Health funds put profits before patients: AMA's Gannon

Australian Medical Association president Michael Gannon wants the federal government and regulators to check private health insurers' increasingly aggressive behaviour that he says puts profits above patients.

With Medibank Private releasing its annual results on Friday and Sonic Healthcare and Primary Health Care reporting yearly profits on Wednesday, political attention is turning to whether taxpayers are getting value-for-money from the government incentives paid to the private health industry.

Mr Gannon said although Australia's health funding was in need of genuine reform, taxpayer incentives to private pathology providers still delivered "bang for your buck".

"The truth is that we are actually seeing a contraction of the number of providers in private pathology," Mr Gannon told the National Press Club in his first address as new AMA president.

"Recently we've seen St John of God Health Care sell its pathology arm because it just couldn't make a profit out of it."

Global pathology business Sonic Healthcare reported  a 30 per cent increase in profits on revenue of $5 billion on Wednesday

The now-shelved bulk billing cuts became an election issue with Labor standing beside private pathology businesses opposing the Turnbull government budget cuts.

Mr Gannon said Sonic's pathology business in Australia contributed only a small part of the group's total revenue, which saw pathology earnings falling due to Medicare fee cuts and rising pathology centre rents. The more profitable parts of the business were Sonic's overseas businesses in the US and Europe and its medical centre business.

"The truth is that pathology has been squeezed so much, that only the very, very biggest providers with their economies of scale can deliver the services, and that's a problem going forward."

Basic diagnostic tests, like a cholesterol test or a chest X-ray, cost taxpayers between $20 and $40 and could prevent more costly conditions requiring hospitalisation and surgery such as heart stents that can cost taxpayers $40,000 to $50,000.

However, Mr Gannon was scathing about major health insurance funds delivering more accountability to their shareholders than their policyholders.

"If the actions of the funds continue unchecked and uncontested - especially their aggressive negotiations with hospitals and their attacks on the professionalism of doctors - we will inevitably see US-style managed care arrangements in place in Australia," he said.

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