Rising costs threaten Australian public healthcare industry

Under the bulk-billing regime, patients are able to access healthcare services at no additional cost to the patient. Instead, healthcare providers bill Medicare directly and receive a standard rebate as full payment for services provided. A number of factors lie behind this movement away from bulk billing, but the primary one is that the Medicare rebate is simply no longer adequate to keep up with the costs of running a practice.

Instead, doctors are being forced to raise their fees to cover operational costs – passing on the difference between the amount received from Medicare and the fees charged by the doctors as out-of-pocket costs to their patients. This issue, together with the shortage of GPs – especially in rural and regional areas – has had a knock-on effect for Australia’s publicly funded emergency rooms, where more patients are presenting to receive treatment for non-emergency health concerns. There, amid a cost-of-living crisis, patients are able to receive treatment without having to pay for out-of-pocket costs.

Government support for healthcare

This trend places additional strain on already struggling public hospitals, and the government has taken some steps to bolster Australia’s healthcare systems while ensuring patients retain access to affordable healthcare.

From 1 September, for example, the dispensing model for the Pharmaceutical Benefits Scheme (PBS), which subsidises prescription medications, will be extended from 30 days to 60 days for certain medications in an effort to reduce the number of times patients need to visit their GP and pharmacist.

But out-of-pocket costs, which can mount quickly when patients require multiple appointments, rounds of tests, and follow-ups, still have the potential to block people from accessing healthcare. Fees like these are not only costly, but are also typically unexpected – and therefore unlikely to be budgeted for.

The federal budget includes new money to bolster access to bulk billing for vulnerable patients, including families with young children, pensioners or concession card holders, by tripling the bulk bill incentive payment paid to doctors from 1 November. Despite the increased funding, however, most Australians will not be captured by the criteria, and will still have to pay for out-of-pocket costs.

Fall in individually owned clinics

At the same time, larger corporate groups – which are able to streamline operations and reduce costs – are acquiring individual GP clinics. These companies often provide the ‘back office’ infrastructure and functions, like software licences, insurance, training and development programs, human resources and payroll capabilities, while the clinic itself is still primarily operated by the doctors.

This trend is not limited to GP clinics: it is also happening in veterinary clinics and pharmacists. Indeed, the era of small, privately-owned pharmacies appears to be coming to an end in major metropolitan areas, with the larger chains taking over due to their ability to offer more competitive pricing to the market.

While these corporate chains are able to deliver increased efficiencies, the potential for profit-driven decision-making to prioritise financial returns over patient welfare remains a major ongoing concern. Some stakeholders also worry that corporate policies could leave GPs – who are well-placed to understand their patients’ needs – left out of broader decision-making processes.

Reforming the bulk billing system

Alongside wider government investment in Australia’s healthcare system, a number of measures could help to combat the rising cost of the bulk billing system, while protecting patients from financial shocks.

Tighter regulation, for example, could help to limit fraudulent claims. This could be achieved through a more streamlined system for claims that uses a two-step approval process for claims. Such a process would allow a GP to submit a claim on the system which is then immediately sent to the patient by text or a phone call at the time of the appointment, so that the patient can then verify the claim. To avoid a situation where patients fail to verify a claim, where a rebate is payable to patients as a reimbursement, the payment could be subject to the two-step verification procedure being fulfilled correctly.

Technology-driven solutions, such as telemedicine platforms and digital health records, can also streamline administrative processes and reduce overhead costs, ultimately leading to more affordable healthcare options for patients. There would, however, need to be a minimum standard or set process for accessing these solutions, and it should not be left up to the individual clinics to decide whether or not they provide access to those solutions.

On top of this, the UK recently introduced proposals to train pharmacists to prescribe certain medications to lessen some of the burden on GP clinics. Similar reforms should be considered in Australia, and more clinics should be enabled to utilise nurse practitioners who are able to prescribe medication.