Private finance

Australians have access to a publicly funded health service, with some charges. Hospitals are funded largely on the basis of case-mix contracts and costs per diagnosis-related group.

Fees for seeing doctors are reimbursed at a rate of 85 per cent of the schedule fee (though a GP or specialist may charge more than this) and many doctors bill the Medicare programme directly for this 85 per cent, leaving the patient with no charge at all.

Doctors often work for numerous hospitals as visiting medical officers and see outpatients outside hospitals for a fee. A few salaried consultants and the junior medical staff, as well as nurses and other staff, are directly employed by hospitals. Universal health benefits are relatively new in Australia, having emerged and been developed over the past 20 years. The national Medicare system was preceded by much wider use of private insurance.

Recent Australian governments have watched the level of private insurance fall from 60 per cent to 30 per cent and are concerned at the level of costs falling on the public sector.

One policy initiative to reduce costs and encourage the use of private care is co-location, putting private beds on public hospital sites to get both doctors and patients to use them. This has stimulated interest from some private providers in greater involvement in the public sector.

A PFI-style approach has also developed, notably in Victoria, one of the leaders in the reform of public services, as well as in Modbury.