Is Private Health Insurance or Doctors a Rip Off?

How can you save your money when using our healthcare services?

We have recently had some interesting media reports on the best value for money private health insurers, such as HBF and the least value NIB. We have become increasingly concerned about excluded procedures and significant patient gaps amongst these schemes.

It is important to note that a number of procedures and tests may no longer be covered by Medicare, which means that you may be further out of pocket if your private healthcare insurer declines to cover these procedures and tests as well. The RACGP Choose Wisely program highlights unnecessary medical treatments that doctors want banned. Being cognisant of this list may save you some time and money https://www.healthandlife.com.au/wp-content/uploads/2016/03/The-unnecessary-medical-treatments-doctors-want-banned.pdf.

Patient education is another good way of helping people navigate a complex healthcare system, and this campaign above appears to be a good start. However, there are reports that the public is getting angry at increasing health expenditure as it is becoming the second biggest household spend after the family mortgage. For many, health care is an opaque product that lacks transparency, and this is why people are starting to vote with their feet and hip pockets.

In particular, a recent article stated that over 500,000 furious Australians are considering dropping their private health insurance. The article names some providers that give the most value for money and some health insurers that provider the worst value for money.

The variability in these payouts can be easily resolved by a more open and transparent system of governance of the whole health care system, as mentioned previously on our site see Doctors set up to fail! .Furthermore, private health insurers, with the assistance of the medical profession could reduce the pricing of replacement joints and implants. In the longer term, we do anticipate some consolidation in the number of private health insurers.

After all, doing nothing will kill the goose that lays the golden egg for some patients. It will also reduce the freedom for patients to choose their doctor and hospital. If media reports that over  500,000 Australians are about to drop their private health insurance, something has got to give.

For some, it may be too late.

We thought Trump was funny, but may have a point about Government!

Of concern is the Government mooting GPs to be paid by private health insurers: Bureaucrats push for private insurance to cover GP visits. This none-too-subtle move towards managed care would see GPs in conflict with insurance companies, where they would not be able to advocate for a patient, as they would be subject to the financial pressures of insurance companies, who would legally have to put profits before patients. There was a recent 4 corners report on this very issue see Commonwealth Bank health insurance scandal see  http://www.abc.net.au/news/2016-03-07/comminsure-scandal-whos-who-four-corners/7226576.  Many will also be aware of such a scenario currently in practice in the US. We believe that this idea is an irreversible moral hazard.

It is interesting to note how specialists charge poorer people: What do specialists charge their poorest patients? Maybe a similar system of patient profiling can be used by GPs, if it is not already in place. Do we really need more red tape? Can self regulation work? Does more competition help or hinder access to more affordable healthcare?

As reported last week in  on the 8^th April 2016 at Sydney Novotel Darling Harbour, David Dahm is honoured to be invited to speak with an eclectic group of speakers. This includes the controversial  Dr Charlie Teo, who was voted Australia’s most trusted person in 2014 by Readers Digest subscribers and Professor Barry Boettcher, a blood expert who worked tirelessly to find the truth in the Chamberlain Case to prove she was innocent, along with a host of amazing speakers from across Australia all dedicated to a more open and transparent healthcare system. This will be a big, game changing event for Australia!

David will be speaking on a global and local solution to fix regulatory gaps in the healthcare system to better empower patients and providers.

Australian Doctor last week announced this event see https://www.healthandlife.com.au/wp-content/uploads/2016/03/Call-for-major-overhaul-of-medical-regulation.pdf.

If you want to attend visit http://hpara.org.au/

This is a quick reminder to everyone. Give your bank account details to your treating practitioner before July. Medicare will stop issuing cheques to patients. The change — announced in the Federal Budget last year — does not include Pay Doctor via Claimant (PDVC) cheques, which will continue to be issued.

Patients can register their bank account details:
• Online — using their Medicare online account via myGov, or the Express Plus mobile app
• Over the phone — by calling 132 011
• In person — by completing a ‘bank account details collection’ form available at humanservices.gov.au and putting it into a drop box at a service centre.

Source: Australian Doctor March 2016

There are some surprising and not so surprising statistics on the money that a Doctor earns compared to other occupations. The disparity between male and female practitioners is interesting to note. Clearly there are exceptions to the rule. We need to keep in mind that Doctors commit to a lot of training throughout their careers. There can be significant associated risks for not getting it right. High professional indemnity insurance, increasing complexity and regulation and high practice costs are all significant factors to consider.

Clearly with exploding healthcare costs, some are asking who are really doing well out of healthcare and is it fair? So we thought this might be of interest.

There are some surprising and not so surprising statistics on the money that a Doctor makes. Clearly there are exceptions to the rule. We need to keep in mind that Doctors commit to a lot of training throughout their careers. There can be significant associated risks for not getting it right. High professional indemnity insurance, increasing complexity and regulation and high practice costs are all significant factors to consider.

The following articles may be of interest.

Who earns the big bucks in medicine  

Specialists bleeding hearts or profiteers?

GPs scrape into top-50 earners list   

Before you get too excited about how well your doctor is doing, there are headwinds: see

Harsh reality: GPs face a future of doing more with less

GPs in particular have to start working smarter and not just harder in order to maintain both their incomes and a quality practice. If GPs ignore their practice, then the recruitment and retention of practitioners will become increasingly problematic. For more information on succession planning and its importance for your practice see https://thebusinessofhealthcare.com.au/2015/10/06/succession-planning-will-practice-manager-co-ownership-save-healthcare-practices/

As both State and Federal Governments continue to struggle for money, the medical profession is increasingly becoming a low hanging fruit opportunity.

Poor understanding, documentation or a less than wise frugal approach is landing some doctors and practices into hot water. To be fair, setting up and running a practice can be a complex affair. Even with the best advice money can buy, some advisers are not specialised enough to be across all issues which can have a serious and expensive knock-on affect. The following are examples of this.

In a Practice, the employment of registrars will increase payroll tax activity, which then may trigger a full-scale enquiry into all Practice contractors.

Furthermore, a new Australian Tax Office publication called “Allocation of profits within a professional firm” indicates that they are looking for a test case. The central message here is do not operate a practice company or trust. You cannot retain profits to keep your tax bill down.

We did warn readers last year and it did make national headlines see https://thebusinessofhealthcare.com.au/2014/09/14/tax-audit/

We are aware that in at least two States, the State Payroll Tax offices are starting to investigate when employee registrars become contractors after they finish their training.  The national training bodies mandate this practice (not for payroll tax reasons), forcing practices to employ trainees. This mandated practice adds risk to practices seeking to hire trainees. This can have a seriously negative affect on the training program.

Of even greater concern, employment of registrars is spreading out: extensive and detailed questionnaires from the State Payroll Tax offices are being sent out to doctors and allied health workers working from the same practice.

Sometimes it is hard to unsay things once a questionnaire is completed. It can be an embarrassing, expensive and arduous process to rectify any misunderstandings, especially if the Tax Offices are attempting to contact your former contractors or healthcare professionals.

Australian Tax Office – Do not use Practice Companies or Trusts to retain earnings

In March 2016, the Australian Tax Office released a new publication called “Allocation of profits within a professional firm” in which they indicate that they are looking for a test case. The central message is not to operate a practice company or trust. You cannot retain profits to keep your tax bill down. For decades, we have recommended against this type of tax planning as it offers no real asset protection or succession planning benefits. Furthermore, you are paying unnecessary fees to your accountant and other compliance costs.

A number of advisers have used this strategy so they could distribute your personal services income money to family members at a lower tax rate via a family or discretionary trust, or retain profits in the medical practice company and only pay tax at 30 percent. It is clear from the publication that the Australian Taxation Office considers this high risk behaviour.

There are legitimate ways to achieve this result, which meets your asset protection and succession planning needs by using service trust arrangements that are commercially realistic and comply with this publication. There are no short cuts.

You know if you may have a problem – simply check if your practice letterhead has “Pty Ltd” or “as trustee for” on your letterhead or stationary.

If this is the case, please consult your adviser as the paper from the Australian Taxation Office can be quite a complex read.

For more information see https://www.ato.gov.au/Business/Starting-your-own-business/Reporting-and-paying-tax/Income-and-deductions/

If you require a practice restructure watch our latest video on Doctor and Staff Contracts, see “Why Restructure Now” before the end of the financial year and if you need further confidential advice without obligation contact us at pa@healthandlife.com.au.

Finally, after a number of requests, thanks to our friend Gary Smith from Armchair Medical and the East Melbourne PHN, we have produced a live recording from the East Melbourne PHN seminar series David Dahm recently presented on Doctor and Staff Contracts. We hope this video will clear up any common confusion between contactors and employees as well as commonly asked staff Award issues such as overtime and penalty rates. We also address many commercial and taxation issues when it comes negotiating doctors or provider contracts.

Please seek independent legal and accounting advice in writing before acting on any information or contact us at no obligation at pa@healthandlife.com.au. This must not be recorded without written permission.For the videos see http://www.armchairmedical.com/david_dahm/.

This is a new section. These are the latest articles on practice tips such as patients are their own worst enemy to the latest practice financial incentives. They include updates on how the national media have reported issues from our news alert series which has vindicated key observations we have made or key areas to watch that will affect you.

April to September 2016

January to March 2016