Competitive Tendering And Bid Seeking Of Health Care Is A Proven Failed Strategy

Competitive Tendering And Bid Seeking Of Health Care Is A Proven Failed Strategy – 16 August 1999

Moves announced by Medical Benefits Fund of Australia Ltd (MBF) to establish a network of hospitals and day surgeries based on “competitive tender seeking bids” is a proven failed strategy for lowering costs and maintaining quality of health care, Executive Director of the Australian Doctors’ Fund, Mr Stephen Milgate, said in Sydney today.  (ref: MBF Media Release 5 August 1999)

“MBF in announcing the establishment of its own health care network has adopted the American Health Maintenance Organisation (HMO) model which in effect restricts MBF policy holders to using the services supplied within that network or alternatively pay directly outside of their insurance cover for non-networked services, ” said Mr Milgate.

“In the US these networks are run by managers (Managed Care) who ruthlessly enforce cost control and health care rationing to produce bottom line profits.  The patients who have bought into this network find that it is too late or too expensive to opt out once they realise what is being delivered.”

“The justification for this aggressive rationing of health care is that it keeps costs down and premiums affordable.  Sadly, in the US this has not proved to be the case and annual premium increases of 15% are not unusual.” (eg  “HMO to hike rates up to 15%” The Boston Globe. 29 July 1999)

“The problem with managed networks is that the management costs start to eat into the health dollars which would otherwise be used to treated patients.  As the costs of managing the network grow, the temptation to ration health care by aggressive tendering and ‘lowest price wins’ bidding is overwhelming.  Patient backlash soon follows as choice is restricted.”

“Under Managed Care much executive time and money is put into complex contract negotiations as well as measuring, coding, and auditing complex costing formulas under which contracts are based.  All of these costs are taken from contributors premiums and add nothing to treatment.  It has proved to be a very complex and bureaucratic system with additional layers of management at all levels.”

“Under competitive tendering patient interests become secondary in the brawl between competing business interests.  The patients health care needs are lost under the weight of contract negotiations and infighing over upcoding or downcoding of patient illnesses.”

“I am staggered that MBF have decided to take, what I believe, is a Managed Care direction at a time when the evidence indicates that Managed Care produces noadditional benefits for patients.  Managed Care ultimately and unnecessarily adds to health care costs and to patient’ discontent,” said Mr Milgate.