Media Response — Insight News

A growing imbalance of power and transition towards US-style managed care and integration of private hospitals poses a threat to Australian patients’ right to choose the doctor of their choice, procedure or treatment of their choice, and hospital or facility of their choice.

It also brings an increased risk that many consumers will be priced out of healthcare, with the domino effect crippling an already struggling public health sector in Australia.

The Australian Society of Ophthalmologists’ (ASO) recent e-petition (EN6877) through the Parliament of Australia is not the first time the association has lobbied the Government in the interests of Australian patients — which is pending a formal response from the Minister for Health.

Launched in late 2024, the e-petition called for the Australian Government to establish a Private Health Commission or Independent Authority to play referee to a divided private health sector, where hospitals are losing their footing as private health insurers (PHIs) reach for greater control and influence.

The ASO is not alone in calling for an Independent Private Health Authority, with the Australian Medical Association (AMA) and numerous other bodies requesting the same as current mechanisms prove ‘ineffective’, at best.

It follows several prior campaigns by the ASO to protect patients’ right of choice in healthcare and limit the influence of PHIs in patient decision making and delivery of care. 

In 2015, the ASO successfully lobbied the then-Federal Health Minister to squash pre-approval activity for PHIs, effectively bringing inappropriate managed care strategies to a halt. 

Since 2018, and in partnership with fellow medical groups — including the AMA NSW, Council of Procedural Specialists, Australian Society of Orthopaedic Surgeons, Australian Society of Anaesthetists, and Australian and New Zealand Association of Oral Maxillofacial Surgeons — the ASO has led the ‘Your Right to Switch’ campaign that educates consumers on their right to change PHIs, without affecting waiting periods, if they are not satisfied with their levels of service. 

The ‘Send the Eagle Home’ campaign launched in 2021 and called for stronger laws to prevent US-style managed care in Australia. 

It resulted in the Australian Competition and Consumer Commission (ACCC) issuing strict criteria on an American health fund from extending its ‘buying power’ and influence across the Australian health fund sector. 

All of these issues remain current, however, a crumbling private hospital sector is now the backdrop, where PHIs stand to cash in as facilities close their doors and become available for sale at significantly reduced rates. 

Many are questioning whether this has been an intentional move by PHIs to limit the premiums returned to private hospitals, contributing to their demise, and ultimately their own profit-driven, managed-care interests.

What Australian patients need to know, and the Government needs to factor into its future decision making, is that the cons greatly outweigh the pros when it comes to models of managed care.

Whilst managed care may arguably be utilised to control healthcare costs and increase system efficiencies, as shown in the US, it comes with major losses for patients and their long-term health outcomes. 

Patient choice can become significantly restricted with an inability to see preferred providers and incur out-of-network penalties, even in emergencies, if they are outside of the PHI’s network of doctors and hospitals.

The ultimate decision to proceed with a procedure or treatment will no longer reside with the patient and be informed by advice from their treating doctor. 

Pre-authorisations may often be requested by a PHI for procedures, tests or medications that can lead to delays in treatment, denial of coverage if deemed “not medically necessary”, and result in added emotional and psychological distress for patients who seek to appeal denials of coverage. 

Comprehensive patient care will take a back seat to profits, with some examples reported to offer financial rewards to their in-network providers for limiting services or reducing costs — a clear conflict of interest.

An example currently under the microscope is Bupa’s Medical Gap Scheme (MGS), which has been labelled by some as ‘restrictive’ and ‘anti-competitive’.

Concerns have been raised about whether its current structure disincentivises consumers from using hospitals outside Bupa’s network.

ASO President Dr Peter Sumich has written to Bupa several times, the latest on 2 April 2025, requesting clarity around the impacts to hospitals that do not have a Bupa contract and are on second-tier default benefits:

“Our query relates to the hospitals which do not have a Bupa contract and are on second tier default benefits. It is understandable that the hospital fee paid to the day surgery by the private health insurer will be according to the contracts between those parties. 

However, the gap scheme product used by the surgeon should have nothing to do with the  hospital’s contractual status. The financial arrangement between the doctor and the patient is separate to the financial arrangement between the patient and the hospital. 

Bupa are effectively penalising a patient because they are receiving treatment at a hospital which has decided for its own separate financial considerations not to adopt your contractual  arrangements and therefore chosen second-tier default benefits. 

In effect, this is intimidating patients and doctors from visiting an accredited hospital or day surgery operating under second-tier default benefits, simply because they have chosen not to contract with Bupa for the hospital and/or day surgery fees.”

The facilities most at risk are smaller, independent sites operating outside of metropolitan cities and hubs. 

Australians living in regional and remote communities are already at a geographical disadvantage when it comes to accessing healthcare and being provided with local choice.

No Australian patient or doctor should be intimidated from visiting an accredited hospital or day surgery operating under second-tier default benefits, let alone the members of our community doing it the toughest with minimal resources.