Insurers' push for vertical integration a threat to patient care: APHA

Around 350,000 patients who would otherwise be admitted to a traditional hospital could receive hospital care in their home in 2030, saving up to $1bn in costs. This is according to new KPMG report, commissioned by Medibank.

The report examines the potential economic benefits of expanding hospital care in the home, with up to 30% of conditions potentially able to be treated at home.

Medibank CEO David Koczkar welcomed the report, which responds to calls from patients for more ‘in home’ care and comes as the health company calls for a system-wide shift to support the sustainability of the health system.

“Australia is currently over-reliant on traditional inpatient care settings at the expense of access and choice for patients. There is a health transition underway and we are trailing behind many other countries when it comes to the uptake of more fit-for purpose and economically sustainable models of care,” Koczkar said.

Futureproofing the system

Dr Craig Emerson, consulting economist to KPMG, said the report suggests the impact of home hospitals could be transformative for the health sector.

“Public hospitals are currently grappling with ambulance ramping, bed block and an overstretched health workforce. These challenges will only compound in the future, with health the area of government spending set to increase the most over the next 40 years,” Emerson said.

“By 2030, 350,000 patients could be treated in the home instead of a traditional hospital bed. We need to make changes now to futureproof our healthcare system; hospital beds in the home play an important part.”

The report states that Australia has been slow to adopt these models of care, pointing to limited examples such as The Alfred (Victoria), rpavirtual (NSW) and My Home Hospital (South Australia). The report includes a deep dive analysis of the My Home Hospital service, which is delivered through a joint venture between Medibank’s Amplar Health and Calvary Health Care on behalf of SA Health.

More than 15,000 public patients from Adelaide and surrounding areas have used the My Home Hospital service since it started in 2021, saving more than 69,000 physical hospital beds in the process. The community has embraced the service, with admissions growing and patient satisfaction sitting at around 98%.

A threat to patient care?

The Australian Private Hospitals Association (APHA) has warned that private health insurers’ push for vertical integration is a threat to patient care.

These are almost exclusively services the insurers provide themselves, and they seldom recognise or pay for anyone else providing them, the APHA said in a statement.

“Insurance companies determining clinical needs based on what they’re prepared to pay. Yeah, nah… that’s not why anyone takes out private health insurance,” said APHA CEO Brett Heffernan.

“Australians’ bulldust barometers are well-tuned. Care outside of a hospital is something private hospitals are perfectly positioned to provide, complementing the high-quality care patients expect inside the hospital setting.

“The two go hand in hand and can be complementary depending on patient needs. This continuum of care can be critical to patient wellbeing.

“But when insurance companies refuse to pay for the same services other than the ones they run, you’d be excused for being a tad dubious about the standard of care you’re getting.

“When insurance companies seek to justify their forays into clinical service provision based on cost savings, be alarmed. The growth of vertical integration by health insurers is a threat to clinician autonomy. The only people who should be making decisions about what care a patient receives and where that care is delivered is the doctor and their patient.

“Private health insurers have embraced hospital in the home as a model that allows them to monopolise patient care and take the decision-making away from clinicians. Often they will only fund a hospital in the home or other innovative program if, lo and behold, they are also delivering it.

“APHA is calling for alternative funding options in private psychiatric and private rehabilitation hospitals. A default benefit in those settings would give patients more options for their care and access to innovative programs developed by the hospital for their patients in their own homes.”

Innovation vs funding models

Last year the Australian Medical Association (AMA) released a report warning that Australia could be heading towards a US-style managed care health system if health insurance companies continue their push for vertical integration.

“It said about 40% of patients are missing out on access to out-of-hospital services, in large part because the funding models don’t support the innovation we know exists in the private hospital sector,” Heffernan said.

“It also highlighted the danger that vertical integration is leading to outcomes that are not in patients’ best interests.

“In the end, this is about large health insurers adding to their ever-expanding coffers by effectively paying themselves to provide cut-cost care. Health funds are sitting on billions of dollars of skyrocketing profits. This pitch for even more cash serves only benefit them and stands to fail patients completely.”

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