Insurers call for reform to allow hospital in the home for patients

Private insurers are calling for structural reform of the health system to enable more patients to be treated out of hospital.

PHA chief executive Rachel David. Picture: Hollie Adams

Private insurers are calling for structural reform of the health system to enable more patients to be treated out of hospital, estimating $1.3bn a year could be saved by shifting healthcare into the home in line with international practice.

A new report by Private Healthcare Australia (PHA) argues Australia is rapidly falling behind the rest of the world in the slow take-up of out-of-hospital care, with private hospitals and insurers hamstrung by funding and regulatory barriers from expanding this type of care.

Out-of-hospital care is accepted as best practice for several services, including post-surgery rehabilitation for joint replacements, chronic disease management and monitoring, mental health and substance ­misuse management, short-stay surgical models, palliative care, and chemotherapy in the home for some cancers.

Health insurers say Australia is failing to capitalise on the efficiencies that would be possible if the current barriers to out-of-hospital care were removed.

“Australia’s private healthcare system is leaving $1.3bn of potential efficiency on the table by lagging well behind other countries in the uptake of out-of-hospital care models,” the PHA report says. “Australian patients are not receiving the healthcare supported by the best available evidence.

“Doctors are unable to support the most effective and innovative models of care because our system will not support them to provide best practice. Our health financing system was designed in the 20th century, yet we are dealing with 21st century problems.

“We have not developed these alternatives to cost-intensive inpatient care due to incentive structures and regulation that ­impede their growth.

“Increasing adoption of these models of care will provide better care with less burden of treatment, reduce the load upon ‘bricks and mortar’ hospitals, and reduce wait times and care bottlenecks. Adopting best practice care, including out-of-hospital options, will also reduce growth in private health insurance premiums and out-of-pocket costs, supporting overall access and affordability of care for patients.”

PHA chief executive Rachel David said some people were spending time in hospital when they didn’t need to be there at all. “When you don’t have well integrated models of care for to transition people out of hospital, you end up with people in a hospital bed, patients are sitting there and incurring all of the expense and risk of being in a hospital, but they’re not actually having any treatments delivered.

“They’re just basically waiting for something to happen or having very short amounts of treatment … like a couple of consultations and physiotherapy … none of which needs to be provided in that setting. So that is what is causing a lot of what they call backlog in hospitals.”

Currently, insurers are barred from funding care out of hospital by legislation governing private health insurance, which restricts certain types of care from being funded or conducted out-of-hospital, and restricts the provision of certain types of care to certain professional groups.

The insurers say that removing these regulatory barriers could make a big difference when Australia is facing unsustainable demands on the health system, placing pressure on hospitals and seeing patients slugged with increasing out of pocket costs. If out-of-hospital care was adopted to its full capacity, it could deliver an extra $1.5bn of value to PHI members by 2027, while slashing the length of patients’ stays in hospital, freeing up beds, reducing the risk of admission by up to 80 per cent and the risk of readmission by 40 per cent.