Private health insurers in Australia have been buying up general practice (GP) clinics around the country, and doctors are growing concerned about the implications of this vertical integration for patient choice and care.

Medibank, the nation’s largest private health insurance company, now fully or partly owns over 160 GP clinics, while health insurer Bupa now owns 33 medical centers and has declared its intention to acquire or build 130 medical centers over the next 3 years. 

“Unfortunately, we appear to be following the US trends in terms of vertical insurer control of various parts of the health system,” Julian Rait, MD, vice president of the Australian Medical Association and an ophthalmologist in Melbourne, told Medscape News Australia. “We have anxiety about the fact that health insurers are not only the company that pays for the service, they’re also the company that provides the service and influences the price that’s then charged to patients, and potentially to taxpayers.”

In Australia’s universal healthcare system, health professionals set their own fees for the services that they provide to patients, and patients can claim a rebate (which varies according to the medical service provided) from the government-run health insurer Medicare. If the doctor’s fee is equal to the rebate, then the consultation is free to the patient (an arrangement called ‘bulk billing’), but this situation occurs almost exclusively in primary care.

Private health insurance focuses, instead, on specialist and private hospital services, where doctors and hospital fees can far exceed the Medicare rebate, but waiting lists are much shorter. “We have a safety net provided with universal healthcare through the public system,” Rait said. “But what’s been happening, of course, is that because there’s been excess demand on that system, many patients who otherwise would only ever be able to access care through the public system are increasingly turning to the private sector to get necessary elective procedures done.”

Restricting Doctors’ Options 

The concern with private health insurers owning GP clinics is that it gives them the opportunity to steer patients to specialists with whom the insurer has a contract or to private hospitals that the insurer owns.

“That’s going to reduce patient choice, it reduces patient autonomy, the doctors become hamstrung in terms of doing the best for their patient, they’re going to be restricted as to where and how they can refer,” said Aniello Iannuzzi, MD, a GP in Coonabarabran and chair of the Australian Doctors Federation. “They’re just clipping the ticket at every step of the journey.” 

The situation could be detrimental to patients’ care, Iannuzzi told Medscape News Australia. “Instead of the doctor being entirely focused on the patient, unfortunately, these monsters in the room, the government and the corporates, are having more and more influence over the relationship and on the delivery of care.” 

An inherent conflict of interest arises when an entity controls both the payment and provision of services “because they can then favor their own businesses over those of others who might otherwise be able to make claims,” Rait said. 

Potential Service Reductions 

Private health insurers aren’t the only ones buying up primary care clinics in Australia. The landscape is also increasingly dominated by private equity firms that own both primary and specialist clinics. 

The growing ownership by private health insurance companies and private equity firms could drive out independently owned clinics, which might struggle to compete with the better pay that the bigger operators can offer doctors, Rait said. That lack of competition could reduce the availability of services, particularly in remote areas. “Private equity might well over time decide that they want to focus again on areas where there’s higher margins or more activity,” said Rait. 

The Royal Australian College of General Practitioners has called for stronger regulatory frameworks to protect the integrity of Australia’s primary healthcare system. “Any role for private health insurers in primary care must be subject to strong oversight, transparency, and clear safeguards to ensure that Medicare remains universal and that clinical decisions are never influenced by corporate or insurance incentives,” Rashmi Sharma, MD, a GP in Canberra and chair of the College’s Funding and Health System Reform committee, told Medscape News Australia. 

Vertical insurer control shouldn’t be allowed, Rait argued. “It can only lead to patients and taxpayers paying more in the long term as the corporate models get more control of the system,” he said. “We’re not at the point yet of needing a Break Up Big Medicine Act, but we certainly should be trying to limit it now.”

Rait, Iannuzzi, and Sharma reported no relevant financial relationships.