That’s one of the key messages from a report released last week by the Australian Medical Association (AMA), which warns that the country’s private health system is behind other nations in delivering out-of-hospital care, and a new national approach is needed to drive an efficient, less fragmented system that delivers benefits to patients.

AMA president Professor Steve Robson said there are many procedures where clinically suitable patients should be able to access out-of-hospital care, such as rehabilitation following hip and knee replacements – some of the most common procedures performed, and a significant cost to the healthcare system.

The AMA’s report, ‘Out-of-hospital care models in the private system’, found there has been a 174-per-cent increase in knee and hip procedures in the private system since 2003.

“The cost difference between rehabilitation at home and hospital per patient is around $6200,” observed Professor Robson. “Looking at knee replacements alone, our report found expanding access to out-of-hospital rehabilitation to patients who would prefer this and were assessed as clinically appropriate by their surgeon, could save up to $62.7 million and free up to 94,000 beds per annum.

“That’s a lot of extra beds for a health system in crisis – a system that’s struggling with ballooning elective planned surgery waiting lists.”

He stressed, too, that the calculations are based on conservative estimates of potential savings, pointing to research showing that out-of-hospital care can also benefit patients recovering from other surgeries, strokes, or patients in need of mental health treatment or palliative care.

“For some patients, out-of-hospital care can deliver the same outcomes as in-hospital care, while also providing patients with other benefits such as the ability to recover in the comfort of home,” he noted.

Call for contestable private healthcare system

The AMA is calling for the sector to design models of out-of-hospital care that are patient-centred and clinician-led.

Historically, private health insurers have only provided cover for in-hospital treatments, with the exception of optional packages of ‘extras’. There has been a trend in recent years – accelerated by the Covid-19 pandemic – for private health insurers to deliver out-of-hospital care, but this has largely been driven by insurers on their own terms, in part, says the report, because of a lack of legislative and public policy design.

Growth of the private out-of-hospital market, it states, has created a complex environment – one where patients may not be aware of what treatment they’re covered for and one where doctors must navigate complex funding and governance arrangements to find their patients the best care, if they want to access out-of-hospital services. This, the report argues, is a result of these new models not being consistently included in all insurance products. Consequently, many privately insured patients whose insurer does not offer an out-of-hospital scheme are unable to receive out-of-hospital care unless they’re prepared to pay large out-of-pocket costs.

Consultation with major private healthcare providers has revealed that around 40 per cent of patients are unable to access out-of-hospital care, either because their insurers do not have their own out-of-hospital programme or do not have agreements with out-of-hospital providers.

Patient-centred approach

The AMA would like to see a private out-of-hospital system where patients can choose the best provider from a range of options, under the guidance of their doctor and funded by their insurer. The body wants to see a Private Health System Authority set up to lead on reforming the system and drive the ‘deliberate design’ of out-of-hospital models of care, with patient choice at the centre.

“At the moment, many out-of-hospital care models in the private system are insurer-led and delivered – often referred to as ‘vertical control’,” Professor Robson explained. “This is an equity issue for patients, as not all insurers fund or provide these models of care and there are no safeguards in place to protect patients.

“This current insurer-led approach has also created a situation that puts patient choice and clinical autonomy at risk, with some insurers only providing out-of-hospital care with select providers and not necessarily involving the patient’s doctor.”

Pointing to the lack of independent oversight and co-ordinated reform across the private health sector, he concluded: “We need nationally consistent guidelines for out-of-hospital programmes to ensure private health policies remain easily comparable. This is why we’re calling for a Private Health System Authority to lead reform, including the development of these guidelines.”