How APHA took on Medibank Private

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By Michael Roff – APHA chief executive officer

When Medibank Private and Calvary Health Care announced in August that they had struck a resolution in the dispute that threatened to end the pair’s long-running agreement, the health industry breathed a collective sigh of relief.

The 11th hour settlement signalled an end to the stoush that began when negotiations between Medibank, the largest private health fund in Australia, and Calvary, the Catholic-affiliated hospital chain, broke down in July.

The fund boldly declared it would no longer pay for 165 “highly preventable adverse events”. It said the changes were necessary to help eliminate mistakes.

Medibank was really using its size and market power to unilaterally impose measures on private hospitals that would in no way improve the safety and quality of patient care.

The list was created in isolation and had no standing in the health industry. It was not based on accepted clinical standards and was not validated by any safety and quality body.

The Australian Commission on Safety and Quality in Health Care (the Commission), the preeminent body charged with ensuring the safety and quality of the healthcare system in Australia, went as far as describing Medibank’s actions as untested and not fit for purpose.

The Australian Private Hospitals Association (APHA) shared this view and became entrenched in the debate despite holding no brief for Calvary.

It was an opportunity for APHA to use its influence in the industry to effect change. We did not want our members, particularly those facing negotiations with Medibank next year, to be bullied in the same way Calvary was.

Our dogged determination, combined with the similar approaches of various other organisations opposed to Medibank’s actions, yielded a favourable outcome. APHA’s efforts included but were not limited to:

  • Discussions with the AMA, RACS and a wide range of other medical representative bodies to inform them of the potential impacts of Medibank’s approach;
  • Production of “fact sheets” for member hospitals to distribute to doctors and patients to ensure they were appropriately informed and not just relying on Medibank’s fodder;
  • Media interviews, briefings and provision of information to journalists;
  • Extensive use of our social media networks to distribute information to the public;
  • Representations to government including at the highest levels of the Department of Health and the Minister for Health;
  • Ongoing engagement with the Australian Commission for Safety and Quality in Healthcare which strongly opposed the Medibank approach; and
  • Meetings with senior personnel from Medibank Private to detail our concerns about their approach.

Medibank revealed in our discussions that it did not expect the medical industry to react as strongly as it did. Senior staff members admitted not being able to fully comprehend why clinicians were so strongly opposed to the changes.

That highlighted the flaws in Medibank’s approach. The fund simply didn’t understand what it was doing.

More cracks appeared when Medibank announced it would make its previously secret list of adverse events public, as well as its plans to introduce a process of independent clinical review “to clarify situations where responsibility for the adverse event is unclear”.

It tried to explain these as minor changes when, of course, they constituted a huge back down.

By that point it was clear that, after initially walking away from negotiations, Medibank was forced back to the table due to the strength of public opposition to its approach. An agreement was subsequently reached, which, according to industry chatter, involved further capitulation by Medibank.

An unfortunate outcome of the dispute is that the fund has unnecessarily and erroneously spread the perception that there is a major problem with the quality of care delivered in private hospitals. For that it should be condemned.

On the eve of the Minister announcing a review of health insurance regulations, Medibank’s behaviour has people in government asking why they should give more power to an organisation that behaves in such an arrogant and irresponsible manner.

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