The private healthcare reps have welcomed suggestions private hospitals give patients a single bundled bill to help prevent bill shock,
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The proposal was made by a Grattan Institute report that on Tuesday, blamed "greedy" doctors and hidden private hospital fees for the rising cost of private health insurance.
Researcher Stephen Duckett pinned growing premiums on a handful of high charging specialists, inefficient private hospitals and unnecessary care.
"Private health insurance will continue its death spiral unless excessive private hospital costs and specialist bills are reined in," the report said.
"Insurers are in a vice, squeezed between rapidly increasing costs, and consumers - especially the young and the healthy - who baulk at paying premiums that are rising much faster than their incomes."
Private Healthcare Association boss Rachel David said the report had some good ideas, pointing to the recommendation to hand patients a single bill.
It said from 2022 private patients should get their bill as a single bundle, including the costs of doctors, prostheses, diagnostics and hospital stays.
They were weren't huge proposals and could be easily taken up by the industry and government, Dr David said.
"It's just a matter of someone taking charge," she said.
The Australian Private Hospitals Association says if private hospitals are forced to bill the patient in one bundle premiums will rise.
Chief executive Michael Roff said the proposal would place an administrative burden on private hospitals and make them "quasi-employers" of doctors, upping indemnity insurance with the costs passed on to patients.
"It sounds like a good idea in theory. In practice, I'm not even sure that it would be legal," Mr Roff said
Labor's shadow health minister Chris Bowen said the Health Minister Greg Hunt needed to get the Productivity Commission to review the sector
"Greg Hunt is fiddling while private health insurance burns," Mr Bowen said.
The report says premiums could be cut by 10 per cent if private hospitals focused on treating patients rather than keeping them in longer to recoup more money.
It identified up to to $2 billion a year in savings the sector could be making, helping pass on lower premiums to their customers.
Private health insurers should pay private hospitals on the basis of a national fee schedule, the same way public hospitals receive government funding.
The report says a small group of specialists were billing patients at more than twice the official fee schedule and often to the surprise of the patient, who had to foot most of the bill.
"The higher fees have nothing to do with the skill of the surgeon ... (the) small minority of specialists who charged more than twice the schedule fee are simply greedy," Dr Duckett said.
But he also pointed to private hospital patients staying longer than public hospital patients, as well as insurers paying for unnecessary care.
"The private health insurers should not have to pay for care that is of no or low value to the patient."
Women were also found to be copping higher out-of-pocket costs and receiving more medical services than those without private health.
Australian Associated Press
