Dr Dwayne Crombie responds to the AMA

Dr Dwayne Crombie, Managing Director of Bupa's Health Insurance, responds to comments about private health insurance made by Australian Medical Association President Dr Michael Gannon at the National Press Club.

Dwayne Crombie has had a distinguished careeer as a general practice locum, public health specialist and highly-regarded leader in both the public and private health sectors. He's in a unique position to comment on the statements about the health system made by the Australian Medical Association's Dr Michael Gannon to the National Press Club in Canberra.

Dr Crombie spoke to Bupa Media.

Dr Gannon says clinical decision-making is being questioned, and over-ridden, in some cases, by insurers. What do you say to that?

In Australia we have a very clear principle and it’s enshrined in the regulations of private health insurance - doctors determine treatment. I don't know that any insurer is trying to stop doctors being the key driver of clinical treatment in this country. I think it's right that doctors drive a lot of cost. Often, they don’t practice the way they should practice in their own medical evidence and literature. I think it’s reasonable, particularly for the public and for government, and for any organisation, to question whether they are actually providing good quality, effective medicine all of the time. I think they should be held to their own standards.

How is it dangerous territory, as Dr Gannon says, for “practitioners to agree to the publication of their details, their fees, and allowing customer testimonials that they do not get to verify”? He says insurers are insisting on this.

I think Michael Gannon’s putting his head in the sand. I mean every profession, every service in the 21st century has to account to consumers. I think the idea that doctors should have their fees transparent and people will be able to make comments about whether they are getting good service, what the facilities are like, whether they're waiting too long; that's completely what you’d expect.

Dr Dwayne Crombie, Managing Director, Bupa Health Insurance
We’re being really clear at the moment not to argue that clinical outcomes should be on a public website. I think that's a much trickier thing.
Dr Dwayne Crombie, Managing Director, Bupa Health Insurance

Both Medibank and Bupa have been working behind the scenes with the Royal Australasian College of Surgeons, where they can give feedback to their members on perhaps unreasonable variation.

But I think Michael Gannon and the AMA need to get real. Consumers will give feedback, they’re giving feedback now in a completely unmoderated fashion so it's time to listen to the feedback not try and pretend that you’re immune from it.

How do you respond to the statement it’s “an appalling and deliberate lie” for insurers to say doctors’ fees are the reason premiums are rising?

Doctor's fees in general; mostly they accept the payments that insurers give them, some charge much higher than that. So Michael Gannon’s right in that respect.

But doctors drive the treatments and I think where we would question it, is why would we do treatments that are perhaps not great value? Things like spinal fusion. If you look at the medical literature, probably only 10 - 20% have any real benefit, yet we see a lot of doctors doing these things which it’s hard to argue they’re good medical practice.

What do you says to Dr Gannon’s claim doctors have absorbed rising costs. He says “Just look at the combined no-gap and known-gap rate of 95 per cent” and “the average known-gap cost for anaesthesia is $96.”

I think Michael Gannon gives some industry figure that say 88% of all medical specialists’ interactions are Gap free and about another 6% have costs of up to $500. That's absolutely true. But those are the overall figures, they include all of the smaller operations like gastroscopy, colonoscopy, they include anaesthetists’ fees- and they are actually remarkably good at not charging big payments.

If you want to look below the general figures, if you want to look at the surgical fee for a cataract, hip operation or removal of prostate, what we're finding is that between 20 and 40% of the surgeons fees in those specific operations are over $500, in some cases over $5000.

There’s almost this dinner table talk, ‘I went to my doctor and he suddenly gave me this huge out-of-pocket fee’. So you can see that a minority but a significant minority of surgical fees for some of the common operations are quite expensive in the many thousands of dollars.

So yes Michael Gannon’s right but if you look below the detail that’s why we get these war stories.

The AMA says “the medical profession has done its utmost best to protect patient access to affordable care and that unless the ‘payers’ in the system start to work with us, it is simply not sustainable.” Do you agree? 

I agree with Michael Gannon’s comment that doctors have done a lot to protect access to the health system whether public or private. In fact I agree strongly - I don’t believe insurers and I certainly don't believe the bureaucrats in Canberra or anywhere else should be determining access to care. I think very much the onus is very much on doctors to do that, but doctors then have to take that responsibility.

And I totally agree that insurers should work with the medical profession to figure out ways to ensure that there’s access to effective care and that the kinds of rationing we’re prepared to accept as a society are kept to a level we can cope with. I think totally, the doctors are a key part of the system. No one wants to take away that part of the system.

We'd be delighted if we had the opportunity to work constructively and collaboratively with the medical profession in doing that.

The more we improve primary care, the way we fund and support it, because that's where most people get the primary advice, the more we can do around prevention – that’s what we should be aiming for. We’ve got to make sure that healthcare is effective, that it’s value for money that we’re not wasting money. I think that's the challenge for all of us and it's not just health insurance, it’s the challenge for doctors, it’s the challenge for hospitals. The consumer pays for everything at the end of the day so we’ve got to treat it like it is our own money.

What do you say to Dr Gannon’s suggestion that maternity and mental health should be included in every policy?

There is a big lobby at the moment to think about what you would have in every health insurance policy. Some people have argued for inpatient mental health access and others have argued for maternity and associated care around birth. They would be very attractive to most people, the problem is they add a lot to the cost. We know that for the budget or basic end of hospital policies if you added those two things into every policy they would add, I suspect in excess of 50% to the price. We know because they are in policies that are higher up. There's just no cheap way to add some of those really important services.

Inpatient (mental health) the average cost for admission is about 9 or $10,000. The average cost for maternity, particularly if you have a caesarean, in private now 48% of all births have caesareans, it’s very expensive, into the five figures. I don’t think there’s any easy answer, answer if you want really good quality care in some of these really complex situations there is no cheap way to provide that good quality care. And I think we have to decide what we pay for as a society really.

What about so called junk policies?

Health insurers are accused of spruiking cheap products the so called junk products. We're getting so many consumers who have affordability as a really big issue and they are saying 'we just can’t afford some of your policies and tell us what can we get for whatever amount that we can afford'.

Personally from Bupa, we don’t have a lot of the lower end products.

And we are really struggling to get market share in the current market because there are so many people at the affordability end. So I would say that we are responding to consumers - it's pity because so many of these products don’t have enough in them but what do you say to someone who can’t afford anything more?

Medibank and nib have announced solid profits. What does this say about the industry?

I think if you look at the 37 or so health insurers only two are listed companies, nib and Medibank. There is a small number of very small ones associated with the Commonwealth Bank and with one of the general insurers all the rest are mutuals or in Bupa’s case a provident fund. We don't have shareholders. We might be called for 'profit' but that is only because we can use any money we make into other areas like in our case aged care.

So the net operating margin for Bupa, and I’ve looked at it over the last eight years, has consistently been between six and seven cents in the dollar. In other words, that's the money that we would make before tax, because we pay tax, that’s the net operating - it hasn’t changed pretty much in seven years. So certainly on behalf of Bupa’s sake we’re not trying to make more money out of the system. The only way we’ve made more profit is by having more members.