Reform calls to save health consumers $935m a year

New data shows that outdated government regulation forced Australians to pay far too much for medically implantable devices for vital heart, spine and joint replacement surgeries.

Data from the Independent Hospital Pricing Authority and Commonwealth Department of Health shows that, in 2017/18, device manufacturers charged patients with private health cover up to three times more than patients in public hospitals.

If the same average price for medical devices were applied in private hospitals as public, consumers would have saved a staggering $935 million. This equated to a $141 annual saving for every Australian private health insurance policyholder.

At the time, the average cost of a pacemaker in the public system was $12,767, while in the private system it was $48,245 – more than three times more expensive. A hip replacement in a public setting cost on average $6,174, but more than $9,800 in private. Insertion of neurostimulator devices cost $13,632 in the public sector, but more than $26,000 in the private sector. And spinal fusions – from minor to the most complex procedures – cost anywhere between $6,000 and $10,000 more in the private sector compared with the public.

In October 2017, the medical devices industry signed an agreement with the Commonwealth Government pledging to reduce costs to consumers. However, Mr Koce said these figures – recorded nine months after the agreement – showed a lot more work was still required.

Matthew Koce, CEO of Members Health, the peak body for 27 not-for-profit and member owned health funds, said “The COVID-19 pandemic has caused enormous hardship and prostheses regulation is an area where immediate savings can be found for the benefit of the more than 13 million Australians with private health insurance.”

Evidence of profiteering by device companies can also be seen in the dramatic price differences for prostheses in neighbouring New Zealand.

One bare metal coronary stent, for example, is $898 on Australia’s Prostheses List, 51 per cent more than the New Zealand price of $439.50 (NZ$465). One drug eluting coronary stent is $2,484 in Australia, 80 per cent more than the $496.21 (NZ$525) across the Tasman Sea. And one femoral head (for hip replacement surgery) is $2,109 in Australia, 45 per cent more than $1,157.83 (NZ$1,225).

Government already sets the minimum price for prostheses in the private health system and the way to achieve savings for consumers is simple. Immediately benchmark all prices for prostheses in the private system to the average paid in the Australian Public Hospital system.

Download the press release and supporting data: 2020-08-20 Members Health MR Prostheses Profiteering

 

Media enquiries:

Jodie Harrison    0425 754 370    jodie@theshannoncompany.com.au

Eddie Morton      0499 700 295   Eddie.Morton@membershealth.com.au

Members Health is the peak industry body for an alliance of 27 health funds that are not-for-profit or part of a member-owned group, region or community. They all share the common ethic of putting their members’ health before profit and represent the interests of more than 3.7 million Australians.