Addressing High Specialist Fees in Australia's Healthcare System

In Australia, patients frequently face substantial out-of-pocket payments to see private specialists, with average annual fees around $300 and much higher costs per appointment, especially when surgery or hospital treatments are involved. This financial burden compels many to either struggle with payments or turn to the public hospital system, where outpatient specialist wait times can extend up to six years. Importantly, private specialist consultations do not require private health insurance and are common even outside affluent demographics and in regions where private specialist care is the dominant or sole option. Specialist fees in Australia are not regulated by the government, allowing specialists to set their prices freely. This system presents two core issues: market power and information asymmetry. The scarcity of specialists, exemplified by limited training opportunities and geographic monopolies, allows substantial fee inflation. The average taxable income of specialist surgeons highlights this market dynamic, creating higher public hospital staff costs as they aim to retain experts. Concurrently, patients lack the medical expertise to judge the quality of specialist care and often associate higher fees with better service, which does not correlate with the actual quality provided. Medicare reimburses a portion of specialist fees through the Medicare Benefits Schedule (MBS), with different rules for inpatient and outpatient care. For inpatient care, privately insured patients receive partial coverage based on schedule fees, with insurers covering most of the remainder; however, gaps can arise if specialists charge above these fees. Outpatient specialist services in private rooms receive 85% Medicare rebates, but private insurers cannot cover the balance. Notably, Medicare schedule fees have lagged behind rising specialist charges, suggesting the need for updated, fair rebates aligned with inflation indices. Addressing high specialist fees requires more than adjusting Medicare rebates; it calls for regulatory mechanisms. Proposals include linking Medicare rebates only to specialists charging fees within a reasonable limit above indexed schedule fees, effectively excluding subsidies for excessive charges. Enhancing transparency by publishing specialist fees, quality indicators, and wait times can empower patients and referring doctors to make informed decisions, mitigating the misinformation that higher costs equal superior care. Although the Medical Costs Finder website exists, its lack of comprehensive quality and wait time data limits its utility. Further policy recommendations emphasize increased public funding for specialist outpatient clinics, especially for high-demand fields like cardiology, dermatology, and psychiatry. Without intervention, financial barriers may worsen, leading to reduced access to necessary specialist care for many patients. This multifaceted approach addresses systemic market failures to promote affordability, accessibility, and transparency within Australia's specialist healthcare market.