Loading Disturbing stories emerged of people being deliberately targeted at their most vulnerable moments. "I asked her to leave because I was feeling so unwell, but she refused until I gave in," says Kirsty of the admin person she was forced to deal with at a Sydney hospital while ill with severe and acute pneumonia. "I signed [to use private health insurance] so she would leave because I needed to sleep and my head was pounding. I am a lawyer and she used duress and preyed on my weakened state." How did our public hospital system come to this? According to the private health insurers, the problem starts with the sector being used as a cash cow by an underfunded public hospital system, which is - in turn - driving up the cost of health premiums.

Health Minister Greg Hunt, whose role includes keeping the private health insurance sector viable, has sided with this view. A discussion paper in 2017 reported on the rapid growth of private patients in public hospitals driven by the "extensive efforts" to make patients go private which is driven through hospital emergency departments. Minister for Health Greg Hunt during Question Time at Parliament House. Credit:Alex Ellinghausen “The government is concerned at the rapid growth in the number of privately insured patients treated in public hospitals," he says. "This issue is contributing to the increased burden of private health insurance premiums on Australian families, [and] longer waiting times for public patients." But the worry is that it isn’t just private health members who are left worse off by this new trend. Public patients in public hospitals wait twice as long for elective surgery compared to private patients in public hospitals. Statistics from the Australian Institute of Health and Welfare for 2016-17 show the average waiting time for public patients in public hospitals who needed elective surgery was 42 days, but for patients who use their private health insurance it was only 21 days.

Think-tanks such as the Grattan Institute are disturbed by this trend, which potentially creates a two-tiered public health system that favours the privately insured. “This is a really serious issue and we ought to be be tracking it much more closely,” says the Grattan Institute's health program director Stephen Duckett. Loading But for many of the patients entering our public hospitals with private health insurance, it certainly doesn’t feel like they are on the top tier. Lea Young was in a bike collision in January. She was alone in the emergency at a hospital on the outskirts of Melbourne when she was first approached by an admin person to use her private health insurance.

Young, who had a fractured leg and was already on painkillers, declined as she was worried about the out-of-pocket expenses she would face. She was approached by admin staff again that evening and again declined. The next day Young was fasting before an operation and was being briefed by an orthopaedic surgery team when an admin person intervened and explained that the surgery had been postponed indefinitely. Lea Young recovering at home. Credit:Eddie Jim “I think it is absolutely appalling you can do that to somebody,” she says. “The thing I find really disturbing is that everyone seemed to comply with that,” she said of the other staff. But the admin person offered another option. If Young went private, she could be transferred to Knox Private Hospital and be operated on that day. She was also given the assurance that she would face no out-of-pocket expenses.

More than a month later, Young, a Scouts leader and fitness instructor, is still fighting the hospital over expenses which she is now liable for, due to her stay at the public hospital now being under private cover. This does not include the cost of her continuing rehabilitation which is no longer covered by the public health system either. “I am appalled at the hospital's pressure tactics. I consider myself a well educated person capable of advocating for myself, but when caught at a vulnerable time, under the influence of pain medication and under threat of treatment being withheld I felt I had no choice,” she says. A nurse who works for the operator of that hospital, Eastern Health, says: "We are pressured to get patients to hand over their private health insurance details. It is seen as a high priority when admitting a patient to hospital. This has been happening for a few years now and there is often no benefit to the patient." One thing everyone agrees on is that the problem lies with the formula that determines the funding public hospitals receive from Commonwealth, state and private sources. Federal funding varies depending on whether the patient is public or private. This accounts for the fact that hospitals will receive funding for private patients from private health funds.

A number of states, including Victoria, NSW and Queensland do not discount their funding adequately to account for the private health insurance contribution. It effectively means private patients are worth more to public hospitals than public patients because the hospitals get more money for them. NIB chief executive Mark Fitzgibbon likened the situation to the behaviour uncovered by the banking royal commission and says this will continue while private patients are worth more to public hospitals. “You show me a bad incentive and I’ll show you a bad behaviour,” says Fitzgibbon. “The pressure that people in the public system are being put under to extract this funding is just enormous.” NIB CEO Mark Fitzgibbon. Credit:Daniel Munoz This is why patients entering many public hospitals will now see the signs like the one at Melbourne's Royal Children's Hospital: Do you have private health insurance? The sign usually includes the assurance that it will enable the hospital to continue improving patient services. The hospital did not reply to enquiries as to how the hospital ensures this money is used for this purpose.

An email sent by a nursing unit manager to ward nursing staff at a Sydney hospital last year provides a stark example of how the strong incentive to make patients go private has penetrated to the front line of our public hospital system. "We raised 113K of revenue last month!" says the email. "Thank you all for your efforts in placing our private patients in a single room. As always, Clinical Need will always take priority with our single rooms." Both Victoria and NSW have denied reports that they have set targets in terms of the revenue public hospitals have to generate from other sources such as private health insurance. Victorian Health Minister Jenny Mikakos denies there is a problem in her state saying only a small number of private patients were admitted to Victorian public hospitals. Ahead of the NSW election this month, Health Minister Brad Hazzard said: “The NSW Health system is funded by a record budget of $25 billion in 2018/19."

In relation to the allegations of pressure tactics being employed on patients, Hazzard says: "In no circumstances should any patient feel pressured to sign on as a private patient, it should entirely be a matter of individual choice.” The representative body for the public hospital sector, the Australian Healthcare and Hospitals Association (AHHA) has said there is no hard evidence to back up the allegations. It says the real problem is that health costs are rising faster than inflation and population growth, and the "vertical fiscal imbalance" created by the fact that states have to deliver public hospital services but lack the capacity to raise all the required funds. According to the latest data from the Australian Institute of Health and Welfare $69.1 billion was spent on public hospitals in 2016-17, an increase of more than $1.8 billion on the previous year. The contribution from the states and territories was flat at $27 billion. By comparison, Commonwealth funding grew 6.2 per cent, in real terms, to $22 billion. Over a 10-year period, the states and territories have increased their spending on public hospitals by 3.4 per cent a year, on average. The Commonwealth funding has increased 4.6 per cent a year on average over the same period.

Private health spending on public hospitals reached $1.2 billion in 2016-17. Everyone agrees that any solution to the problem lies with the Council of Australian Governments (COAG) meetings where the states, territories and commonwealth meet to reach agreement on issues such as public hospital funding. “It needs to be driven at a COAG level because any change in funding arrangements between the state and Commonwealth, any change in funding models, needs to go to COAG,” says Fitzgibbon. While Hunt has pushed the issue at COAG meetings in recent years, the Commonwealth, states and territories have yet to reach a solution. And with a federal election looming, the issue has been put on the waiting list.