Glenn Sterle (WA, Australian Labor Party) Share this | Hansard source

I will take that interjection, Senator Brandis. There is nothing wrong with that, except that increased profits should not be simply derived from maximising access to taxpayer money without proper accountability. The private hospital operators have used increased private health insurance coverage to expand their businesses into hospital services which offer the highest profit mark-up and have the potential for high-volume growth. Private hospital operators certainly have not gone down the road to their nearby public hospitals and asked the public hospital CEOs what the private hospitals can do to relieve the pressure on those public hospitals. So a substantial mismatch has occurred between the private hospital sector’s profits and service growth strategies and sufficient growth in those categories of private hospital services needed to reduce demand on the public health system.

The Howard government’s private health insurance changes opened the door for private hospitals to ramp up activity in those hospital treatments and procedures that provide the greatest profit margins, particularly day-only treatments, and that is what the private hospitals have done. Increased private hospital activity has not taken the pressure off the public hospital system. On the contrary, with the help of the private medical specialists, the private hospitals have created another, more profitable market. We are now seeing that, for many hospital procedures and treatments, privately insured patients have much greater access than Medicare public patients to treatment. This is the threat of the two-tier system referred to by Senator McLucas.

Australian Institute of Health and Welfare published data show that, in the period 2000-01 to 2004-05, private hospital same-day separations increased by 31.5 per cent. That is twice the rate of increase experienced by public hospitals. It is no simple coincidence that private hospitals have ramped up their concentration on same-day services. Between 2000-01 and 2004-05 the average private health fund benefit for a day-only separation in a private hospital increased by 32 per cent while the average bed-day benefit for a multiday stay separation increased by only 25 per cent.

Obviously, the higher the number and proportion of same-day patients, the higher the rate of revenue growth and the higher the profit margin for private hospital operators. While the private hospital sector’s number of low-cost, same-day bed days rose strongly over recent years, the number of private hospital higher cost overnight bed days has remained virtually the same. At the same time, the public hospital system has had to absorb a 4.5 per cent increase in higher cost overnight bed days.

I want this to be very clear: I am not criticising private hospitals for seeking to maximise returns to their owners and shareholders. What I am condemning is the lazy way the Howard government has been willing to so blatantly, and I think wantonly, squander Australian taxpayers’ money and put at risk major parts of Australia’s health system. The public hospital system is in a worse position than it was before the introduction of the Howard government’s private health insurance changes. The fact is that the private hospital sector’s average patient cost weight has fallen. Less average patient treatment complexity equals lower costs and—guess what!—higher profits. So, as a result of the Howard government’s approach to health care, the private hospital sector has managed to shift costs onto the public hospital system. What a testimony to total incompetence by this government. No wonder our public hospitals are buckling under the pressure.

To further underline the total mismanagement by the Howard government of its private health insurance policies, in the five years to the end of 2004-05 the number of licensed private hospital beds increased by only 271—a measly 271 beds across the country. How is that piddling number of additional private hospital beds supposed to take the pressure off the public hospital system? How can the Howard government justify spending nearly $6 billion on private heath insurance rebates in respect of private hospital services over the five years to 2004-05 when all that was achieved was 271 additional private hospital beds? How miserable, how lousy, how stingy! In the same period, the number of public hospital beds increased by no less than 2,700 to meet demand.

Since the Howard government came into office, federal government payments to the private hospital sector have increased by no less than 330 per cent. Over the same period, federal government outlays for public hospital services have increased by only 55 per cent. These figures clearly show what this government is up to. It intends to starve the public hospital system to death while it pours money into the private hospital sector. In cost-effectiveness terms, the government’s private health insurance policies have been a monstrous failure. The public hospital system has for decades been at the very heart of the Medicare scheme. The public teaching hospitals have been the engines of progress in ensuring that Australia’s health and hospital care standards and equality of access to health care have remained the envy of the world. But this government appears hell-bent on breaking the heart of the Medicare scheme, and that is not what Australians voted for.

Finally, I would like to join Senator McLucas in thanking the Senate committee for its work and also join her in urging the government to support Labor’s amendments during the later consideration in detail of this package in the Senate.