Understanding Specialist Fees

Greedy Specialists?

I thought I should provide some information regarding costs, given recent publicity regarding so called, “greedy specialists”, charging gaps for treatment.

It is important to realise that like any small business, a medical practice needs to operate at a reasonable profit, to be able to continue to provide quality care.

I am acutely aware of the ongoing cost of living crisis, and so I strive to provide my patients with the best quality health care at the lowest possible cost.

Unfortunately, medical practices are being squeezed from both ends, which makes it very difficult to keep costs down. Table 1 below illustrates this problem perfectly. Let me explain.

Medicare Rebates Are Reducing Relative To The Actual Cost Of Care

Whilst the majority of payment that a specialist receives for treatment and consults comes from the Medicare rebate schedule, the contribution under the schedule bears no relationship to the actual cost of providing patient care.

To demonstrate the loss of value of medicare rebates, here are some facts:

• The Federal government froze Medicare rebates from 2013 to 2020.
• During this period inflation rose 11.8% and in 2020 the increase was less than half that rate
• If the 104 item (initial consultation) had increased in line with Federal MP salaries, it would be now worth nearly $300 as opposed to $85.

See Table 1 below.

Medicare Rebates Do Not Reflect Real Medical Practice

Medicare schedule fees have also failed to change with modern surgical practice.

A 45 minute abdominal wall hernia repair, performed as a day case, pays the same amount as a robotic abdominal wall reconstruction that can take up to 4 hours, and a patient hospital stay of several days.

In addition, unlike anaesthetists, surgeons do not get any loading of the Medicare fee for procedures that are performed as emergencies or out of hours.

Case 1 (Recent patient)

• Emergency gallblader procedure on an 80 year old diabetic patient presenting with sepsis on a Saturday night, taking 3 hours.
• 48 hours in ICU (3 doctor visits total)
• Further 3 days in hospital (3 doctor visits total) before discharge.
• Surgeon contactable 24 hours a day whilst patient is hospiatised

Case 2

• Straightforward gallbladder procedure on a 30 year old woman that takes 45 minutes
• An overnight hospital stay.

In both these cases the surgeon gets exactly the same Medicare rebate.

Increased Health Fund Premiums Do Not Equal Increased Service Fees

For those patients who have private health insurance, the private health companies provide a “top up” towards the cost of surgical procedures.

We all know that each year, the government allows the private health funds to increase their premiums, but unfortunately, those increased premiums do not transfer to increase in payments for the cost of procedures.

• One prominent private health fund pays $10 less now for a hernia procedure than they did 20 years ago.
• In the same time frame, that same fund's net profit after tax has increased by 150%.

See Table 1.

Table 1.

Medical Business Costs Are Rising Fast

Basic small business costs like electricity, rents, and insurance are all rising. My excellent staff receive an annual pay rise and are paid above the award rate. These are things that all small businesses deal with successfully.

However there have also been very large increases in specific medical business costs:

• Australian Health Practitioner Regulation Authority (AHPRA) registration fees have increased by 42% in the last 10 years, far more than CPI
• Medical indemnity insurance, a very substantial cost, has increased by 141% in the last 10 years and 10% in the last 12 months despite no change in claim history.

Our Charges Reflect Our Costs

The Queensland AMA provide an externally calculated fee scale that reflects the actual costs of medical practice at any one time. This acts as a reference point for fees within the practice.

I hope you find this information informative, and I would be grateful if you could bear it in mind the next time a government minister is talking about “greedy specialists” on the news.

Phil Lockie

Surgeon