Life Wellbeing The crippled economy: How Australia could be on its knees by 2030
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The crippled economy: How Australia could be on its knees by 2030

Knee surgery
Australia is on the track to having a serious backlog of patients needing knee surgery. Photo: Getty
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For a sector reportedly in a death spiral – as repeatedly asserted in Grattan Institute reports – private health is doing a roaring trade in knees and hips.

Last year, according to the Australian Orthopaedic
Association National Joint Replacement Registry, about 60 per cent of all hip replacements and 70.7 per cent of all knee replacements were done in private hospitals.

Public surgeries were up, too.

In fact, since 2003, both sectors have roughy doubled the number of these surgeries performed each year – tens of thousands – with knee replacements in private hospitals roaring ahead with an increase of nearly 140 per cent.

But let’s look at the actual numbers from last year: 38,807 primary total knee replacements and 25,980 primary hip replacements were reported in the private sector, with some to most of the costs paid for by private insurance (depending on level of coverage) – or paid for by people dipping into their superannuation, taking out loans or selling assets.

In the public sector, there were 12,802 primary hip replacements, and 16,689 primary knee replacements, largely covered by Medicare – with many patients having waited at least a year for their surgery, although for some it blew out to two or three years.

Dr Andrew Ellis is president of the Australian Orthopaedic Association and a Sydney-based orthopaedic surgeon who works in both sectors.

In a wide-ranging interview with The New Daily, Dr Ellis said that over the past 15 years there had been a gradual separation of public versus private cases, with many more surgeries being done in the private sector.

“What these figures tell me is that the burden of disease being carried by uninsured patients is substantial and their unmet need in terms of hip and knee replacements is very high,” Dr Ellis said.

But the burden on both sectors looks to get worse, and will do so quickly, according to a study published in February: “If surgery trends for (osteoarthritis) continue, Australia faces an unsustainable joint replacement burden by 2030, with significant healthcare budget and health workforce implications”.

And with the nation getting older and fatter, those trend lines will only get steeper.

So what to do?

Orthopaedic surgery rates and costs (and associated controversies) and social fallout have been a grumbling issue for years.

But no matter how hard the state governments work to get surgeries happening quicker in the public system – and how clever doctors are in finding alternatives to surgery and reducing low-value procedures (such as arthroscopies) – the number of people wrecking their joints just gets bigger. And the associated issues become more complex.

Out-of-pocket  costs

Over the past five years, Victoria Newman, part-time librarian from the Sunshine Coast, has paid about $15,000 in premiums to insurance fund TUH (Teachers Union Health).

When Ms Newman, 62, developed disc problems in her neck, with nerve damage in her right elbow, she was referred to a surgeon who charged her about $12,000 for surgery.

Victoria Newman recounts her experience with the private health sector. Photo: supplied

She’s now on an 18-month payment plan, $270 a month paying him off – although $4500 had to be paid upfront.

For that she dipped into her superannuation. Medicare and TUH contributed less than $2500 to her costs.

There was also the anaesthetist’s fee of $833.50, which her fund did not cover.

The costs were “pretty horrific” but going through the public hospital system simple wasn’t an option.

For one thing, she was in constant pain caused by disc problems in her neck – but not on the brink of an emergency that would have seen her moved up the waiting list.

“I couldn’t work, I couldn’t get in the car to drive. I was so in pain, I couldn’t sleep at night,” she told The New Daily.

“My father’s nearly gone blind waiting on the waiting list. He’s 88 and I’ve seen my mother wait for years for surgery.”

In an email seen by The New Daily, the surgical co-ordinator explains to Ms Newman why there was a gap in her coverage.

“Unfortunately the gap between your Medicare/fund rebate and the cost of surgery has risen across the board in recent years, due to a number of factors, such as Medicare rebates not keeping up with the rate of inflation, rising insurance, administration and staffing costs,” the email said.

“The other reason there is a gap is due to the complexity and time it takes to perform this surgery and the after-care involved.”

But that’s not the whole story.

In 2016 and 2017, Medibank and the Royal Australasian College of Surgeons published a series of surgical cost variance reports, including The Surgical Variance Report – Orthopaedic that revealed variations in cost, out of pocket or gap fees, and rates of hospital readmission for common orthopaedic procedures.

It also reveals the average number of nights patients spent in hospital.

It revealed that in 2014-15 and 2015-16:

  • The average separation cost (the total cost of the surgery and hospital stay) for a hip replacement varied between $19,439 and $42,007 depending on the surgeon
  • The average out-of-pocket cost charged by a surgeon for a hip replacement varied between $0 and $5567, with the average out-of-pocket charge by a surgeon in NSW at $2673 and the average out-of-pocket charge by a surgeon in Victoria at $1997. The lowest average out-of-pocket charge from a surgeon by state was in South Australia ($556)
  • The median number of nights that a surgeon’s patients stayed in hospital for a hip replacement ranged between one night and nine nights with a median of five nights (based on 299 surgeons who had performed at least five of these procedures)
  • For a knee replacement the average separation cost varied between $17,797 and $30,285, depending on the surgeon
  • The average out-of-pocket charge by a surgeon for a knee replacement varied between $0 and $5137, with the average out-of-pocket charge by a surgeon in NSW at $2499 and the average out-of-pocket charge by a surgeon in Victoria at $1609. The lowest average out-of-pocket charge from a surgeon by state was in South Australia ($397)
  • The median number of nights that a surgeon’s patients stayed in hospital for a knee replacement ranged between one night and 16 nights with a median of five nights (based on 394 surgeons who performed at least five procedures)
  • For a knee cruciate ligament (ACL) repair the average separation cost varied between $5076 and $13,950, depending on the surgeon
  • The average out-of-pocket charge by a surgeon for a knee cruciate ligament (ACL) repair varied between $0 and $2907, with the average surgeon out-of-pocket charge in NSW at $2248 and the average surgeon out-of-pocket in Victoria at $1671. The lowest average out-of-pocket charge from a surgeon by state was in South Australia ($415)
  • The median number of nights that a surgeon’s patients stayed in hospital for a knee cruciate ligament (ACL) repair ranged between 0 nights and three nights with a median of one night (based on 112 surgeons who performed at least five procedures).

The Medical Journal of Australia produced an excellent analysis of the report.

Public v private: Is the question still worth asking?

“Donald”, 61, wrecked the bones in his wrists from a lifetime of hard labour.

Three years ago, an orthopaedic specialist told him it would cost about $30,000 to have steel rods surgically placed in both wrists.

“‘The bones are dead … The bones are dead. We need to get the rods through it,'” he recalled his specialist saying.

That was about three years ago. Donald (who asked that his real name not be used) was not covered by private health insurance.

He said he simply couldn’t afford the procedure and had no choice but to continue working as a concrete finisher despite the severe pain.

“Some days are worse than others. I keep the pain to myself. I don’t want to show any sign of weakness,” Donald said.

“On the poor days, I get the duct tape and strap my wrists up fairly tight for support.”

If Donald stopped work, he said any government pension wouldn’t be enough to care for himself and his 83-year-old mother.

Donald is taking out a loan to pay for surgery for his wrists. Photo: supplied

He’s now considering taking out a bank loan to fund the procedure.

But there’s a question here: Given this was three years ago, chances are he’d have had surgery in the public system by now. Why didn’t he go on the public waiting list?

Donald said his specialist advised him to go the private route as it can be several years before patients on a public hospital waiting list are seen.

“The orthopaedic surgeon said to me … I’ve got patients waiting back to 2009 on Medicare. And I went there in 2016.”

Donald said he didn’t shop around for other quotes because he believed other specialists would have charged a similar price for the procedure.

While researching this series on costs in the healthcare system, The New Daily frequently heard that the public system wasn’t worth considering – not just because of the significant waiting times, but because of a belief that the public system offers sub-standard care.

Dr Ellis said figures from the National Joint Replacement Registry showed outcomes for surgeries in the public sector were on a par with those in the private sector.

“The revision rate, the second-time surgery rate in public and private  are about equal,” he said. “People get good-quality care going public.”

Dr Ellis said there was something of a cultural difference between the sectors.

“It’s like flying Jetstar versus Qantas first class,” he said.

“I know Jetstar gets me safely from point A to Point B. It does’t crash. It gets the job done.

“The physicality isn’t so comfortable, but our nurses and physios work hard to provide good-quality care.

“The number of our members who work in both systems is high. We provide the same level of care in surgery.”

He said some people – “some surgeons, some hospitals, some insurers, anybody with an opinion” – had an interest in running down the public system, where the real issue is timely access.

The only thing that can solve that problem is more funding.

“The question is: Is that 365 days’ waiting time a fair and reasonable thing? We don’t think it is,” Dr Ellis said.

“Some of these patients are seriously affected by arthritis and serious economic issues because of the arthritis.

“They’re not all 80-year-old retirees living in supported care. Some are young and working and trying to raise families and they endure a long time of lost productivity.

“It’s unfair and unreasonable and represents inadequate resourcing of what should be fair treatment.

“There is plenty of evidence that if you have a hip replacement, the majority of people come off anti-inflammatories and painkillers. Their health needs and burden decreases, quality of life improves, their general health improves. The sooner it’s done, the greater the benefit.”

Jo Root is policy director for the Consumers Health Forum of Australia.

She told The New Daily: “Consumers tell us about long waiting times in the public system for elective orthopaedic surgery of all kinds.

“It is concerning that the growth in private provision of many procedures may divert doctors away from the public system into the private system, where they can often earn more.

“In this way private health insurance, rather than taking pressure off the public system, has exacerbated the problem and made access for public patients more difficult. This could be alleviated by increasing the number of surgeons being trained.”

Stephen Mason is CEO of the Australian Patients Association.

He said: “Out-of-pocket cost shock is the No.1 complaint we receive from patients.

“We have previously written to the federal Health Minister Greg Hunt asking him to place a cap on the amount specialists can charge over and above the scheduled fee and believe there should also be a mandatory requirement for all specialist fees to be provided in a written quote to patients prior to entering hospital for surgery.

“Only in the case of an emergency, should excess surgery fees be applicable.”

“To help reduce excess waiting times for orthopaedic surgery, we believe state and federal governments could contract under-utilised private hospitals to help reduce the load on the public system.

“If state governments allocated funding to pay for private hospitals to take public patients waiting the longest for elective surgery, ultimately patient outcomes would be improved and the burden on the public system would be reduced.”

Something – or someone – has to give, and give big.

According to the February study cited earlier:  “Based on recent growth, the incidence of (total knee replacement) and (total hip replacement) for (osteoarthritis) is estimated to rise by 276 per cent and 208 per cent, respectively, by 2030.

“The total cost to the healthcare system would be $5.32 billion, of which $3.54 billion relates to the private sector. Projected growth in obesity rates would result in 24,707 additional (total knee replacements)  totalling $521 million.”

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