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Published on
24/06/2016
by Punchmedia
Medicare Privatisation and Health Services
With the Federal Election fast approaching and all the talk around Medicare and its possible privatisation we thought we’d take a look at the Health Services industry and what, if anything privatisation would mean for it.
The Health Services subdivision encompasses a range of industries. General hospitals make up about half of the subdivision’s revenue, with the remainder consisting of general practice medical services, specialist medical services, dental services and other health services. Subdivision revenue is forecast to rise at a compound annual rate of 4.1% over the five years through 2015-16 to reach $116.2 billion.Overview
General hospitals dominate the Health Services subdivision, making up just over half of the subdivision’s revenue. Revenue from general hospitals has grown slightly faster than the overall subdivision as hospitals maintained capacity while increasing throughput rates. Consequently, the number of patient separations (cessations of treatment) has increased, resulting in public hospitals attracting greater funding from state governments. Throughput rates have also increased for private hospitals as same-day separations have become more popular following elective surgery. Additionally, private hospitals have benefited from wider private health insurance coverage, which has broadened potential client pools. Public hospitals and not-for-profit private hospitals have no profit motive, resulting in substantially understated profit margins for the subdivision.Industry Growth
As Australia’s population size of older people has grown and the median age has increased over the past five years, an ageing population has been the primary factor behind health services demand growth. Older people, particularly those aged 65 and over, are more susceptible to injury, illness and disease.Ageing Population
Private health insurance coverage has increased over the past five years. An estimated 11.4 million Australians will be covered by private health in 2015-16, up from 10.3 million people in 2010-11. The surge in private health coverage, driven by Federal Government incentives, has resulted in revenue increases across numerous health service industries. Private hospitals have gained market share in the General Hospitals industry, with private health insurance growth exceeding increases in public hospital funding. Many health services that do not receive Medicare funding are benefiting from the private health insurance boom.Private Health Insurance
According to the Australian Institute of Health and Welfare, funding from all levels of government (including private health insurance premium rebates paid out by the Federal Government) makes up just under 70% of total recurrent health services expenditure. In 2011, the federal and state governments signed the National Health Reform Agreement. However, this was revoked in the 2014 Federal Budget, with the Federal Government transferring the burden of hospital funding back to state governments from July 2017. The Federal Government is also seeking additional cuts to other primary care services through its freeze on the Medicare Benefits Schedule, which is currently in place until July 2018.Public Funding Changes
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