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Doctors must stay at their posts while Canberra searches for a cure

By Tony Abbott - posted Friday, 10 October 2003

As the new Health Minister, my job is to ensure that Australians continue to receive high-quality, affordable health care. The most pressing initial challenges are tackling the medical indemnity crisis driving doctors out of the public hospital system in NSW, and strengthening Medicare so that everyone has reasonable, affordable access to a local doctor.

Despite the problems, Australia has a good health system compared with other countries. Unlike Britain, we have a vigorous private sector that takes the pressure off public hospitals. Unlike in the US, access to top-quality health care does not depend upon private health insurance.

After Japan and Switzerland, Australia has the highest life expectancy in the OECD. After Japan, Switzerland and Sweden, Australia's people have the longest healthy lives in the OECD. Even so, governments can never be complacent about the state of our health system because health is important to everyone.


Around the world, health budgets are under pressure. Patients invariably expect more than society can afford. People are living longer and in better health but medical advances don't come free. In Australia, health costs have increased from 8.1 to 9.3 per cent of GDP in the past 10 years despite our comparative success at controlling costs.

Significantly, many doctors feel that price discipline has been at their expense. Doctors work long hours in stressful circumstances for their comparatively high incomes, and many also do honorary work for sports clubs and professional institutions. They resent being found negligent when operations go wrong, even though they have followed accepted medical procedures, and believe that the threat of litigation is inhibiting medical advancement and forcing them into early retirement.

When one Sydney orthopedic surgeon began practice in 1990, his medical indemnity insurance was $1800 a year (equivalent to the scheduled fees for performing 3.5 knee arthroscopies). This year, his medical indemnity insurance totalled $125,000 (or 250 knee arthroscopies at the scheduled fee), including a government levy to cover back claims against UMP, the chief medical indemnity insurer.

For many doctors, the IBNR levy (claims "incurred but not reported") was the straw that broke the camel's back. If they take effect, the resignations of more than 70 surgeons will cripple Sydney public hospitals.

The government has committed more than $350 million to reduce doctors' medical indemnity liabilities. It is subsidising the premiums of high-risk specialists such as neurosurgeons and obstetricians, meeting half the cost of medical indemnity awards exceeding $2 million and organising a scheme so doctors won't be personally liable for any award exceeding $20 million. The government has also exempted doctors older than 65 from the levy.

To stop doctors resigning, the government has announced an 18-month moratorium on IBNR levies exceeding $1000 and a policy review process to ensure a more affordable and sustainable medical negligence system. This week, I will again meet the Australian Medical Association and other doctors to consider the scope, duration and personnel of this review. Any resignations which proceed can't be attributed to the IBNR levy.


The government won't keep doctors on tenterhooks for 18 months but does expect them to stay at their posts while it demonstrates it is serious about making progress.

Changes to NSW tort law largely restore the "Bolam principle" that doctors can't be found negligent for following accepted medical procedures. No cases have come to judgement under the new rules and doctors fear that the legal system might continue to operate on the basis of compensation to victims rather than any actual fault in procedures. But the new laws seem to be making a difference, with claims to UMP reportedly dropping from 60 to 15 a month since July last year.

Over the past four years, the bulk-billing rate has dropped from about 73 to 67 per cent of visits to the doctor. Bulk-billing rates vary greatly so that access to a bulk-billing doctor often depends on where people live.

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This article was first published in The Sydney Morning Herald on 7 October 2003.

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About the Author

Tony Abbott is a former prime minister of Australia.

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