The additional cost burden to hospitals is significant and in the case of private hospitals may see these additional costs passed on to the patient, making the risk of having surgery in a private hospital prohibitive and forcing more patients back to the already stressed public sector.
Below is a link to an ABC report on Medibank Private and its battle with Calvary to have over 150 claim types removed from their most recent contract negotiation.
Is this the start of Health Insurance companies looking at also making this a part of our insurance contracts in the future?
Transcript of the report follows:LEIGH SALES, PRESENTER: As we go to air tonight, a deal is very close to being signed between Australia's biggest private health insurer, Medibank Private, and hospital chain Calvary. For weeks, the two parties have been locked in bitter negotiations as both sides search for an answer to the question: who pays for the complications that happen in hospitals and after surgery? Alex Mann reports.
PETER DEVONISH, ANAESTHETIST: Fred, just gotta tell us your full name.
FRED MCCLURE, PATIENT: Fred Darcy McClure.
PETER DEVONISH: OK and what operation are you having?
FRED MCCLURE: Um on my sternoclavicular on my left side.
PETER DEVONISH: Yep, perfect. And your date of birth?
ALEX MANN, REPORTER: In the operating theatre of this Calvary private hospital in Adelaide, 14-year-old Fred McClure is about to go under the knife.
PETER DEVONISH: So I'll give you some happy drugs now, OK? Just gonna start to smell a little bit now, OK?
ALEX MANN: Dr Peter Devonish has been a specialist at Calvary Private for almost a decade.
PETER DEVONISH: Fortunately for Fred, he's a low-risk patient. He's young, he's fit and healthy. But all patients undergoing surgery are at risk, albeit is a low risk, of complications such as infection, post-operative bleeding and because Fred will only be - will have the use of one arm post-operatively, he's at risk of falling.
ALEX MANN: Post-operative risks are always a worry, but now there's a new concern. Soon, it could be Calvary, not the insurer, paying for every one of these complications.
PETER DEVONISH: Private health in this state or in this country is under threat with the new policy direction of Medibank Private.
ALEX MANN: For weeks, Calvary has been locked in bitter contract negotiations with Australia's biggest private health insurance agency, Medibank Private. The dispute has centred over what conditions the insurer is prepared to cover.
MARK DORAN, CEO, CALVARY HEALTH CARE: It's been pretty tough. We've pretty much got opposite ends of the pole.
ALEX MANN: One big sticking point is a list of health and safety issues Medibank says Calvary should be responsible for.
MARK DORAN: Quality and safety shouldn't be a negotiating piece. It shouldn't be a function of how strong your ability to negotiate is.
ALEX MANN: Medibank had identified 165 complications it will no longer cover. These range from in-hospital falls to bed sores and infections.
MARK DORAN: We believe, like many other experts, that the 165 is largely not preventable and in fact, these are known complications.
ALEX MANN: Calvary says its hospitals aren't to blame and Medibank should be the ones paying. They've got until Monday to come to an agreement or insured patients will be out of pocket.
MARK DORAN: A lot of people will be very anxious if that were to occur and that's what we're trying to avoid.
SCOTT MACKIE, ORTHOPEDIC SURGEON: The admission costs associated with a complication after joint replacement can blow into tens of thousands of dollars.
ALEX MANN: Dr Scott Mackie is a Tasmanian orthopedic surgeon. In his state, almost all Medibank Private customers are Calvary patients.
SCOTT MACKIE: That cost, at the moment we don't understand where it's going to be borne by the private health insurance provider or by Calvary or by the patient. I think no-one will deny a need to reduce health costs. However, to do it in the way that's been approached by Medibank Private is looking after shareholders, not looking after their patients.
ALEX MANN: Medibank Private this week posted its first year of profit as a publicly-listed company, but it says the changes aren't about increasing profits, they're about improving quality and safety.
LINDA SWAN, CHIEF MEDICAL OFFICER, MEDIBANK PRIVATE: What it's about saying is that for many years, decades, we've known that there are things that happen in hospital that can be prevented. We want to encourage however we can more action to address these.
ALEX MANN: Linda Swan says Medibank's list of 165 adverse events is supported by evidence.
LINDA SWAN: Things like falling out of bed. In medicine, we're working on a cure for cancer. Surely we can find a way to stop someone falling out of bed.
BRIAN OWLER, PRESIDENT, AUST. MEDICAL ASSOC.: Our big concern is that, firstly, this has nothing to do with quality. This is really all about cutting costs.
ALEX MANN: Medibank's dispute with Calvary is causing alarm at senior levels of the medical profession.
BRIAN OWLER: Well this is the largest insurer in the market basically bullying one of the hospital groups into accepting this 165 highly preventable events - what they're commonly calling mistakes. It's also trying to introduce this rule about not paying for readmissions within 28 days.
ALEX MANN: Dr Brian Owler is a surgeon and the president of the Australian Medical Association. He's sounded a dire warning.
BRIAN OWLER: I think people will start to question the value of their private health insurance and we're going to see longer queues at our public hospital emergency departments, all of which we can't afford to see happen.
LINDA SWAN: I guess calls all the time from members who tell me tales of terrible things that are happening in hospitals. I've got a responsibility to do something about that. We don't accept that it's acceptable that people come to harm in hospitals. We do know that despite the best of efforts, sometimes harm does occur, but we don't accept that nothing can be done to prevent it.
ALEX MANN: After tense negotiations today, both parties have told 7.30 that they're very close to an agreement. It's understood that Medibank has softened its position, agreeing to introduce an option to independently review any adverse event. But even if the dispute is resolved, there are concerns that this could be the first of many similar conflicts as other health insurers try to keep their costs down. Private health insurer BUPA says that they may have no choice.
DWAYNE CROMBIE, MD, BUPA HEALTH INSURANCE: We support the need to have the conversation. I think at the end of the day, parties have to agree and have to be able to move forward. You know, you can't have patients being caught up in the crossfire.
ALEX MANN: For Peter Devonish, any concessions from Medibank Private have come too late. He's ditched his cover and is urging others to do the same.
PETER DEVONISH: I work in the private health system, I work in the public health system, but I have been a patient and my wife has been a patient as well, so I know what it's like on both sides. You need to have a private health insurer who you can trust, not one who's going to leave you at your hour of need.
LEIGH SALES: Alex Mann reporting.