The Move Towards PBS Privatisation – It is a Possibility and Could Provide a Wrecking Ball for Community Pharmacy

I am always suspicious of government motivation when they move the chess pieces around the board without an appropriate explanation.
Dating back to the start of the Coalition taking power there was discussion that highlighted the poorly defined role private health insurance plays in the funding and delivery of Australian health care, and how government might allow this role to expand.
There has been no open debate on how Medicare will be changed to accommodate changes to the private insurance system and evolve to a more integrated public-private system that can improve the efficiency in health care financing.

The prevailing wisdom is that people purchase private health insurance to have their choice of doctor and hospital facilities, but as University of Sydney researchers  have found, it is really more about shorter wait times for hospital procedures, perceived quality of care and “peace of mind”.
Having private health insurance provides the ability to “jump the queue” to access a range of elective procedures in private hospitals. But this comes at a price for all patients.

People with private health insurance are likely getting services ahead of people without insurance but with greater need. The private patient who gets their orthopaedic or cataract surgery within weeks rather than months will very often end up with substantial, unexpected out-of-pocket costs.
About 50 percent of the Australian population has private health insurance can expect higher bills from April 1 2016, as premiums increase by an industry average of 6.18%.
The increase varies across different funds, ranging from 3.98% to 7.92% and will add around A$200 to A$300 a year to the average cost of hospital cover for families.

The increase is also two to three times higher than inflation and this type of increase has been happening each year since 2009.
So, how can the government approve such a hike?
And how much profit are private health insurance companies making?

Pharmacy, because its prescriptions are substantially funded through the PBS system does not seem to be considered for funding through private health funds.
But since the PBS has reached the end of its product life cycle and has become commoditised, will the government take us down the privatisation road?
It is quite conceivable because we seem to be following a pathway resembling the US health system.
Under that system health insurance organisations form up as patient benefit managers (PBM’s) and under that banner they purchase services from health professionals using draconian measures to reduce payments to those health professionals, which include pharmacists.
Using their strong financial “clout” they move into buying into ownership of pharmacies, private hospitals and medical centres which increases their considerable asset value and simultaneously reduce insurance premiums to their clients if they use the PBM – owned facilities.
This increases pressure on all other health facilities as they are unable to compete within this closed market unless they are part of a similar PBM operation.
i2P would remind our readers that PBS and Medicare are just government-owned PBM’s and there would be strong competition by health insurance consortiums to buy these public assets, allowing government to opt out of its health obligations to a level of subsidy they determine as appropriate.
This generally means that middle class and lower socioeconomic demographics pay a disproportionate amount of their income to fund their health.
To i2P this is a cowardly way of managing the future health of Australia which has a large demographic of citizens over the age of 64 peaking to about 25 percent of total population by 2030.
Chronic illness is a feature of this demographic so a higher expense in all areas of health.
This population type is thus very vulnerable and hence the secrecy surrounding any changes to the health system, particularly Medicare.

Narrowing the focus to pharmacy it is clear that PBS will not provide adequate returns to community pharmacies and that a private dispensing system built on generic drugs and compounding will have to emerge.
Global drug companies are already taking steps to increase generic drug prices and branded drugs to very high levels and are continually taking “strikes” at compounding pharmacies.
Nonetheless, our pharmacy leadership organisations need to sharpen up their political weapons to offset the other problem in our political mix, and that is the problem of mainstream media carrying false stories involving pharmacy that serve to degrade trust and integrity perceptions.
i2P has mentioned before that an investment into a pharmacy newspaper delivered through community pharmacies could counter some of this adverse publicity.

Now it is also a fact that Australia’s largest health insurance fund, Medibank, was privatised not so long ago.
Why would that have occurred?
Medibank was Australia’s largest health fund, it was highly profitable and it served as a brake on premium increases by other competing health funds.
On privatisation we saw hundreds of benefits disappear concurrently with premium increases.
We have now reached the point where, on April 1 2016, many Australians will eliminate the “extras” component of health insurance completely, because it now does not represent value for money.

Pharmacists must now look outside their four walls and ask themselves why it has also been necessary for yet another enquiry into pharmacy concerning location rules and ownership rules.
Also, with the investigating committee stacked against pharmacy by two antagonistic votes out of a total of three votes, already predetermined.
Surely it only makes sense when compared with all potential moves on the health chess board.
Pharmacies are destined to be engulfed by patient benefit management organisations if the current moves by government are allowed to move in the direction they are already moving.
Your only defence may be to become part of a pharmacy consortium and run your own PBM.
To summarise, you may need to prepare strategies pre and post the next election.
This may mean revisiting the CAPS strategy and organising such a group now to become politically disruptive.
The following is a check list of items that will have to be put in place prior to government taking action by stealth:
1. Form up a CAPS-2 umbrella organisation that can present a unified pharmacy front organisation.

2. Fund a news magazine publication as a means of getting an appropriate pharmacy message to the general public.
Deliver through community pharmacies.
This has to be done because mainstream media prints blatant lies about pharmacy to create a negative public image of pharmacy, and to facilitate damaging coalition policies against pharmacy.
Communication to the community must be maintained at all costs.

3. The first message to get out is the issue of location rules and pharmacy ownership. If pharmacy is formally engaged in primary health care then it must embrace aspects of public health, including emergency health.
Public health services are now initiated locally through CVS pharmacies in the US, where the face of a former public health local office is now a CVS pharmacy linking in with a single government regional office.
This can only happen with an appropriate distribution of pharmacies which Australia already has.
In the US the concept of a patient-centred home has been left behind, and in its place there is now a patient centred neighborhood.

With the Location Rules investigating committee having a 2:1 majority in favour of dismantling the location and ownership rules, there is not going to be any impartiality associated with the result, sure to be adverse for community pharmacy.
And that will be a disaster for Australian pharmacies already weakened by a range of PBS financially disruptive decisions.

A recent media release by Walgreens-Boots Alliance group that they have started to revisit the Australian market to either set up a franchise for their products but with a preference to own their own pharmacies to me, flags that they have already been in discussion with our health bureaucrats and have sufficient confidence to be making public statement in preparation for their arrival.
And don’t forget Roger Corbett who is currently sorting out Woolworths management prior to another attack on pharmacy ownership.
This means government plans are well under way and pharmacy must prepare for a long and bitter fight.
Make it an election issue!

4. Plan a Patient Benefit Management (PBM) organisation that embraces all of health, or whatever component can be secured.
Remember PBM’s source drugs and services from the cheapest supplier – their own.
This has to be done to counter a privatised PBS that will be owned substantially by Medibank, which in turn will own its own national chain of pharmacies.

This will all be done under the banner that Australia cannot afford the current health system, funded by government.
What replaces our current system will be very cruel towards the very people that are vulnerable – the 64+ years demographic.
And the very bitter lesson that pharmacy takes from all of this is that you cannot trust any government not to be disruptive.
It is time for pharmacy to deal only with the people that matter most – the patients.
If any organisation wants to “bulk bill” as a “middle-man” you are simply setting up that middle-management structure to own your business in the future.
That is unacceptable.

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