Craig Drummond: Action required to address rising demand

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Medibank CEO Craig Drummond says there is wide stakeholder agreement rising demand threatens to overwhelm the public and private health systems.

"Unless we address the growing demands on both the public and private health system, the future of our world class health system is under threat," he said on the company's website.

Mr Drummond said health costs are rising at 5-6 per cent every year, meaning governments will pay more for public hospitals and Medicare, while private health insurance premiums will continue to rise.

The Medibank boss also responded to a call from the prudential regulator for insurers to develop specific proposals to reform the sector. 

"We are up for the challenge," he said. "But the entire health sector must rally behind us and commit to reforms to protect the future of the dual public-private system for all Australians.

"And sometimes that can be a painful process, but it would be even more painful to see our public and private health system swamped."

Mr Drummond said Medibank is committed to reform and making the private health system more affordable through addressing a range of challenges, including out-of-pocket costs, increased transparency, prostheses pricing, exploring alternative models of care like at-home care, and focusing on prevention and chronic disease management.

"If we look at alternative models of care we must focus on care that delivers the best outcomes for patients. Why, for example, should a patient who can receive rehabilitation at home with the exact same clinical outcomes spend days on end receiving rehabilitation in a hospital? And why can’t we as a community do more to keep Australians out of hospital in the first place, especially through preventative programs that help people avoid or minimise chronic disease onset?"

According to Mr Drummond, research shows more "holistic care of at-risk patients" could reduce their rate of hospitalisation by 19 per cent and reduce costs by $1 billion across both the private and public hospital system.

"There is capacity to deliver better treatment and prevention programs for people with chronic disease, particularly with a focus on better health outcomes," he said.

He also said further changes to the pricing of prostheses could deliver another $500 million in savings.

"One option is for the Government to establish a national independent body to manage the procurement of prostheses. Any savings would be passed in their entirety to our customers," he said.