Vertical integration push by insurance companies a bad outcome for patients

The latest effort by private health insurance organisations to justify their push towards vertical integration is a distraction from the real work of health care reform that will help patients. According to the recently released Private Healthcare Australia’s (PHA) report, Aussie private hospitals welcomed health insurance companies’ new desire to fund out-of-hospital care, but experience shows they can currently do this, they just choose not to.

The double standards exhibited by insurance providers

The report from the Improved Models of Care Working Group in 2018, which examined how to expand non-hospital services paid for by health insurance and gave advice about reforms to the govt, found there were no regulatory barriers to alternatives to in-hospital care.

But the experience of private hospitals which have developed innovative, out-of-hospital models of care focused on the needs of their patients, is overwhelmingly that no private health fund will support them. But while insurance firms refuse to pay for out of hospital services provided by hospitals, they are quite happy to pay for similar services they operate.

It appears this report is a shameless attempt for health insurance firms to expand vertical integration, where they pay themselves for providing services to members. Also, they deny their members choice of service provider which is one of the key reasons people take out health insurance. We have to be careful that the push by insurance companies for “innovative care models” is not about pushing customers to use services those same companies own.

Why vertical integration hurts the patients

I don’t think Aussies want a system where patients are being directed into a particular care pathway because it is in the financial interests of the insurance company rather than the best clinical interests of the patient. Vertical integration that went unchecked could lead to the same situation banks found themselves in when they owned wealth management funds.

The Hayne Royal Commission into the banking sector found that vertical integration by the banks – offered as a “one stop shop” – was not in the best interests of consumers, and this push by insurers wouldn’t be either. Australia could provide more out-of-hospital care and that private hospitals were well placed to deliver it. Private health insurance companies could give their members access to innovative out of hospital care today, they just choose not to.

Just as health insurance companies refuse to fund innovative out of hospital services provided by private hospitals, the research report from their lobby group seems to ignore private hospitals as valid providers of these services. It is frustrating to once again see the health insurance lobby put the financial interests of their member companies ahead of the interests of the Australians who buy their products to access high quality care.

Michael Roff is the CEO of Australian Private Hospitals Association.

Michael Roff, CEO of Australian Private Hospitals Association