Posted by http://www.thestar.ca/thestar/back_issues/ED20000318/news/20000318NEW01d_NA-OZ.html on March 25, 2000 at 19:05:53:
FIXING HEALTH CARE
THE HARD LESSONS DOWN UNDER
Condition critical: Where two-tier
hospitals are failing
By Thomas Walkom
Toronto Star National Affairs Writer
BRISBANE, Australia - When free-market critics of
Canada's struggling medicare system start to talk of
reform, they look to countries like Australia.
Canadians, they say, have become wedded to a system
that no other major country has, one in which core
medical care is funded by a government monopoly.
William Orovan, head of the Ontario Medical
Association, made the case a little over a year ago.
Why not take a lesson from the rest of the world, he
asked them, and allow private hospitals and other forms
of private medicine to exist alongside medicare?
Sure, the result would be two-tier.
But letting those who can afford it pay extra for health
services would reduce medicare waiting lists and take
pressure off the public system.
And while many Canadians fear that the re-introduction
of private medicine would lead inexorably to the horrors
of the U.S. system, critics say that's fear-mongering.
``My only fear is that we will not make progress
because we're afraid of an American-style two-tier or
multi-tier system,'' Orovan said.
``There are many countries in the world, like Australia
and New Zealand, who do things differently.''
In Alberta, Premier Ralph Klein is forging ahead with
private medicine. In Ontario, Premier Mike Harris is
sympathetic. If governments aren't willing to put more
public money into basic health, he said last month, the
only sensible alternative is to tap the private sector.
Would that really be the end of the world?
`Don't do it. I would
argue very strongly
against Canada going
down our path'
- Gavin Mooney
University of Sydney health
economist
To try and answer these questions, The Star took a
close look at the Australian medicare system.
It's a system much like Canada's - in fact, it was
modelled on ours. But unlike this country, Australia
allows - even encourages - private hospitals and insurers
to operate alongside the public system.
If Canada were to add a private tier to its health care
system, along the lines suggested by the OMA or the
Reform Party, it would probably end up with one almost
identical to Australia's.
In Australia, every resident may use the public medicare
system where all, or nearly all, the costs are picked up
by the government.
But those who wish can also pay extra to be treated
privately. They can avoid long waiting lists by using
private hospitals (about one-third of Australia's 1,100
acute care hospitals are private).
And they can buy private health insurance - not just for
ancillary services like dental care, as in Canada, but
full-blown medical insurance that will cover them for
anything, including procedures as complex as brain
surgery.
During a month in Australia, I talked to nurses, doctors,
politicians, health experts and just plain patients. I visited
crowded public hospitals which, like their Canadian
counterparts, are trying to cope with years of
government cutbacks. And I toured private hospitals so
spanking new, they seemed four-star hotels.
What I found was not an unalloyed horror story.
Two-tier medicine has not destroyed Australia's public
medicare system, at least not yet. Australia is not the
U.S., where only the well-to-do get good care and the
middle classes have to scramble.
But at the same time, private medicine has not been
without cost. By diverting resources, it has weakened
the public system - some say fatally. Certainly, it has not
produced the benefits claimed by its Canadian
adherents. In particular:
It has not eased pressure on the public system; in fact,
it has made waiting lists in the public hospitals longer.
It has not saved money. Hospital privatization
schemes, along the lines suggested by Alberta's Klein,
have been financial disasters.
More tellingly, two-tier health care has actually cost
more money. In Australia, the federal government has
been forced to subsidize the private health industry, to
the tune of $2.2 billion a year, just to keep it alive.
Ironically, the real success story in the Australian
health system - both financially and medically - has not
been private medicine. It has been pharmacare, a
universal, publicly-funded drug benefit program.
To an outsider, this seems an exceedingly curious free
market solution.
Just north of Brisbane, in the town of Caboolture,
20-year-old Eileen McLean is explaining the
peculiarities, as she sees them, of Australia's hybrid
system.
McLean has an unusual condition for such a young
person: she has cataracts, an eye condition that impairs
her sight.
If she were to get them removed in a public hospital, she
wouldn't incur any out-of-pocket costs. But she would
face an 18-month wait.
``I can't wait that long,'' she explains. ``I can't drive.
And I have to go back to school.''
So McLean ``went private.'' She arranged with her eye
surgeon to do the operation outside of medicare. The
wait will be only four weeks and the cost - to her - will
be $900.
What's peculiar is that she is getting the fast-track
private surgery from the same doctor who would have
made her wait 18 months, had she used his services
through the public system.
And she's getting it done in the same public hospital.
Same doctor. Same equipment. Same operating room.
The only difference is that her eye surgeon is getting paid
$900 more than he would have under medicare.
In effect, McLean is being held to ransom. She is being
forced to pay extra for treatment that by rights she
should get under medicare.
Almost everyone in Australia who has dealt with the
health system has a similar story.
Dr. Tracy Schrader, a Brisbane physician, recalls the
time her 54-year-old father experienced serious heart
problems.
``He saw a cardiologist who said `You can wait six
months and get an operation in the public system or I'll
do it for you tomorrow privately.'
``My father was in a panic; he was out getting bank
loans to raise the money. And he was in bad way. He
couldn't work. He couldn't even walk.''
His experience, and that of Eileen McLean, points to
one of the fundamental weaknesses of the two-tier
system: While there may be two tiers of health care,
there is only one set of physicians.
And these physicians - particularly in high-demand
specialities - are free to arrange their time between the
private and public systems as they see fit.
An orthopedic surgeon, for example, may have a
contract to work at a public hospital. But he will also
see his own private patients separately. And he may
operate on these private patients either at the public
institution or, more commonly, at a private hospital.
For a relatively straightforward elective procedure such
as knee surgery, he will usually prefer to channel his
patients into the private system. There, unlike the public
medicare system, he can charge whatever the market
will bear.
Yet the more these specialists work in the private tier,
the less time they have to work in the public - and the
longer the public waiting lists get.
As Jeff Richardson, a health economist at Melbourne's
Monash University explains, this has created a perverse
result: a government that encourages the private health
system in order to reduce public waiting lists may end up
making them longer.
Even the head of the Australian Medical Association, an
organization that firmly supports private medicine,
agrees. ``Most doctors see working in the public system
as altruism,'' says Dr. David Brand. ``They are altruistic.
``But it is true - the more incentives you have in the
private sector, the more you pull doctors across to it.''
Newer private hospitals, such as Sydney's North Shore
Private, in the posh northern suburbs of the city, have
set themselves up explicitly to take advantage of this
dynamic.
In Australia, the most prestigious hospitals - the
so-called teaching hospitals, where the sexiest and most
adventurous medicine takes place - are virtually all
public. In North Sydney, for example, the big public
teaching hospital is Royal North Shore.
To take advantage of Royal's staff and state-of-the-art
equipment, North Shore Private set itself up right next
door. It offered Royal's roster of specialists luxurious
offices in its brand new building, and encouraged them
to do their elective surgery - at top dollar - in its brand
new operating rooms.
It even built an overhead covered bridge to connect the
two institutions so that, if it rains, the specialists don't get
wet as they go back and forth.
But if Australian policy makers had hoped that North
Shore Private would take some of the load off the
adjoining public hospital, they were wrong.
``There was some fear that we'd steal business from the
public hospital,'' says North Shore Private's director of
clinical services, Catherine Lambert. ``But no. About 92
per cent of our patients are in for elective surgery. And
even of those, we've taken very few from Royal North
Shore. Most seem to have come from other, smaller
private hospitals in the area.''
Unlike most private hospitals, which concentrate on
relatively simple procedures, North Shore Private prides
itself on doing high-status cardiac and neurosurgical
operations. A cardiac bypass operation, for example,
will earn the hospital about $25,000 to $30,000 from
the patient. On top of this, the surgical team of doctors
will probably get from $15,000 to $20,000.
A patient who chooses to have his bypass done at
North Shore Private rather than Royal North Shore
Public will get some of the doctors' fees back from
medicare. His private insurance, if he has it, may cover
another portion of the physicians' fees as well as part, or
in a few cases all, of the hospital fees.
But, says Lambert, the patient will almost surely have to
pay an additional $2,000 to $6,000 out of his pocket to
cover that portion of the physicans' fees that are not
picked up by any insurance.
Why would anyone pay all of that - private insurance
premiums plus extra top-ups totalling thousands of
dollars - when he could have had the same doctor
perform the same operation in a state-of-the-art public
hospital next door?
Aside from North Shore Private's luxury rooms
(decorated in tasteful earth tones and containing oversize
showers), the answer, says Lambert, is convenience.
Patients wanting elective surgery at Royal North Shore
may have to wait weeks to see a specialist at the
hospital's outpatient clinic, and then perhaps months to
have the operation itself.
But the same specialists will be happy to see these same
patients immediately - as long as they're willing to walk
across the bridge and pay a few thousand more.
When people here are told that some Canadians, like
Alberta's Klein, are looking to copy Australia's hybrid
system, they are at the very least bemused.
``How strange,'' says AMA chief Brand. ``We copied
our system from you, and now you're looking to us?''
``Why on earth would you change what you've got; it
sounds much better than ours,'' says Robyn Green, a
Brisbanite who has had some rough experiences with
her own country's health system.
``Don't do it,'' says University of Sydney health
economist Gavin Mooney. ``I would argue very strongly
against Canada going down our path.''
Most experts here say that the hybrid public-private
Australian system - with jurisdiction divided between
state and federal governments - is neither particularly
efficient nor fair. Even supporters of private medicine
say that Australia's two-tier system doesn't work very
well.
``If I was going to invent a system that was efficient, I
wouldn't invent the Australian system,'' says the AMA's
Brand. ``The system is crazy. But it protects us
(doctors).''
John O'Dea, the AMA's director of medical practices is
equally blunt. While he firmly supports two-tier
medicine, he himself buys private health insurance only
to win a tax break. ``I have no intention of using it. . . .
There's no good reason to go to a private hospital.''
Why then have the parallel private system?
``To put it crudely,'' answers O'Dea, ``doctors get paid
more in private hospitals. . . . You can earn a lot more
by billing the patient than by negotiating with the
government.''
Yet while specialists can make a good living from the
private system, the private hospital companies
themselves are not doing well. Profits are down; share
prices are plummeting.
Ian Chalmers, executive director of the Australian
Private Hospitals Association, says that his members are
squeezed between a public unwilling to pay the high
costs of private medicine and a health insurance industry
trying to ratchet down costs.
As for the private insurers, they are making money now
but only because the government is, in effect, subsidizing
them.
In late 1998, the federal Liberal-National government, a
conservative coalition, passed legislation giving any
Australian with private health insurance a tax rebate
equal to 30 per cent of any premiums paid.
The rebate is expected to cost the national treasury a
staggering $2.2 billion this year.
Still, the idea of two-tier medicine remains remarkably
popular in the country. Only 30 per cent of the
population takes part in the private system; with
premiums running at about $1,500 for the average
family, it is too expensive for most.
Yet even those who don't earn much seem to like the
idea of the private alternative.
Margaret Wakely, for instance, works part-time in a
restaurant in Newcastle, a few hours north of Sydney.
When I met her last month, she was part of a team of
pickets, protesting the privatization of Newcastle's
Mater Hospital.
Wakely talked about the importance of keeping
hospitals like the Mater in public hands. But when the
topic of private health came up, she was equally
adamant.
People who can afford to pay for private insurance have
a social duty to take it out, she said. ``If we all said
we're not paying for private health, well then (the public
system) would cost too much. We can't afford it as it
is.''
Wakely herself has private health insurance. Except for
the birth of one of her children, she has never used it.
``But what would happen if I got in a car accident?''
In fact, if she got in a car accident, according to David
Brand, she'd be wise to go to a public hospital. ``I'd
probably be happier going to a public hospital if I were
in a major accident,'' says the AMA head. ``They're
used to doing it.''
The same point is made by almost everyone familiar with
the health system.
``I'd never advise anyone to use a private hospital when
they're ill,'' says Dr. David Henry, head of clinical
pharmacology at Newcastle's Mater Hospital, a public
institution.
For one thing, most private hospitals don't have doctors
on duty at night or weekends. ``Patients are sent here
(to Mater) on weekends from local private hospitals
because the doctors are off-duty,'' says Henry.
Most private hospitals don't have emergency rooms;
those which do, explains Tracy Pilatti, a public relations
spokeswoman for the country's largest private hospital
chain, Health Care of Australia, rarely make money on
them, preferring to use them as loss leaders that will
draw in new business.
Even the more sophisticated private hospitals are
reluctant to take up the burden of Australia's
overcrowded public emergency rooms. Gavin O'Meara,
general manager of Greenslopes Private Hospital in
Brisbane, says that if he had to choose between closing
his money-losing emergency room for a day or
postponing lucrative elective surgery, he would not
hestitate.
``I'd shut the emergency . . . it's our business if we do
that, not the government's.''
Yet many Australians firmly believe - contrary to all
evidence - that medical care is better in the private
system. Robyn Green says her health was ruined by a
privately-paid specialist performing what was supposed
to be a routine gynocolocigal operation in a private
hospital, an operation which left her with masses of
interenal scars called adhesions, and in chronic pain.
Even so - and even though she has been unemployed for
seven years - she still scrapes together enough to pay
her private health insurance premiums.
Asked why, she appears suprised that anyone would
ask. ``The public system's much worse,'' she says. ``It
must be. It's free.''
Monday: How the Australian taxpayer supports private
medicine - and why.
Tomorrow: Ralph Klein Down Under: Australia's
bitter experience with privatized hospitals.