Trade Practices Commission intervened, and that attempt has been stopped.

  More recently the MBF in New South Wales issued a circular saying that it was concerned that some hospitals were offering cheaper bed day charges to some patients. MBF wanted the hospital to increase charges for such patients as it undoubtedly saw such discounts as being at the expense of higher charges for its members. The MBF threatened to reduce its bed day benefits to the level of the lowest fees being charged by a hospital. This certainly would have left patients out of pocket. The theory seemed to be that this would create patient pressure to make hospitals increase charges for non-MBF members. Senator Richardson intervened and MBF decided to cease action on this proposal.

  Clearly it is unacceptable for private health funds to seek to stop a hospital providing lower fees for other people. It is also unacceptable for health funds to collude to achieve such an objective. However, it is perfectly reasonable for health funds to seek to get the best possible deal for members. Clearly, if a health fund simply lets private hospitals charge whatever they wish, fund members may have to pay for any undue generosity either through higher out of pocket costs or through higher premiums.

  Health funds in Victoria have entered into preferred provider arrangements with hospitals which guarantee members on such tables no out of pocket costs for accommodation expenses. It is entirely appropriate for health funds to attempt to negotiate the best price for their members. It is also appropriate for private hospitals to attempt to negotiate the best prices from their perspective, but whether cost information is exchanged in such negotiations is a matter for the health funds and hospitals involved in those negotiations. The situation is not markedly different to the government wanting cost details in considering introducing new items into the medical benefits schedule.

  Senator Richardson's proposals are based on private health funds taking a greater role in negotiating on behalf of members. That is an appropriate commercial and consumer approach, but it is not in the interests of consumers to continue an arrangement whereby hospitals set whatever bed day charges they like, which people with insurance have to pay one way or another. Senator Richardson's reform arrangements will provide for an appropriate framework, while dealing with restrictive trade practices. Without pre-empting the consultation process, it is highly likely that the Trade Practices Act will continue to apply to funds and hospitals. Similarly, the reforms that deal with cases where a health fund owns the only private hospital in a town will probably be requiring such a hospital to offer no less generous prices to other funds than it provides to its own funding.