We need a second opinion in battle between private health insurers and hospitals

Private health insurers don’t exactly top most patients’ popularity polls with their regularly rising premiums, gap payments and complex exclusions.

But the present stoush between the largest, the recently privatised Medibank Private, and the private hospital sector has implications for what we pay and where we might be treated.

If talks this week between Medibank and the Catholic run Calvary Health Care stumble some patients could face higher costs for further treatment.

Medibank, which has almost 4 million members and 30% of the market, says it’s playing hardball with the private hospitals to keep prices and hence premiums down.

The issue is around the $40 million it pays to the hospitals for so-called ‘unplanned patient readmissions’ within four weeks of surgery.

There are always complications and things do go wrong, such as infections and falls, but Medibank has a list of 165 such events it calls ‘ highly preventable adverse events’ which it says it will not pay for.

It’s demanding the biggest private hospital players such as Ramsay Health Care and Healthscope carry for the can, ie pay, for when these things occur and not the insurer.

“If the industry doesn’t start looking at this as a whole, private healthcare is going to become progressively less affordable,” Medibank’s Dr Andrew Wilson told The Australian.

The other larger insurer NIB agrees with him and analysts figures suggest the private hospitals’ profits are growing apace while the insurers’ margins are shrinking.

Other interested parties take a different line. The doctors’ group the AMA says since privatisation Medibank seems more concerned for its shareholders than its members and is putting pressure on the patient.

The private hospital industry body concurs and says Medibank is being a bully. It warns if patients stay with the insurer they might not be fully covered at their hospital of choice.

In a statement Medibank says it’s unfortunate Calvary will not agree to their affordability and quality requirements.

Some 21,000 Medibank members used Calvary’s 11 hospitals in the past 12 months and if the contract isn’t extended beyond August 31 it could turn nasty.

The insurer warns: “Medibank and ahm members may still attend Calvary Health Care hospitals after this date and Medibank will continue to cover a large proportion of their costs. However, they may incur higher out-of-pocket costs because Calvary Health Care will be able to charge their own rates.”

In terms of the much larger hospital chains, Ramsay and Healthscope which have 113 hospitals between them, the contracts with Medibank expire next year.

Are they as one newspaper has it on a ‘collision course? Or will the brinksmanship of previous negotiations, which have also gone to the edge, be resolved in everyone’s interests?

It’s a hard call.  As consumers we pay the insurers’ more each year as medical costs rise at almost twice the rate of inflation.

If we need to use a private hospital who does or doesn’t pay for what may go wrong afterwards seems an academic issue so long as someone pays.

But if as Medibank claim, and the hospitals dispute, these are preventable events we should care a great deal more.

If you are with Medibank, and concerned about the Calvary talks breaking down, the insurer says they’ll contact everyone affected and there are 450 other hospitals which offer real alternatives.

Do you believe Medibank is doing this to protect member’s interests and keep premiums down? Or do you follow the hospitals’ line that the insurer is just trying to shift costs onto them?