A lack of theatre time to do complex surgery is frustrating some Western Australian plastic surgeons, who claim pricing agreements have de-incentivised longer operations.
By Cathy O’Leary
A stoush is developing between surgeons, private hospitals and health insurers over lengthy cosmetic surgery which is increasingly struggling to get theatre time.
Plastic and reconstructive surgeons in some specialties argue their access to theatre space in private hospitals is being reduced because their lengthy procedures are not generating sufficient returns from private insurers.
As a result, privately insured patients, many with painful and progressive medical conditions, are facing tougher hurdles to obtain essential treatment in private hospitals, with waiting lists for protracted surgeries growing every week.
That includes patients needing treatment for invasive skin cancers, the removal of painful breast implants, abdominoplasty, 360-degree body lifts after major weight loss, breast reconstruction after a mastectomy, and surgeries to prevent the progression of lipoedema.
Their concerns have been echoed by several leading professional bodies, including the Australian Society of Aesthetic Plastic Surgeons and the Australian Society of Plastic Surgeons.
Doctors blame the reduced profitability of these surgeries partly on the ranking system which some private health funds use to determine the remuneration hospitals receive from insurers for each procedure.
Banding categories were decided by a National Procedure Banding Committee, consisting of private insurers and hospital representatives.
Doctors cite knee replacements, which are usually a 45- to 60-minute procedure and attract a higher banding and therefore greater remuneration to the hospital than surgery after weight loss, or a breast reconstruction (six to eight hours for a bilateral reconstruction) after a mastectomy.
Australian Society of Aesthetic Plastic Surgeons vice president Dr Amira Sanki said the current system for determining remuneration to hospitals meant their agreements with private insurers for some procedures – usually involving long hours in a theatre and several days in-hospital after care – were not beneficial enough to them.
… it seems really unfair that patients who have paid their private insurance premiums for years cannot access treatment with a surgeon of their choice in the safe setting of a private hospital.
Getting the push
Some areas of plastic and reconstructive surgery were increasingly pushed out of the safe settings of private hospitals, she said.
Gastric sleeve operations, which often took 45 minutes and required a relatively short hospital stay, returned $10,500 to hospitals and were generally relatively easy for privately insured patients to access.
On the other hand, the more time-consuming belt lipectomy (also known as a lower body lift) returned $3500 to a hospital and was becoming increasingly difficult for patients to access.
“Hospitals are saying their agreements with private insurers for some procedures are simply not beneficial enough, Dr Sanki said.
“It’s understandable that the hospital has to make these tough measures because hospitals must remain financially viable.
“However, it seems really unfair that patients who have paid their private insurance premiums for years cannot access treatment with a surgeon of their choice in the safe setting of a private hospital.”
Dr Sanki said that in some cases a hospital might only agree to allow theatre space for some of the lengthy procedures if a patient was admitted as uninsured and paid for all costs out of their own pocket.
She argued that a fairer system would be for all insurer agreements to remunerate hospitals on the basis of time in theatre and hospital after care.
“We currently have a situation whereby a privately insured patient can have gastric sleeve surgery in a private hospital, they then go on to lose a massive amount of weight and need a follow up procedure to remove extensive excess skin but cannot access it,” Dr Sanki said.
“These patients, who have done all they can to improve their health, cannot be expected to live with all that loose skin which creates considerable problems for them.”
Operations cancelled
Along with blown-out waiting lists, more patients were finding that the surgery they had waited over a year or more for was cancelled at short notice.
In one case – a woman who was booked into a private hospital for a 360-degree body lift, liposuction and multiple hernia repair – was told the day before that her scheduled surgery could not go ahead.
The surgery did go ahead after her surgeon advocated for her, but not without considerable trauma to the South West grandmother who had organised time off work for herself and a family member to support her recovery.
West Perth-based plastic and reconstructive surgeon Dr Adrian Brooks said some essential procedures were at risk of becoming almost extinct.
Up until 2020, he did up to three body lift surgeries a week, whereas now he did one a month in the only hospital that permitted it. And whereas a body lift was generally one procedure, most hospitals now required it to be split into two. This shortened each operation and in-patient stay, but meant two operations for the patient.
Some abdominoplasty cases were being declined by private hospitals.
“I used to be able to book these patients into any of four private hospitals, now I’m down to one and even then, most patients are declined,” Dr Brooks said.
Australian Society of Plastic Surgeons president Dr Nicola Dean said reduced equity of access to essential surgical treatment in public and private hospitals was a growing concern.
She said there was inequity in terms of medical rebated procedures in private hospitals, which was partly due to bureaucratic processes.
As an example, many breast cancer patients who have had mastectomies could not access reconstructions as a consequence of private hospital operating lists.
She said a national uniform pricing regulation system for hospitals led by the Commonwealth Health Department could help, as current funding models were not transparent and varied widely.
Several private hospitals in Perth were contacted for comment but they declined or referred Medical Forum to the Australian Private Hospitals Association.
In a statement, the APHA said the National Procedure Banding Committee (NPBC) did not determine the remuneration hospitals received from insurers – only relativities between MBS procedures based on factors including labour, time in theatre, anaesthetics, consumables and specific high cost equipment. Each MBS procedure was placed in a theatre band based on these relativities.
Advice ‘ignored’
The APHA said the NPBC only made non-binding recommendations which were often ignored by health insurance companies.
“The amount paid to a hospital for any procedure is ultimately determined by each health insurer. One hospital will receive different payments from different insurers for the same procedure and one insurer will pay different hospitals different amounts for the same procedure,” it said.
HBF’s Executive General Manager Insurance and Health Services Dr Daniel Heredia told Medical Forum that the bulk of the fund’s contracting was done on a case basis, using the DRG system.
(The Independent Health and Aged Care Pricing Authority publishes the Australian Refined Diagnosis Related Groups (AR-DRG) to calculate public hospital funding on an activity basis, and this is also used in funding agreements between private hospitals and insurers).
Dr Heredia said that while the codes themselves did not change, the weighting did change, based on detailed data from all public and private hospitals, including consumables used for a particular procedure, how long it took, and how long patients stayed in hospital.
“For example, with joint replacements, length of stay keeps dropping, so unsurprisingly, the weight that gets applied to those procedures is slowly reducing over time,” he said.
“We think that it is a fair system because it’s independent of both the hospitals and the insurer, so as a matter of principle we don’t mess with that.
“Every two or three years when we go to the hospitals, we say that what is non-negotiable for us is that the new contract is on the most recent version of the DRG, because that should represent contemporary practice, recognising that there is a lag of a year or two.
You have to look at it as an end-to-end thing – some things make a lot of profit, others don’t.
Don’t cherry-pick
“But that tends to be a point of contention in the negotiations because hospitals like to pick the DRG version that suits their particular cases.
“What is happening, over time, is that with plastic surgery, the newer versions of the DRG system are starting to recognise that these cosmetic procedures do take longer and have more input costs, so what we’re finding is that the cost weight that is attached to a lot of these procedures is higher.
“If hospitals agree to the most recent DRG version, they’ll see an increase in their reimbursement for those procedures, but some hospitals are using very old versions – some 20 years old.”
Dr Heredia said he believed that hospitals should commit to being on the most recent DRG, because that meant they were being paid fairly and for contemporary practice.
“The other thing we would say as a matter of principle is that as a hospital you can’t pick the most profitable procedures, you need to provide a comprehensive service,” he said.
“Breast cancer is a perfect example of that. You can’t just say we want to do the chemotherapy and take out the lesion, but we don’t want to do the reconstructive work because it doesn’t pay as well.
“There are swings and roundabouts in all of this. There are some procedures where we’re paying way more than it actually costs, and there’s others where we might be paying less.
“And what the plastic surgeons are finding is that when you have situations where theatre time is scarce and there’s more demand than supply, hospitals are looking at it and saying ‘we have to make tough decisions and might cut out things that are not as profitable as others’.
“But you have to look at it as an end-to-end thing – some things make a lot of profit, others don’t.
“And while we try very hard not to mess with the DRG weightings, if there are particular pressure points, hospital operators should raise them with the funders during their contract process. We’re not hearing grumbles from the hospitals – it’s not being raised with us.”
Dr Heredia said it also had to be recognised that because a lot of the procedures in question were cosmetic, when there were scarce resources and limited theatre time, hospitals had to make decisions on urgent versus cosmetic surgery.
He predicted some of the cosmetic work would increasingly move into day surgery, or doctor-run type, facilities.
“We’re already seeing that – but I think we’ll see more of them done in purely cosmetic surgery facilities to manage that supply and demand,” he said.
Mount Lawley-based plastic and reconstructive surgeon Dr Paul Quinn warned Australia might find itself mimicking situations in other parts of the world, with a proliferation of mini operating theatres attached to a surgeon’s office, or complex surgical procedures being performed in under-resourced small peripheral hospitals or day surgeries.
“Patients who have paid their private health insurance premiums for many years deserve to be treated in a private hospital by surgeons with the appropriate additional 12 years of medical and specialist training,” Dr Quinn said.
“A hospital is the most appropriate place for patients to be having surgery of this nature.”