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No longer just funders: private health takes on chronic disease

Grandmother of seven Annette Moult was on the path to a hip replacement. Instead, she found relief in a program which offers an alternative for those facing spinal, hip or knee surgery.

Annette Moult: ‘I’d never gone to a gym before and hadn’t really considered it.’
Annette Moult: ‘I’d never gone to a gym before and hadn’t really considered it.’

It was frequently when digging up the dirt of the raised garden beds in her sprawling garden in Richmond, a historic town dotted with wineries and cheesemongers on the Coal River northeast of Hobart, that 69-year-old Annette Moult experienced painful twinges in her hips. As months passed and the discomfort grew, she saw her GP, who ordered an MRI that revealed osteoarthritis.

For many people in Moult’s situation, a referral to an orthopaedic surgeon would lead inevitably to a hip replacement. But it wasn’t the case for the Tasmanian grandmother of seven, who was referred for physiotherapy and strength training with Kieser Australia, which runs personalised programs overseen by physios in gyms on specialist equipment that isolates and targets specific muscle groups. Moult’s non-profit health fund, St Luke’s, funded the therapy, which costs $55 a week for two 30-minute sessions, as a 14-week out-of-hospital care program.

“I’d never gone to a gym before and hadn’t really considered it,” Moult says. “But the Kieser program was available and my GP thought it would be a much better option than surgery. I don’t like surgery at all. I think it’s much better if you can just train your muscles around those joints that are causing problems. It certainly works. I’m not experiencing hip pain now at all. And I’m much stronger in everything I do.”

St Luke’s is not the only private health fund referring members to the Kieser program in an effort to keep them well and ward off frequently unnecessary joint replacements. Nine funds have partnered with Kieser Australia in a preventive health initiative that is disrupting the fee-for-service funding model in which health insurance funds surgeons’ fees and private hospital stays.

While extras cover has subsidised to some extent allied healthcare for members, the shift towards funding preventive models of care is on a different scale entirely.

It’s easy to see the attraction for the funds, particularly as an ageing population means a greater and greater proportion of the population is afflicted by arthritis and joint dysfunction. Already in 2019, musculoskeletal disorders such as back pain and arthritis were responsible for more health spending than any other group of conditions – $14.6bn, or 10.4 per cent of Australia’s health spending.

Physiotherapist and Kieser Australia chief executive Brett Long says between 70 and 90 per cent of private health insurance members who were on a path towards spinal surgery, hip replacement or knee replacement surgery who undertook Kieser therapy avoided surgical intervention altogether.

That supports data from randomised trials that indicates up to half of orthopaedic surgical procedures have no scientific evidence proving they work better than non-operative treatment.

“Our system was set up in the ’70s and ’80s, when we didn’t even have the same diseases, and it was bolted on to the Medicare system. So it’s set up as this fee-for-service system to pay for procedural medicine, which overwhelmingly favours in-hospital expensive procedural care,” Private Healthcare Australia chief executive Rachel David says.

“It was set up to be a passive payment system where the funds didn’t really engage with their customers, they just paid the bills. And that’s just not sustainable any more. Now, we see alternatives. The alternative is that funds work with clinicians on evidence-based community-level programs, which have been shown to reduce the risk factors for chronic disease.”

It’s not just a matter of modern innovation. Like the recent review of Medicare that has prompted a decade-long project to overhaul the fee-for-service funding system, the shift by private health insurers to becoming healthcare partners and not just funders is prompted by existential concerns.

Healthcare costs are the fastest growing cost of any government expense, predicted to rise to 6.2 per cent of national GDP by 2062. Private health funds’ hospital treatment benefit outlays are $16bn a year and are projected to rise to $25.5bn if the pre-Covid growth rate of 4.5 per cent a year is sustained, according to analysis by consultancy PHInsights founder Dan Hilvert.

Hilvert says it’s crucial that private health insurers hold on to younger members who have joined funds since the pandemic, with the ramifications of losing a proportion of these members who cross-subsidise the high-claiming elderly potentially catastrophic. A huge increase in the proportion of healthcare that takes place in out-of-hospital settings and a pivot towards funding preventive care are two of the major levers available to the private health industry to interrupt an unsustainable trajectory of rising outlays. In the process, access to wellness services could make private health insurance a lot more attractive for younger people.

“If we do nothing, if you look at what the projections of the dollar expenditure is going to look like, it’s going to be prohibitive,” David says. “People are either going to be facing very high premiums, or very long waiting lists, and certain forms of treatment might not even be continued to be made available by third-party payers.”

The idea that access to care may not be immediate, or may not be available at all, is anathema to the concept of private health insurance, which is marketed on being able to obtain virtually immediate treatment.

But even before the tide of chronic disease within an ageing population exerts unsustainable pressure, there are worrying signs of cracks appearing already, exacerbated by the pressures of Covid-19.

Australian Private Hospitals Association chief executive Michael Roff says many private hospitals are struggling with rising costs and difficulty in accessing key specialists. He even has suggested key procedures such as cardiac surgery and cancer surgery that “are becoming harder and harder to generate a return on” may be unavailable in future in the private system.

“In the next five to 10 years there will be a breaking point unless we come up with an infrastructure that incentivises people to stay healthy,” says University of Sydney professor Luigi Fontana, a physician scientist and a leader in the field of nutrition and healthy longevity. “The costs are going to be unsustainable for any government or any health insurer. We have an ageing pandemic, but it’s an unhealthy ageing pandemic. So people are not getting older and healthier. Unless we intervene in unhealthy lifestyles, the system is going to become unsustainable.”

In recent years the big for-profit funds including Medibank, NIB and Bupa have moved aggressively into the healthcare delivery space, buying their own commercial telehealth outfits that prescribe weight loss drugs, establishing hospital-in-the-home rehabilitation programs, and establishing and funding alcohol detox primary care services.

While the motives to move towards service delivery are clear for these funds, what is happening at a local level in places such as Geelong, the beachside satellite city south of Melbourne, is a fascinating glimpse into a future in which non-profit health funds step in to deliver multidisciplinary primary care. In July local health insurer GMHBA opened a health hub in the suburb of Belmont, where patients can access Medicare-funded GP visits together with dental and physiotherapy services. There is an adjoining pharmacy.

“Not only does it create a healthier community, it’s actually economically more sustainable for health insurance organisations to invest in preventive health,” GMHBA chief executive David Greig says.

“The problem we have in the community is for other stakeholders, governments for example, those same incentives to invest in prevention are not there. The benefits of that investment may not be realised for 10 years, 20 years or even longer. And if you’re a government, that will accrue to a different government, it won’t accrue to you. So governments are often less incentivised than, say, the health insurance industry to invest in prevention.

“For us, we’re now on a strategy to evolve from being a health insurance company to a healthcare company. We’re looking to integrate the private health insurance and health services network so we can actually partner with our members and our patients throughout the health journey.

“We do expect that people will be healthier and, as a consequence, claims costs will be lower. But for us, because of that purpose, prevention and embedded health is a worthwhile goal in itself.”

Natasha Robinson
Natasha RobinsonHealth Editor

Natasha Robinson is The Australian's health editor and writes across medicine, science, health policy, research, and lifestyle. Natasha has been a journalist for more than 20 years in newspapers and broadcasting, has been recognised as the National Press Club's health journalist of the year and is a Walkley awards finalist and a Kennedy Awards winner. She is a former Northern Territory correspondent for The Australian with a special interest in Indigenous health. Natasha is also a graduate of the NSW Legal Profession Admission Board's Diploma of Law and has been accepted as a doctoral candidate at QUT's Australian Centre for Health Law Research, researching involuntary mental health treatment and patient autonomy.

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Original URL: https://www.theaustralian.com.au/inquirer/no-longer-just-funders-private-health-takes-on-chronic-disease/news-story/7b2e7574bb5e77e74fdb2ef4562ccc38