One of the most senior heads of a Catholic healthcare system in Australia has warned Catholic health and aged care could be forced out of existence by federal policies.
By Anthony Barich
SOME Catholic health and aged care institutions will disappear within the next 10 years due to expected government reaction to the global recession unless tough decisions are made, the national head of St John of God Health Care said.
After revealing a bearish picture to Catholic Health Australia’s August 17-19 national conference in Hobart on the economic circumstances affecting the future of Catholic health care, St John of God Health Care group’s Chief Executive Dr Michael Stanford told The Record that healthcare bodies will need to upscale to remain viable and have the Federal Government’s ear in the public policy debate.
He said that even though St John of God Health Care’s revenue for 2008 was approximately $800 million and that it employs close to 9000 people, “We don’t think we’re big enough to deal with all the issues around hospitals and pathology moving forward”.
Major Catholic healthcare bodies like St John of God Health Care, and hospitals run by various congregations such as the Little Company of Mary and the Sisters of Charity Health System will come under increasing pressure to merge or take over smaller Catholic operations that cannot cope under existing financial conditions.
The pressure will come from expected government action in the near future, he predicted.
Chief executives of major healthcare bodies at the CHA conference lined up to say that while the current economic recession may be turning around, health and aged care would be a major consumer of the public dollar in the near future, especially with an ageing population.
Federal debt is expected to grow to $300 billion and the government believes it won’t be in surplus to start paying back debt until the 2015-16 financial year, Dr Stanford said.
And with the government wanting to restrict growth in outlays to two per cent per annum, “there’s not much room to move,” he added. He said Catholic healthcare providers expect the federal government to reduce its support for private health insurance in order to support the provision of public healthcare. Prime Minister Kevin Rudd was reported as responding to the Government’s National Health and Hospital Reform Commission’s recommendations that the $5.7 billion needed to implement them would, if they were agreed upon, need review of the private health insurance rebate and Medicare safety net.
If, as is expected, unemployment continues to rise, greater numbers of Australians will not be able to afford private health insurance, causing problems for the private sector.
Dr Stanford said this will lead to a “shakeout” of the private side, and many private institutions will sell out or disappear within the next 10 years.
“We know from the experience of the market dynamic of the 1990s that this is inevitable,” Dr Stanford said.
“We are ‘bearish’ about the next three to five years as there will be reductions in the private health insurance rate.”
Aged care is also likely to suffer, he said, if tough decisions are not made sooner rather than later.
“If the aged care sector doesn’t consolidate to work in a better way to free up some funds, members (institutions) of the aged care community will disappear as they can’t afford to make investments; Catholic operators might not be there in 10 years if the government doesn’t increase the funds,” Dr Stanford said.
The National Health and Hospital Reform Commission has said that the health and hospital system currently consumes 3.8 per cent of the Gross Domestic Product (GDP), which in 40 years is expected to rise to 7.3 per cent.
Much of this money is being spent on technology that is out of date by the time its effectiveness can be properly gauged.
Dr Stanford said that this development was necessary for hospitals to remain viable, but new technologies present problems for private health providers as they need to find the money to cover them, which could lead to a rise in premiums.
Pathology, which has not had a price increase in 11 years, will also be affected as the Federal Government cut Medicare funding by 4.5 per cent in the last budget.
This meant that St John of God Health Care, which employs 1100 people nationally in this area, had its annual revenue reduced by $4.5 million.
“If the Catholic sector wants to stay vibrant and vital there will need to be some tough decisions made, or parts of the sector will go out of business, which will be a bad outcome,” he said.