Remote care key to restoring health system and fighting inflation, says Bupa boss Iñaki Ereño
Australia’s decades of uninterrupted prosperity has delayed much-needed reform of the country’s health system, says Bupa’s global chief executive Iñaki Ereño.
Australia needs to adapt to more flexible models of healthcare – such as recuperating in homes rather than hospitals – to ward off a looming health crisis that threatens to drain the federal budget, the global chief executive of health insurance firm Bupa warns.
Iñaki Ereño said Australia’s decades of uninterrupted economic prosperity had delayed much-needed reform of the healthcare system, saying the “need for change hasn’t been there”.
As a result, Australia has lagged other countries – including many European states, which have shifted the healthcare burden from hospitals to remote forms of care tailored to patients.
“In Europe and other countries there is resistance to change in healthcare – it’s in every place. The thing is, the need to change here hasn’t been as great as great in the last 15 years,” Mr Ereño said. “In other places where the economic crisis was much bigger, the need to change was bigger. And now the need to change is also happening here. And Covid-19 has aggravated this to everybody.”
According to the latest spending data, federal and state governments spent $142.6bn on healthcare in the 2020 financial year, a 5 per cent increase on the previous year. This comprised 70 per cent of overall health spending, which totalled $202.5bn.
Mr Ereño said that was in line with world spending, which accounted for about 10 per cent of global GDP, and with the World Health Organisation forecasting that proportion to increase to 13 per cent in coming years.
Mr Ereño said an overseas model that Australia could benefit from was the so-called campus model that directed patients to day surgeries, at home rehabilitation or whatever place that suited their needs, “as opposed to just everyone going to an acute hospital and then waits their turn”.
Australia’s biggest private hospital group, Ramsay Healthcare, has advocated this model in its French business, where 73 per cent of all surgery is done through outpatient care, according to an investor presentation in December. This compares with 49 per cent in 2012.
“We have been setting up (a) care pathway. We have been creating 12 oncology institutes in the last eight years. Now we have been creating 13 nutrition and obesity centres,” Ramsay said in the presentation referring to its French operations. “We are entering new territories, for example by creating non-planned emergency departments.”
But in Australia, insurers who have advocated similar models have been criticised for seeking to introduce US-style managed care, where the health funds have a greater say on patient treatment.
Health insurers argue that they are bringing Australia into line with overseas jurisdictions and not seeking to influence clinical decisions. According to OECD data and LEK Executive Insights, international best practice – referencing the US – is that 30 per cent of joint replacements are performed in short-stay hospitals, whereas in Australia it is close to zero.
Indeed, tensions between Bupa and Ramsay have become so bad that the hospital group sent the insurer a termination notice last month after they failed to reach a new funding agreement. Despite talks continuing between the pair in an effort to secure a resolution before their current contract’s expiry on August 2, Ramsay has launched a special website, which advises customers to review their health insurance policies and how to switch providers.
Mr Ereño said Ramsay’s move was a “big surprise” and “not positively”. He said: “Negotiations with providers and payers is normal. What is not normal here is that the customer has been introduced into the equation, and that is not good. We don’t support that because we need to make sure customers are always kept absolutely protected and out of any discussion. Also, with inflation pressures that we are seeing in every country, all participants in the system need to align and be conscious that affordability now is more difficult than ever.”
Bupa’s Asia-Pacific chief executive, Hisham El-Ansary, said the need to deliver more efficient models of care was more pressing given health spending was forecast to soar as high as 18 per cent of GDP in the next 30 years.
“If you’re a government and now health is 10 per cent of your budget, and it’s going to nearly double, what are you going do? Are you going to increase taxes or are you going to stop money on roads and other education,” Mr El-Ansary said.
“It’s a massive problem.”
Despite the resistance, there has been some progress. In May, Bupa struck a new funding agreement with Melbourne-based hospital group Cabrini that included alternative models of care – such as home rehabilitation, which costs about one-third of the cost of hospital recuperation.
Mr Ereño said the pandemic had revealed that the health system was not performing as well as it could be, particularly in offering remote care, which would become essential in future health crises. This would also help keep a lid on costs as inflation returned.
“There will probably be more pandemics,” he said. “So all the health systems should be able to provide remote care. All of this is happening in the context of price increases in the whole chain, so the question is how we can make health still affordable. It’s a challenge that affects all payers, providers, patients.”
One initiative Bupa has introduced across its global operations is a platform that helps patients find and book doctor appointments and telehealth consults. Mr Ereño said virtual medical consultations were here to stay.
He said before the pandemic, Bupa would perform about 300 telehealth appointments on its busiest day. That number surged to 6000 a day during the Covid-19 outbreak. “Today that usage remains at the same level as Covid.”
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