Australia’s busiest joint surgeon says hip and knee patients ‘pawns’ in battle to save on rehab costs
The surgeon who does more joint replacements than any other in Australia says private health funds are interfering in decisions on hospital rehab.
As Australia’s busiest orthopaedic surgeon, Michael Solomon thinks he should decide whether to send his patients to hospital-based rehab based on need – not because a private health fund wants to save money or because of a hospital contract.
Dr Solomon, who does more hip and knee replacements each year than any other Australian specialist, says only about 30 per cent of patients need inpatient rehab, yet referral rates in some areas of Australia are as high as 70 per cent.
The Sydney-based surgeon blames a private health system that encourages people to seek referrals to inpatient rehab because care is totally covered by their funds, but at the same time sees the funds putting pressure on doctors to deny their patients a referral in order to cut costs.
He says doctors and patients are increasingly caught in battles between the funds and the private hospitals that sign contracts covering surgery, post-operative care and, in many cases, rehabilitation physiotherapy.
It is understood that some contracts specify referral rates of no more than 30-40 per cent and include penalty clauses for hospitals that exceed those levels.
“The more I delve into this, the angrier I get,” says Dr Solomon, who works out of three of the city’s biggest hospitals – St Vincent’s, the Mater and the Prince of Wales.
“Patients are the pawns in the system. The health funds are putting pressure on the hospitals, the hospitals are then putting pressure on the doctors, and that’s interfering with the doctor-patient relationship. The hospitals are doing the health funds’ dirty work, and it becomes a conflict discussion.”
Dr Solomon has performed more than 15,000 joint replacements over the past 26 years and says the situation makes no difference to his income as a private doctor, but he is speaking out because it is interfering with the doctor-patient relationship.
“If you look at purely the science, the outcomes – whether you go to inpatient rehab or do some outpatient physio – are exactly the same for the majority of people,” says Dr Solomon, a former president of the Arthoplasty Society of Australia, and a member of the (invitation only) International Hip Society.
“Patients aren’t being done any harm by having outpatient physio rather than inpatient, but because they phone their health fund and the fund says, ‘of course, you are covered’, patients say ‘that’s what I want to do’.”
He says some patients do need inpatient rehab – people who live alone; some with knee replacements, where recovery is slower and more uncomfortable; people who need to be motivated to exercise; older patients, or; those with comorbidities.
“I’ve had patients who from a mental health perspective say, ‘I needed this time out’,” he says. “All these are valid reasons, and I don’t have an issue with them whatsoever.”
But the challenge for specialists – who “completely accept the fact that the majority of patients do not need inpatient rehab” – is that they are dealing with people who have paid for the service and want to go to rehab.
The pressure on private funds over rehab costs has increased over recent years as an ageing population faces more joint problems. In 2023, about 136,000 Australians had knee or hip replacements, and the numbers are increasing at about 8 per cent to 10 per cent each year.
With more than 70 per cent of operations in the private sector, the insurers – who increasingly have access to precise data on referrals – are encouraging doctors to resist patients’ requests to go to a rehab hospital rather than home after three or four days in an acute bed.
The funds’ peak body, Private Healthcare Australia, says the average referral rate is only 24 per cent for hips and 27 per cent for knees. But Dr Solomon says that in some areas – such as Sydney’s eastern suburbs, where he has a big client base and where the Wolper Jewish Hospital at Woollahra has a reputation for providing high-level rehab – the referral rate can be as high as 70 per cent. He estimates 65-70 per cent of his patients want to go to inpatient rehab.
“From the doctor’s perspective, whether a patient wants to go to rehab or not doesn’t really matter, because it’s what they’re entitled to,” he says.
“All I can say to a patient is, ‘look, I can reassure you that your outcome won’t be any different whether you go or not, but it’s your choice’. This fact is confirmed in multiple scientific studies.”
Dr Solomon argues the funds should offer cheaper insurance products that don’t cover inpatient hospital rehab.
“Significantly more patients would choose this product and accept going home, knowing that the evidence does not support inpatient rehab and they can save some money by still having their replacement in a private hospital,” he says.
“I am in the process of writing to the major health funds to ask them directly why they are penalising hospitals and pressurising doctors despite the fact that the product they offer a patient gives them full cover to go to inpatient rehab.
“There is no product available that excludes this option but still allows them to have their joint replacement in a private hospital.”
Dr Solomon points to the public hospital system where there are limited rehab beds and where patients who wait up to year for surgery under Medicare are told they need to prepare their home and family for when they are discharged from acute care.
“Patients are not paying for the service and they completely accept the fact that they will be going home and will need to make some arrangements for somebody to be around to assist them if needed,” he says.
“What the health funds are not telling patients or the general public is that they are charging top premiums, advising patients that their premiums cover them for inpatient rehab, but are then penalising the hospital provider for sending you to rehab and essentially interfering with your care.”
The penalties for private hospitals are written into their contracts for “case paid funding”, which vary across facilities, funds and geographic areas but which generally allow funds to recoup money if the referral levels are exceeded.
Hospitals can also be penalised if they send patients home early.
The contracts allocate money for theatre costs, prostheses, hospital stay, and even rehab costs whether inpatient or outpatient. They specify the maximum and minimum nights in an acute bed and hospitals can be penalised if a patient overstays or – paradoxically – goes home before the minimum nights specified. The latter issue is complex but, in essence, hospitals can find it hard to cover ancillary costs if they are paid for only one night of care, for example, rather than two or three nights. The minimum and maximum days, known as the “trim points”, vary between funds and facilities.
Dr Solomon says the fact funds are now making agreements with acute hospitals to cover rehab is causing problems because the pressure is on the acute hospital to manage rehab costs even though it is not carrying out the rehab directly.
He says he recently faced difficulties finding a rehab hospital for a 94-year-old patient whose hip he had replaced, because both the acute hospital and the rehab centres were worried she would need more than the days specified under the contract with the insurer.
“We battled to get her to a rehab unit, which clearly she needed and was covered for, because the rehab centres were concerned that she would ‘overstay’ because of her age and they would then run at a loss,” he says.
The patient, Margaret Fitzpatrick, was eventually allocated a bed in a rehab hospital. Her daughter, Jenny Dunstan, tells The Australian that her mother is fit and lives independently but was clearly unable to go home after a few days in an acute bed. She had paid for top cover with her fund for almost 70 years but was being told it could not find a place for her even though she clearly needed inpatient rehab.
Dr Solomon says private hospitals are also being “screwed” because some funds steer members to co-owned hospitals, taking less complex cases, and leaving more complex cases to the big private hospitals. Some funds offer patients places in co-owned facilities using surgeons linked to the facilities with the incentive that they would have low or no out-of-pocket expenses.
“Health funds are telling patients they can go to their surgeon of choice, their hospital of choice and inpatient rehab,” he says.
“But the reality is they try to steer healthy patients to their co-owned hospitals, they cherrypick the care, they tell hospitals they will lose indexation funding or be fined if they send more than 30 per cent to rehab (in some cases). They allow the complex expensive surgery to occur in the bigger private hospitals and siphon the low-complexity cases away.”
Private Healthcare Australia says it does not have access to the details of the contracts or the penalty clauses agreed between individual funds and hospitals.
A spokesperson said the federal government determined the procedures and treatments covered by health funds, and any cheaper product would have to be agreed by the government.
“Currently (this) option … is not available, and it would be a policy decision for the commonwealth if this were to change,” the PHA said. “If a surgical procedure is covered by a ‘gold’ hospital policy, then the funds must also cover the rehabilitation costs. This is a legislative requirement.”
The spokesperson said that long inpatient stays for post-operative rehab were “falling out of favour, clinically, for patients who are otherwise well and have good social support”. Some doctors were choosing outpatient rehab options for their patients on clinical grounds.
“Consumers are free to choose whichever doctor and/or hospital they prefer,” the spokesperson said. “In Australia, health funds are not permitted to run narrow networks of clinicians or hospitals, or to direct clinical decision-making.
“Over the last few decades consumers in large market research studies have consistently named large or unknown medical out-of-pocket costs as one of the top concerns they have about private health.
“Many patients are asking for, and welcome having, an option where there are no out-of-pocket costs.
“The decision by some health funds to work with doctors to provide this is driven by demand for more affordable services from their members. Health funds are developing affordable options for surgery together with doctors because this is meeting consumer demand, not for any other reason.”
Helen Trinca was a patient of Dr Solomon in November 2024.
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