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COMMUNITY AFFAIRS LEGISLATION COMMITTEE
08/05/2000
Health Legislation Amendment (Gap Cover Schemes) Bill 2000

CHAIR —Welcome, Mr Buntine and Professor Woodruff.

Mr Buntine —Thank you for inviting us.

CHAIR —Witnesses are reminded that the giving of evidence to the committee is protected by parliamentary privilege. However, the giving of false or misleading evidence may constitute a contempt of the Senate. The committee has before it your submission. Do you wish to make any alterations to your submission?

Mr Buntine —The only alteration which I would like to make is that, having thought about it further, I would rather see the mechanism by which transparency is achieved with respect to the schemes be that the scheme must be tabled in parliament rather than a copy sent to the Ombudsman. If it is tabled in parliament one assumes then that the Ombudsman can get a copy easily and also the patient, doctor and other interested parties, including the media and so forth, can get copies. My whole point is that it is absolutely essential to get the cooperation of doctors, at least, for these schemes to be completely transparent and for everyone to know about them. I see absolutely no reason why that should not be the case.

CHAIR —Any other alterations or additions to the submission? I now invite you to make any other comments that you may wish to make, then senators will ask you questions.

Mr Buntine —I feel some need to explain who I am as I am not actually appearing to represent a body. That is because the main bodies that I am actively involved are state bodies, and they are the Victorian branch of the AMA and the state committee of the College of Surgeons. It would be the federal bodies that would make submissions.

I am presently elected to the federal body—that is, the Australian Hand Surgery Society, but that would not be making a submission here. With respect to my discussions here, the most relevant body that I am associated with is the Australian Day Surgery Council of which I am a member. This is interesting in that this is a body where health funds, hospitals and doctors cooperate extremely well. It is a very effective body. It has done much to improve the practice of medicine in Australia and it has also reduced costs.

I am a senior plastic surgeon at the Box Hill Hospital, one of Melbourne's teaching hospitals. My main interests in that regard is surgery of the hand. Looking back on achievements in the past, the thing which gives me greatest satisfaction is having assisted the drafting of the Victorian WorkCover legislation—so I have taken an interest in legislation in the past. Over a 10-year period I have tried to achieve something similar to private health insurance but I am afraid without success. Ironically, the extensive discussions that I have had in this field may have stimulated the Lawrence legislation and I think, most probably, did play a part initiating the legislation that we are considering at the present.

It is very important, as I have said, because this legislation is actually the most radical legislation applying to health since the Medicare legislation. That is not appreciated. This is because the legislation actually says very little, but it is what it does not say that is important. The potential benefits of the legislation are overshadowed by the quite serious risks. This is why I believe that amendment is absolutely important and that is that a copy of each scheme must be tabled in parliament and must be subject to parliamentary disallowance.

Patients have an absolute right to know of restrictive clauses in the presently secret contracts between their health funds and private hospitals. These are contracts by which treatment is directed, for instance—this happens at the present time—which limits length of stay in hospital and has an influence on choice of prostheses and so forth. That transparency and public scrutiny becomes even more important if you are now considering schemes involving doctors. I do firmly and strongly believe that commercial-in-confidence should have virtually no place in medicine and that public scrutiny of these schemes is of even greater importance now that the American HMOs are coming to Australia. Last year in Melbourne I did, in fact, speak to Kaiser Permanente, with the executive director of the Victorian AMA. Kaiser Permanente, I should explain, is a highly reputable American HMO and they were considering a joint project with St Vincent's Hospital. That is a project of which I made it quite clear I would have approved; the project did not proceed for other reasons.

Two years before that I did play a leading role in preventing Columbia HCA from coming to Australia. I must say that Columbia HCA is a huge, highly disreputable American HMO, the subject of criminal actions and so forth in the United States. People tell me that Columbia has not given up yet. I do know what I am talking about, and although I keep on saying it, these schemes just have to be available for public scrutiny. Professor Woodruff would also like to make a comment.

Prof. Woodruff —Yesterday I took time from the Royal Australasian College of Surgeons council meeting to view the Channel 9 Sunday program. As chairman of the vascular surgery unit at the Princess Alexandra Hospital, the hospital whose carotid artery surgery and stroke rate was featured on the program, I am only too well aware of the need for complete openness and accountability applying to all aspects of health care. This, of course, must apply equally in the private system as in the public system. I also believe this is why each gap cover scheme approved by the minister must be tabled in parliament and subject to disallowance by parliament. The schemes have the same impact as regulations and I think should be handled in the same manner.

With the proposed legislation, the minister could be placed under extreme pressure by the types of organisations, which Mr Buntine has alluded to, and particularly large conglomerates from overseas. Under these circumstances, he could well be comforted by the support of parliament. When speaking to the Convocation of the College of Surgeons last night, the Minister, Dr Wooldridge, not only emphasised the requirement of the medical profession to embrace accountability and transparency but also he expressed concern at undue extension of corporatisation in health care. For instance, radiology and pathology are already, to a large extent, corporatised. He was clearly referring to clinical care. This is why it is very important that every scheme be tabled in parliament. There is a risk that schemes might impact adversely on patient care in a manner which might not be evident even to those caring for the relevant patients.

The minister, in his speech last night to the college, mentioned that the largest business in Australia is now the health care industry. Huge sums of money, as we all know, are involved. It is conceivable that, with these pressures, financial considerations can determine various types of health care delivery. I think there has been evidence with casemix or DRG funding in Victoria, in particular, of the funding arrangements we used to increase the development of catheter laboratories for treatment of cardiac atherosclerotic lesions.

I am currently a member of the Health Insurance Commission Vascular Advisory Group, which is trying to determine from the data available which is the optimal way to treat narrowing of the coronary arteries—whether patients treated by dilatation have a more favourable outcome than patients treated by coronary artery bypass surgery. This answer is not yet apparent, so it strikes me that it is rather premature to have insurance companies perhaps having a bearing on which of these treatment modalities might be the one that is most likely to be funded.

CHAIR —Wouldn't it be a case of horses for courses? Wouldn't one procedure be better for one patient and another might be better for someone else?

Prof. Woodruff —I agree with you, but at this stage I do not believe we have the answer to this. I am not absolutely sure of the position I am in at the moment, because I have signed a confidentiality agreement in relation to some of the data I have from the HIC. Without encroaching on that in any identifiable manner, would I be within my rights to point out—please stop me if I am transgressing—that there is a tenfold disparity in the ratio of one treatment to the other of the two I have already mentioned in one state and the ratio is reversed in another state? It is quite apparent that the two treatments are not going to be exactly the same, nor do they cost the same and nor will the outcomes be the same, but why should there be tenfold incidence of the procedure in one state—

Senator CHRIS EVANS —What are you saying? Are you saying that is driven by health insurance considerations?

Prof. Woodruff —No, I am not saying that. I am saying that at this stage even the people responsible for this therapy do not know the correct answer. So how on earth—

Senator CHRIS EVANS —We have had the inquiry on childbirth that looked at similar sorts of statistics for varying hospitals and different doctors' preferences. What is the point? Doesn't that occur anyway?

Mr Buntine —Can I explain this. I come from Victoria. The situation here was that we were told by John Patterson that DRG weights—that is, the amount paid for particular procedures—would be altered for two reasons: one would be that the costings were altering or were found to be incorrect; the other would be to encourage what were preferred treatments. They did get the idea that it was better to do angiography and dilate vessels rather than do cardiac surgery. A significant reason for that is that it is by far the cheaper treatment. The DRG weights were adjusted so that all the public hospitals set up catheter laboratories. They started to spend so much money doing that that the DRG weights were then reduced again. I do not doubt that that—

Senator CHRIS EVANS —Was that price driven?

Mr Buntine —That is that price driven thing. In other words, it was not so much the doctors making the decisions for the hospitals. It was so much better for them to treat coronary artery disease by dilating the blood vessels than by actually bypassing them surgically. I believe that is the reason there is so much dilatation done in Victoria and so little done in South Australia.

You could speak to John Patterson about that. I do not know about that particular situation, but he was quite clear about the fact that he would vary—and this is public treatment. He believes in dealing with situations via the finances, and he would make those treatments which the government wished to support more profitable for the organisations that performed them than the others.

What we are really suggesting is that health funds can do the same. In speaking to Russell Schneider on one occasion, I did get him to agree that it might be reasonable for the contracts between hospitals and health funds to be made public, but not the financial considerations. I said, `If you do not make the financial considerations public also, you are not really making it transparent because you can organise the finances so that you can have some preferred treatments and some less preferred treatments.' That was the point. Have I given that correctly?

Prof. Woodruff —Yes. I have a quick response to some of the issues raised by the previous witness. As a vascular surgeon, it would be extremely difficult for me to be specific as to the nature of the operation prior to actually opening the patient, very often. Sometimes in bypass surgery grafts we are not sure where the distal anastomosis is going to be, and it attracts a significantly different fee if it is above the knee—for instance, in the case of femoral popliteal grafts—as opposed to below the knee or even a little further down the leg into the tibial vessels. That decision is often an operative one, just as in the case of operating on aortic aneurisms: sometimes the clamp goes above the renal arteries, where the rebate is 50 per cent greater than if it is below the renal arteries.

CHAIR —Wouldn't that also be applicable to general surgeons who are operating on cancer patients or whatever?

Prof. Woodruff —Of course.

CHAIR —They do not know what they are going to find until they open them up.

Prof. Woodruff —Yes. Another issue relates to my anaesthetist. One of the modern developments in anaesthesia of aortic surgery is the use of epidural anaesthesia. This is often precluded by just minor variations in arthritis in the spine: the patient cannot be positioned properly for placement of the epidural. That has a significant bearing on the funding of that particular anaesthetic. At the completion of the operation some patients do not breathe properly and they have to remain on a ventilator. That makes a significant difference, and that is not anticipated either.

In other words, I believe wholeheartedly in informed financial consent, but the best I can offer my patients is to say that I believe in the schedule of fees published by the Australian Medical Association. I produce a copy of it for them. It is pointed out to them, when they first phone my practice for a consultation, that this is the type of practice they are being referred to. I go by the schedule of fees. We will discuss any of the items in the schedule and we will do our best to give them, as we have to do on the operative consent form, what we intend to do at the operation. But they have to be aware that there could be a certain variation, depending on the findings at surgery.

Senator CHRIS EVANS —Do you tell them the difference between the AMA fee and the rebate?

Prof. Woodruff —Yes, it is published in the schedule.

Senator CHRIS EVANS —That is given to them?

Prof. Woodruff —Yes. But as I often do not know who my anaesthetist will be at the time they are being booked for surgery four weeks down the track, it is very hard for me to include the anaesthetist's fees on this informed consent form. In fact, it is impossible.

Senator CHRIS EVANS —Because you do not know whether he charges the AMA fee or a higher fee or a lower fee?

Prof. Woodruff —I do not even know at that time who the anaesthetist will be.

CHAIR —Doesn't the anaesthetist then advise the patient subsequently to that? You organise the anaesthetist after your consultation with the patient and the anaesthetist then advises the patient of what their fees will be by mail or by consultation? A lot of anaesthetists will wish to see a patient in advance of admission, at which time they would or could discuss fees. But if they leave it for, say, a more minor procedure where they are not going to see the patient till the day of admission, then I understood that the anaesthetist provided the information to the patient by mail.

Mr Buntine —I think that would be the exception.

Prof. Woodruff —I think it would be too.

Senator DENMAN —You wouldn't have access to a range of costs and what they are likely to be from a variety of anaesthetists when you are discussing it with the patient?

Prof. Woodruff —No, I would not. I would know that the anaesthetist would be able to answer that question, but, no, I do not take that on board as part of informed financial consent. I have enough trouble organising the hospital.

Senator CHRIS EVANS —That is the point, isn't it: this scheme really anticipates. The ACCC basically said that they anticipate the lead surgeon will be one of those people who is responsible for giving this informed financial consent. In a sense, you really will have to be a spokesperson and represent the other professionals and those others who will be charging them, won't you?

Prof. Woodruff —It would totally preclude me from being part of the scheme—not for any financial considerations of my own, but my wife is my practice manager and it would be the end of my marriage, I think, if I tried to get her to follow the suggestions that have been put before us.

Mr Buntine —This is something which varies with the specialty. There is no way Professor Woodruff could really give this to people. You could start off with giving a range, but whether it does or does not involve intensive care is everything. The whole thing is completely workable. With the type of work I do, which is largely hand surgery and skin cancer these days, I can usually give people a very accurate cost assessment. From my own point of view, for pensioners, particularly elderly pensioners, I operate to the schedule fee and so does my anaesthetist. So it is easy: it does not cost them anything. I would actually get paid more if I submitted my account to AXA, but I will not do that because I work with my patient, I do not work with AXA. AXA, to me, is the rebating organisation. I am not employed by a health fund. As far as that complicated informed financial consent thing goes, I would rather take the lower fee and not have anything to do with it, and there are a lot of doctors who feel like that. So the people who have given advice about these matters in relationship to informed consent are not really the people who are actually doing the work.

Senator CHRIS EVANS —Are you saying, Mr Buntine, that you are not going to sign up to the no gap arrangement?

Mr Buntine —No, certainly not.

Senator CHRIS EVANS —I do not think there is any doubt that the consumers want no gap insurance. I do not think anyone disputes that, from the consumer's point of view, it is something that people want. They want to know when they pay their insurance that they are not going to get hit for other bills. What are you going to say to your patients—I am trying to be devil's advocate here—when they say, `We want this and why won't you give it to us?'

Mr Buntine —There are two groups of patients. There are the pensioners, particularly the older pensioners— some of them infirm and that sort of thing—and, for them, I operate for the schedule fee. They get informed financial consent; they do not have any extra payment. There are other people who come in, and when I start talking to them about fees, they really are not interested. I can say, `It might cost you a couple of hundred more than your rebate,' something like that, and they really are not interested.

Obviously there are people who are concerned about gaps and so forth—health funds continually tell us that this is the case—but it does not occur in my practice. No-one worries me about what the gap is going to be. In talking with colleagues who work in the public hospitals, in that sort of thing, and in the major cities—and perhaps Melbourne is an area which has been depressed in recent years, where the fee schedules are somewhat lower—this is not the issue that I see. But you hear it when you talk to health funds. I am quite aware of the fact that there are some patients who, even though they know very well what the arrangements are going to be, nevertheless try and get a bit extra out of the health fund if they can.

I think you are seeing it from two different points of view. There are many doctors—I speak to a lot of doctors through the AMA and that sort of thing—who do not see informed financial consent as being the problem it is presented to be. I do not doubt that there are a few instances which I would not approve of where it has ended up being a problem, but if you analyse what the gap is, it is quite small. It is $60 or something like that. I think there is a political imperative in lumping in the fees together rather than it being an issue for patients. That is what we are talking about: corporatisation. It gets so complicated.

I discussed this with one of the doctors who appeared on that Sunday program. What he said when he looked at this informed financial consent was, `Look, the average surgeon is just going to send it to the hospital, tell them an item number and tell them to sort it out.' In other words, we are heading towards the situation where medicine is controlled by the hospital, and that is really, I think, a great pity. We have seen that sort of thing in the United States, and it does not give the highest standard of care. I want to deal with my patient; I do not want to deal with their health fund. A lot of doctors feel like that.

Senator CHRIS EVANS —I see one of the other points you make is that you do not want to actually be part of any single billing operation.

Mr Buntine —No, I would not accept single billing. The term started off as `single billing', and then it became `simplified billing'. The term that I tried to get the AMA to accept was `patient friendly billing'. I tell you what I do. Mostly there is only me and an anaesthetist. It is day surgery, a lot of it, or home the next day. If the patient needs an investigation it is usually done out of hospital anyway, so there are no complicated accounts. I give the patient the account personally at the first post-operative visit, which is commonly within a couple of days of operation, and I explain it to them then. I actually clip it to the history, and I give it. That is the best form of billing. My anaesthetist posts his accounts.

For many of us the simplified billing arrangement—and for me to actually have to give my account to the hospital for my patients to access a higher rebate—is completely unreasonable. I know of these simplified billing schemes. What happens is the accounts get sort of lost and mislaid and nobody knows where they are or what has happened to them, and people do not get paid, and then they are ringing up. They do not get in touch with the patient. They have to get in touch with the billing system. People who are involved with these at a practical level are not happy with them.

I am sympathetic to patients, and I understand some of what is desired. For instance, for a pathology service computer just to spit off an account automatically for every test that is done and for the patient to get a great stack of accounts for essentially the one type of service I think is completely unacceptable. So I think that individual providers like pathology services should certainly put their bills into some simplified form—perhaps give a bill once a week or something like that. I think there are some situations—where staff specialists are working at a hospital, involved in private practice and so forth—where they could well submit their account with the hospital. But for ordinary independent specialists simplified billing is an even greater intrusion on their already stretched resources.

Senator CHRIS EVANS —Mr Woodruff, you make great play in your submission about the need to know the relationship. You talked about the current contracts between health funds and private hospitals, and you are really after the financial information at the core of their relationship, I gather. It is the same when you are saying we need these agreements to be publicly available or tabled in the parliament. But you are interested not in the information about the relationship between the consumer and the fund, about what conditions apply to them, but in the contracts that underpin the relationship between doctors and health funds or hospitals and health funds. That is not actually related to the schemes. You are after the financial relationships that underpin the schemes. Is that right? I am just trying to tease out what it is you actually think ought to be public.

Mr Woodruff —The more transparent the system is the less scope there is for obtuse pressures to come into the system, whether it be between the doctor and the treatment or between the patient and the various selection of doctors.

Senator CHRIS EVANS —What sort of information are you after that you are not getting now? I am just trying to get you to define what it is. I took it, initially, that you were talking about what would be publicised to the consumer as what they get if they buy a no gap product, but it seems to me you are actually after quite a bit more than that. Is that right?

Mr Buntine —What I am after is what it says about length of stay for particular procedures and that sort of thing. The contracts that health funds have with hospitals at the present time specify things that relate to patient care, but these are secret and there is no way that presently I can find out. There was a time when I could find out about these contracts, and that is when they were first introduced in Victoria. At that time I was on the board of a large private hospital group—I ended up being the chairman, actually. I got a completely different idea of health funds and how they dealt with hospitals then from what I had before.

I will tell you the particular situation that existed at that time: our executive used to have to go to the health fund and, on the one hand, negotiate a higher theatre fee against an earlier step-down. That meant that, if the patient agreed that after a particular operation the health fund amount paid to the hospital would reduce after three days, he could get a higher theatre fee, but if the step-down did not occur until five days, he got a lower theatre fee. In other words, the idea was to get as high a theatre fee as you could and reduce the hospital stay and try to negotiate that with the health fund.

I am sure this sort of thing is still happening. It was the case then and, if anything, these contracts between health funds and hospitals have tightened up and presently we do not know anything about them. They are commercial-in-confidence. If you are being treated in a hospital, you do not know that your health fund has made an agreement that for your condition you have to be out of hospital in two days. Do you see what I mean? You would not know that. I would not know that at the present time. I did know it for a while but how many doctors own hospitals or are on the boards of hospitals? These are the only doctors who are informed at the present time as to what health funds are doing. It is completely wrong; it should be public knowledge that that is the case. That only involves hospitals, but once it involves doctors, they can specify certain types of prostheses. If you go by best practice, best practice is so many years behind what is established as reasonable practice that you can always find excuses for saying that such and such a prosthesis has not been properly trialled or something like that.

Senator DENMAN —So are you saying that they will use a cheaper prosthesis than perhaps a more expensive one that may be more in line with what they ought to be using?

Mr Buntine —Yes, that is right. That sort of problem already exists. There are schedules applying to prostheses. I must admit that I have a certain sympathy for the health funds in this because I personally think the price of some prostheses is too high, but you have to allow for development costs and that sort of thing. We are talking here about areas that I do not really know about, but I do know about the commercial arrangements. There already is a bad situation in what exists in secret contracts between health funds and hospitals. If schemes that involve doctors and hospitals are secret and we only have the minister who approves them, nobody apart from the participants will know what is going on—

Senator CHRIS EVANS —But the minister won't be approving that in detail, will he?

Mr Buntine —That is what the scheme is that he is approving; he is approving the scheme. We want to know what it is he has approved. The scheme will have to be the scheme in totality. I notice here that one of the health funds, Alliance, have actually indicated that they have put forward their proposed scheme, but commercial-in-confidence applies to it so it could not be distributed with the papers that we have today.

These are detailed contracts. They will talk about step-down periods in hospitals, about theatre fees, about what prostheses are allowable—the whole thing—which is what we want to see. These schemes are very detailed. They will alter the way that medicine is practised, and that is why they should be available for public scrutiny. This is not minor legislation. This allows for some things that we perhaps should not argue about: for doctors to be paid salaries in private hospitals by health funds. There are situations where that could be a good thing—for instance, a resident on call at night and perhaps you can say there should be a full-time doctor employed in intensive care and all that type of thing—all paid for by the health fund according to a contract. The contract might say that, provided you treat more than 50 coronary cases a year or something, we will pay the salary for a full-time doctor in your intensive care.

These contracts can be as complicated or as simple as people imagine. I have discussed this with Sandra Hacker, the Vice-President of the AMA. She said, `There is no reason to argue against doctors being paid salaries in the hospitals via the health funds.' I agree with that, but we want to know what the arrangements are.

These schemes get away from health funds paying rebates. They were initially called service delivery schemes, and that is what they are, and then the name was changed. Initially the situation was that they were going to be tabled in parliament, according to what I saw published in the medical press, but then an erratum was put in that said that the schemes were not going to be tabled in parliament. That is the whole point. I support the concept of the schemes: I support gap insurance; I support the whole thing of informed financial consent. Despite the difficulties—they do not mean we do not support it—I personally give my patients what I regard as very good informed financial consent, but I want to be able to have access to each individual scheme. How can the Ombudsman function if he does not get access to the schemes? Therefore, I thought in the first instance the right thing was to send a copy of every scheme to the Ombudsman, but I think it is even better to table them in parliament because then they will be in the Parliamentary Library, and the Ombudsman and everyone else will have access. If that is not done, you will get suspicion between providers—one surgeon may feel that someone in another hospital is unreasonably being paid more or that there are some conditions attached to his so-called employment. It sets up an atmosphere where everyone is suspicious of everybody else.

CHAIR —We are starting to run short of time. Professor Woodruff, you were wanting to add something to that?

Prof. Woodruff —Very briefly, my interest in the HIC comes about because I believe we have not even yet determined what is the most efficacious treatment where there are certain options. We have to get that right before we start allowing insurance companies to have any secret contract arrangements which may or may not impact on which form of treatment eventuates. At this stage they say, `Of course we will not have any bearing on treatment,' but in every situation where this has arisen—and we are seeing evidence of it already in some of the hospitals not under private health insurance schemes—financial considerations are having a bearing on what therapies and prostheses, et cetera, are available and which ones are not. So there is no reason to feel confident that it will not occur with the advent of other pressing commercial pressures.

Senator DENMAN —I have just one very quick question, again back to prostheses. You were saying that you thought some of them were too costly. Are those that you think are too costly those that are most in demand?

Mr Buntine —I do not use prostheses appreciably, and therefore I would only be relating things that I hear. I think that the most expensive prosthesis is not always the best, but certainly the very cheap are not very good.

CHAIR —Thank you very much, gentlemen. I am sure there are many more questions we could ask. We thank you very much for giving us your time today.

[3.19 p.m.]