Private and public pricing

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A PwC analysis commissioned by the Medical Technology Association of Australia (MTAA) has found a 15.3 per cent differential between public pricing and private pricing of medical devices.

The report, which comes as tension grows during ongoing discussions led by health minister Greg Hunt on further pricing reform of prostheses pricing, shows a difference between public and private pricing of medical devices of $305.7 million. 

According to the MTAA, this is considerably less than the claim of $800 million.

“This analysis represents almost 80% of the PL expenditure and is the most comprehensive and robust data set that exist incorporating 6958 of the 10454 products on the PL," says MTAA CEO Ian Burgess.

The MTAA says a key reason for the differential is the purchasing policies of public hospitals, where prostheses are generally procured through tenders, while private hospital purchasing is generally based on a single purchase at a time based on surgeon preference.

It also attributes regulatory hurdles in the private sector that have the potential to delay market entry and the requirement for a significantly higher level of technical manufacturer support in the private market.

"The PL represents only 14% of PHI expenditure for hospital cover policies compared to hospital benefits which comprise 70% of the costs and medical service benefits which comprise 16% of these costs," it says.

"The growth in the average PL benefit has fallen by 20% in real terms since March 2007. This means patients are getting at least 20% better value from the PL than they were 10 years ago."

“MTAA is working with Government to deliver reforms which improve patients access to the best medical devices in the private system,” added Mr Burgess.