Private health insurance premiums in Australia could be reduced by up to 10% if private hospitals were made more efficient and stopped over-servicing, revealed a new report from public policy think tank Grattan Institute.
A handful of ‘greedy’ doctors were found to be charging their patients more than twice the official ‘Medicare Benefits Schedule’ (MBS) fee.

MBS is a listing of the services subsidised by the Australian government under its publicly funded universal health care insurance scheme known as Medicare.

In fact, only about 7% of all in-hospital medical services are billed at the higher rate, yet these bills account for almost 90% of all out-of-pocket costs for private hospital patients. Patients are also often not told of these costs in advance, stated the report.

Some doctors also charge ‘booking fees’ on top of procedure and consultation fees. These covert fees are not recoverable from private health insurance or Medicare which leaves patients to foot bills from their own pockets.

“The higher fees have nothing to do with the skill of the surgeon or the adequacy of the MBS. The small minority of specialists who charged more than twice the schedule fee are simply greedy,” said Grattan health programme director Stephen Duckett.

The report also debunked the myth that private hospitals are more efficient than public hospitals. In fact, patients stay 9% longer in private hospitals than public hospital patients with similar conditions. It was also found that private hospitals provide care that is of little or no value to the patient on a frequent basic compared to public hospitals.

Costs could be reduced by paying private hospitals for treating a patient rather than for keeping the patient longer, doing more tests, or ordering more drugs.

The total identified savings of about A$2bn ($1.85bn) each year could fund cuts in private health insurance premiums of 7-10%.

“Capturing these savings and passing them on to patients in the form of lower insurance premiums could save private health care in Australia. Patients would be the winners under this blueprint because their out-of-pocket medical costs and private health insurance premiums would be lower,” said Mr Duckett.

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