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Significant government reforms, shifting demographics and increased access to nationwide health data will underpin opportunities – both foreign and domestic – for Australian healthcare providers in 2016. NAB’s Paul Littleton and Dean Pearson highlight the key trends.
With the first major review of the Medical Benefits Schedule (MBS) since its inception, the healthcare industry is set for big changes in 2016. NAB’s Paul Littleton and Dean Pearson highlight the key trends.
Changes are afoot in the healthcare sector with nearly every component of the health system currently under review.
Key shifts include the full rollout of consumer-directed care across community care with aged care moving back to the Department of Health; the review of the Medical Benefits Schedule (MBS); and reforms to the Pharmaceutical Benefits Scheme (PBS). The latter means that from January 1, 2016, pharmacies will have the option of paying to discount their patients’ copayments on eligible PBS and Repatriation Schedule of Pharmaceutical Benefits (RPBS) prescriptions by up to $1 per script.
One of the first major reviews of the MBS since its inception is set to revise the services subsidised by the government via Medicare. The first interim report is due by the end of 2015.
“Healthcare providers clearly need to follow the MBS review closely, as it will present both challenges and opportunities as patients’ out-of-pocket expenses may change,” says Paul Littleton, Manager, NAB Health’s Pharmacy division.“It’s important that providers understand how changes to the MBS will potentially impact on the cash flow of the healthcare providers business.”
The current health insurance review being conducted by the Department of Health will try to take into consideration the push-pull environment of private, public, health insurers and the consumer all working together to make the system sustainable for future generations.
A recent report advised that many Australians are downgrading their private health insurance coverage in search of a better deal – paying lower premiums in return for more exclusions and higher excess payments. As a result, we are at risk of the private health insurance cost base blowing out, according to Littleton.
“These changes are forcing the healthcare sector to be more flexible and consumer-focused,” he says. “Efforts to improve value for money include offering benefits that encourage healthier behaviour, a strategy that can boost customer satisfaction and loyalty while reducing their demand on the healthcare system. We are also seeing the entry of wearables and healthy living habits play a role in the health system driving lower costs for those consumers.
“As for healthcare services, the opportunities are definitely in the ageing space and integrated care. There will be room for niche players that just look after a specific area but a large operator, able to provide a holistic approach from a patient perspective, will be the one to succeed.”
The launch of the National Innovation and Science Agenda (NISA) has been flagged as a priority area for Malcolm Turnbull’s government. Funding of $1.1 billion over the next four years focused on culture and capital, collaboration, talent and skills as well as the government becoming more innovative in delivering services, sharing data and making it easier for business to trade and work with them, should be seen as a real positive for the health sector.
“The government supporting greater access to health data will help align key stakeholders in the sector,” Littleton says. “We are seeing the entry of large corporates in the health sector wanting to overlay data sources, not only across health but across sectors to enable a detailed view on clinical outcomes linking with consumer behaviour to support solving some of the big challenges faced by the sector.
“Big data projects based on this information present the opportunity for the healthcare sector to understand the patient better. As with any big data project, one of the key challenges is precisely defining the problem you’re trying to solve.”
Changes to the superannuation tax concessions and the GST via the tax white paper and tax review process will also be of particular interest to healthcare providers.
While the local healthcare sector is changing, economic forces are also making it more lucrative for Australian providers to explore export markets – particularly thanks to the low Australian dollar and the China-Australia Free Trade Agreement.
In the wake of the mining boom the Chinese services market offers opportunities for Australian healthcare players prepared to expand their horizons, says NAB’s Head of Industry Analysis, Dean Pearson.
“Health and wellbeing of the broader China population are key objectives for China,” he says. “There is also a focus on the provision of a regulated framework for minimum standards of care and accommodation across the entire senior living sector, from retirement villages to aged care including both residential, community and day care models.”
Australian healthcare service providers have much to offer including professional education and training organisations, community and home-based care providers, IT and digital platforms and operators with strong clinical governance protocols.
“Australia’s trade in services is traditionally very narrow but it’s the largest part of the Chinese economy and our research shows that China is more keen to do business with Australia than any other country,” Pearson says.
“If you look at the population of China, it’s continuing to age and their health system isn’t as advanced as ours. There are big opportunities in China, not just for Australia’s private health sector, but also for a range of related professional services.”
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