00:00We are reaching a point of crisis that has been waiting to happen for quite a while.
00:08In the past couple of years, we have seen struggles in the private healthcare sector
00:14and hospitals have been closing over 60 in the last couple of years and Healthscope has
00:19been clearly under the radar and under a lot of pressure to keep its activities.
00:27The reasons are many are profound, some are related to the inability of the current funding
00:32model to sustain the demand for healthcare services and clearly there is a funding issue
00:39also that relates to the inability of private insurers to really make up the increasing costs
00:45and the rate of the increasing costs in the healthcare sector, in particular in the private
00:50system with a very, very, very problematic issue that relates to the workforce and the
00:58fact that they are very stressed and they are not as many as we wish them to be.
01:03So this is indicative of not only issues within the company, but broader issues within the
01:09sector and the model that we've got in Australia, this blended model that we've got in Australia?
01:14I think largely the reason has to be identified and researched in the structural underlying models
01:22in the Australian public-private mix.
01:25Certainly Healthscope has faced multiple issues because of the structures that has in place,
01:32the infrastructure that it has adopted.
01:35That doesn't really appeal anymore or at least it doesn't also in terms of its long-term viability
01:45or interest from the private insurers.
01:48They are looking to deliver care in different ways and that means that they're not prepared
01:55to pay for traditional types of care, which are very much needed because the private hospital
02:02sector does respond to an important offering in the Australian system, which is in fact supplying
02:10elective services that are quite important to the community.
02:14So we are really at crossroads here.
02:17There is, on the one hand, a private hospital system that needs to deliver on public entitlements,
02:23and that's what the current structure overall has built it for.
02:29And on the other hand, there are private insurers that are commercial entities, for-profit, listed
02:35companies that need to look at different care models that satisfy their basis, their shareholders.
02:42So there is a bit of a problem there.
02:45It's structural, Healthscope is one of the conglomerates that is facing these issues.
02:51It's not going to be, in my opinion, the only one or the last.
02:55And clearly the government has the responsibility to step in, look at the funding model overall,
03:01and try to create a framework that really allows both the private providers and the insurers,
03:07and perhaps other forms of funding to actually step in and serve the community as the demand rises.
03:15Yeah, so you're saying this is indicative that, in Australia, we're at a crossroads in terms of our health system,
03:22and the government needs to look at the funding model.
03:25What does, what needs to happen with that funding model?
03:29Well, look, there are various ways we can look at this.
03:32The approach has been not to look at taxation.
03:36Now we have a new government at the Commonwealth level.
03:40They could look at how that could be tackled.
03:44Of course, there is, you know, another issue there, which has to do with the fact that we are federal.
03:50We have a federal system with multiple jurisdictions.
03:53So what could be the role of states going forward in providing further assistance and maybe participation as well?
04:02Maybe something that we could see happening in this particular case.
04:06Of course, the big question is Lscope.
04:08Will they be able actually to find the buyer?
04:10Certainly the infrastructure is there, but also the debt is there.
04:14What kind of buyer would come in, possibly an external buyer that has and can leverage from global perhaps or national resources and funders as well?
04:27So there are many questions there that need to be answered.
04:30But in reality, you can solve it in very two simple ways.
04:34Either you raise taxation and find the increasing cost of healthcare,
04:39or you completely reconsider the foundations of our system and try to actually strengthen our insurance framework by providing more financial instruments and abilities for health insurers actually to be able to cope with the increasing healthcare costs.
04:57At this point in time, all this is very disconnected.
05:00And this type of crisis, let's call, which are really important to tackle because of patient care and the risk they face, but also for the workforce, are really something that we're going to see.
05:13And we have been seeing for quite a while now.
05:15In his media conference this afternoon, the CEO of HealthScope identified one of the issues as being the private health insurers squirrelling away money that should have been pumped back into the system.
05:28How much of a factor was that in this?
05:31Well, look, the reality of it is that the private health insurers are acting rationally.
05:36They are commercial entities.
05:38They are operating in the way they are set to operate.
05:42So we can't expect different things from insurers in terms of being hard bargainers.
05:48The other side of the coin is, of course, to ask the question to private providers.
05:53Why are costs increasing so much?
05:56Is that due to the fact that we are maybe paying too much for healthcare compared to other contexts or other countries, even compared to the public sector?
06:05Is it a supply, a volume issue?
06:08Maybe we don't have enough doctors, nurses.
06:11We need to actually open up even our borders to attract more brains from overseas.
06:17And then there are all sorts of moral questions because everybody everywhere in the world is facing very similar challenges.
06:24So it is a little bit a situation where everybody's wrong and everybody's right because they're set up to behave in a certain way.
06:34That is why the ultimate responsibility sits with government, Commonwealth and states to find out and create and think about a framework where actually they can find a balance in these relationships with appropriate and efficient funding for it.
06:50And you're saying that the government and the people responsible for this need to take a really good, broad look at the system, investigate what needs to change.
07:02And if that doesn't happen, hospitals are likely to close.
07:07I think, look, nobody really can tell what will happen in reality.
07:13But the truth is that we have been seeing closures over the past period.
07:18And it is clear that the private hospital sector is in crisis.
07:23The Commonwealth has done a wonderful job led by the Department of Health Chief Health Economist Emily Lancer showing, in fact, that we have issues that we need to deal in the funding of private hospitals.
07:37So the reality of it is that it may be the case that we will see more closures going forward if we don't face the issue structurally.
07:50The way in which we dealt with the increase in health care costs so far has been largely devolved to individuals and their ability to pay.
08:00And that's fine if it's for things that are not public entitlements, but the private hospital sector plays a function that it's public.
08:08You know, these are entitlements that are considered public.
08:11In fact, they attract, if they are insured, a lot of subsidies.
08:14So what is it that we want to really pay for for a community?
08:18And if that is attracting subsidies like the ones that are received by private insurers, ultimately we have to find a community response to this problem and find a way to, in fact, have enough resources to provide a fair shot to everyone that needs elective care.
08:37And just finally, the company HealthScope is adamant it'll be business as usual at the hospitals and there will be no redundancies.
08:44Is that realistic or likely?
08:47Yeah, this is a very good question.
08:49Look, I think the assurances, as we all know, are all good and fine.
08:54We always hear them, especially when there is a financial injection of the one of the kind that we just saw from the Commonwealth and other financial institutions.
09:05The truth is that we have to watch this space very closely, don't distract ourselves because the reality is that when you have a strong, very significant exposure in terms of debt, that's where companies start looking at intervening.
09:26So workforce and also closing some facility, merging them, integrating them, which might mean intervening on the workforce.
09:33That's why it's important to watch this space because that will deteriorate the quality of care.
09:39And that's the last thing we want in a system that it's already in crisis, in my opinion.
09:44So at a very close direction, I want to go to the right now.
