AMA 15th National Conference 2003 Media Conference - Dr Kerryn Phelps, President, AMA - Medical Indemnity Policy Discussion

Policy Discussion Panel: Dr Michael Sedgley, Chair, Medical Professional Indemnity Taskforce; Dr Andrew Pesce, Medical Professional Indemnity Taskforce; Dr Jill Maxwell, Chair, Medical Defence Association of South Australia

PHELPS: We may well have said almost all we need to say about medical indemnity but if you were in the session you will have realised that Senator Helen Coonan gave up her time to come along and give a presentation and I think quite a good history from the government's point of view about how the medical indemnity response by the government has proceeded.

I have to say that the AMA has had to prod and cajole and negotiate and converse and do whatever we could to get them to that point and they'd get to one point, then we'd open up another issue or another problem and then there'd have to be a resolution of that so it's been a very long, tortuous, complicated but ultimately, I think, very rewarding process.

I have with me two of the members of the Medical Professional Indemnity Taskforce, its Chair, Dr Michael Sedgley and Andrew Pesce who's an obstetrician/gynaecologist, one of a dying breed, I think, although we hope that they're a resuscitable breed.

And Jill Maxwell who is the President of MDA South Australia, who can give an MDA perspective to any of your questions.

QUESTION: The only remaining sticking point seems to be the national care and rehabilitation program. I had a brief word with Senator Coonan after her speech and she doesn't seem to necessarily think that the answer seems to be something that doctors definitely want to see in place.

PHELPS: I think it's inevitable that we will have to move to a long term care and rehabilitation scheme. The government perhaps just doesn't realise it yet but then they have needed to be convinced of a number of issues along the way and that's been the history of this whole issue, is that the government has had to have been convinced that what we have believed was necessary from the outset is what needed to happen because, of course, we've been closer to the issue than anyone in government for a very long time.

The AMA alone has had an indemnity taskforce of some sort in place for about 14 years, I think. A long time.

SEDGLEY: The last five years it's been- -

PHELPS: Very active, yes. But we've been looking at this issue for a very, very long time and so we have an enormous amount of expertise that has been gained over that period of time and we're only too happy to share that with the government but the long term care and rehabilitation scheme we believe will inevitably have to be put in place because the government is also now, remember this, in some ways in partnership on this whole thing too because there are certain elements of medical indemnity that they are underwriting.

QUESTION: That walkout by doctors that had been anticipated on July 1 if something hadn't been done, is that completely over now or is it still sort of a prospect that some doctors may go?

PHELPS: I'll ask my colleagues to respond to this as well but my sense has been all along that it's only the AMA that has had the brake on a mass walkout for the last 12 months and it's because we've been able to report consistent and steady progress on some of these really difficult and concerning issues that there hasn't been a mass walkout and there has been the maintenance of provision of services because the mood has been very, very high in every state, particularly along the eastern seaboard.

I think that the threat of an imminent walkout before July 1 has been averted but the crisis is certainly not over and that point was well made today. Michael?

SEDGLEY: Yes, I think that we were in a state of real crisis and we ourselves were shocked by the enormous response that came through when we were talking about the blue sky, how really concerned doctors were that they could get a claim against them which would not be covered, so that they could lose all their assets and, on the other side of it, of course, their patient was not covered.

This was a really emotional issue, the government told us that it was an emotional issue and we shouldn't worry about it but they changed their minds and I think that the long term care and rehabilitation scheme is exactly the same thing. I mean, that's something we really want to see happen. It's something we'll work towards over the next couple of years. We're told the time frame is one to two years and these measures, such as covering the blue sky, which don't involve any government money, but those sorts of measures are really temporary measures until this scheme comes into play.

PESCE: Yes, the loss of services which, I think, there was a real threat - I'm an obstetrician and my organisation in Victoria did a fax survey and 40% of members indicating that they were going to stop obstetrics and not only - I mean, there were women ringing up saying my obstetrician has told me he can't deliver me. I mean, it was a real threat.

What's happened is the government has recognised two things and that's what doctors needed, to say we can keep delivering babies, as obstetricians, and seeing patients as other professionals.

One is that the government now has acknowledged, and it seems quite upfront, has said yes, we understand doctors need to be able to retire with the certainty of any claims against them being covered without them having to contribute huge sums of money after they've retired.

The second thing is that you can't be sued for more than what your insurance covers you for. Now, there are various ways you can skin a cat and we are yet to see exactly the details of all of those things but we take with goodwill and relief the fact that it does appear that the government has acknowledged these two fundamental principles and as long as whatever is put in place delivers on that we have averted the crisis.

If, for some reason, the proposed solutions don't address those issues, we will be back to square one but I don't mean to say that mischievously. I actually do personally believe the government has finally seen that it really needs to fix this to the satisfaction of the profession and our patients and I think it's going to do that although it may take a little bit of getting there yet.

PHELPS: I just want to point one thing out, that when you hear the word threat it's a threat to doctors not a threat by doctors and doctors felt so threatened about the way things had been heading that they really could see no alternative and were very, very distressed by the notion that they would have to be retiring early or giving up part of the job that they love so much which was, in the case of obstetricians and gynaecologists, just doing gynaecology and not obstetrics. So it was really the threat to doctors that we were attempting all along to avert.

QUESTION: What about the IBNR levy? Is that still an issue?

PHELPS: It's still a huge problem and it will become a huge problem for patients because while everyone recognises that the unfunded tail was partly the result of liabilities that were not funded during the course of the insurance of that doctor, that that was money that was not being, or costs that were not being passed onto patients during all those years. So with the IBNR levy, we're going to have to - I think we will have to see levying of patients to account for that and that's perhaps something that government hasn't quite yet come to grips with, that yes, doctors are prepared to carry that burden but they will have to pass it on to their patients.

So there will be an increase in fees to account for that levy and, in some cases, particularly in areas like obstetrics, it could be substantial. Orthopaedics is the other sleeper area.

QUESTION: Dr Sedgley, as a member of a threatened species, is there a greater sense of buoyancy now among your speciality, a sense that doctors will start flowing back into that area?

SEDGLEY: Yes, is the quick answer to that. I am in contact with a lot of colleagues in Victoria who were considering because - of my age - they were considering that they would stop work completely and I've had quite a lot of phone calls since the Minister made her announcement saying, no, we're not going to stop now, we're going to keep going. I mean, they recognise that there's more problems that we have to deal with but that one issue of covering their liabilities properly has made them feel that they can go on working and given them the confidence that the government and the AMA can work together to get a proper proposal for the long term.

The thing about the levy that - the levy, by the way, is not totally a New South Wales or Queensland UMP question. It is possible that the Victorian medical defence organisations - I won't name any - it is possible that other medical defence organisations could be subject to a levy as well.

The levy is struck on 30 June 2000. Some organisations had already perhaps collected these dues from that - after that time - but the levy is struck at that date and so it will be judged by an independent actuary, a government actuary, looking at the medical defence organisations who will say what the shortfall is and the members of that organisation could well be subject to a levy as well as the members of UMP so it is not just UMP who could be subject to the levy. We're not quite sure who's involved, we have no idea how much. The one thing that's certain is that the patients of today, in the end, will have to pay for the shortfalls of the patients of yesterday.

QUESTION: Did you just mentioned Victoria specifically because of hard- -

SEDGLEY: Because you said you were from The Age.

QUESTION: You don't know specifically that some of the Victorian MDOs might be in that position?

SEDGLEY: There are several MDOs who might be. Perhaps Jill would like to comment on that.

MAXWELL: None of us know for sure yet. The verbal report that we've had is that all MDOs will be included but not all members will be levied. That will depend on the actuarial assessment. I think Michael was just naming Victoria, being the biggest state outside New South Wales and Queensland, the largest number of doctors. We don't yet know because independent actuaries are looking at all of our finances and will make a decision whether or not our members need to be levied but we'll probably all be included so that if things don't go well in the future, the funding of the MDO, then the levy may applied later down the track.

QUESTION: Is there any word from the government of when they might be able to say what the levy will be or anything?

SEDGLEY: As I understand it, around August - August, early September.

PHELPS: To be collected in November.

SEDGLEY: To be collected in November, correct, yes.

QUESTION: Will it be an annual levy, a quarterly levy or how will it work?

SEDGLEY: The terms of the levy will be that it is struck and it is not to exceed half of the premium of the doctor in that year and once it is - in the year 2000, yes, when it was struck - and the premium is not to exceed half the premium of that year. Once the levy is struck, that amount cannot be exceeded in subsequent years and there is no time limit on it, as far as we know, so that is what we are told is the situation. We obviously find that extraordinarily difficult.

QUESTION: Given that premiums are still pretty high, that means the levy could be pretty significant.

PESCE: I'll put some numbers on that because I'm in New South Wales and I was a UMP member that year. The premium I paid that year was $46,000 so if, in the worst case scenario, 50% of that is $23,000, so it may be struck at $23,000 for an obstetrician and probably a similar amount for a neurosurgeon and that can go on every year for at least five years and possibly beyond that. So that's the worst case scenario and, of course, I guess people factor that into their worrying.

QUESTION: How many patients would you see in a year if that cost is going to be passed on?

PESCE: The average number of patients delivered by obstetricians in New South Wales is 100. OK? And it really depends on how many patients you deliver, how many you have to share that burden across. But let's just talk about the average obstetrician. If it was $23,000 and you've got 100 patients, that's $230 per patient. If you happen to be in a country town - you see, a lot of this crisis has really impacted mostly on regional areas where there are fewer patients, there are fewer private patients.

You've got to remember there's an obstetrician sitting out there delivering a great public service, part of which is paid for through the New South Wales public system because they're on at the hospital but they're trying to make a living in their private practice as well. It's not mischievous and it's not misleading to say, well, I know someone who's a good, young, popular obstetrician, a female obstetrician in a large rural, regional city who has 15 private patients a year. Now, if she has to pay $23,000 out of 15 private patients you can do your sums.

Now, we should also mention that the levy, the IBNR levy, is included in the amount that the Federal Government subsidy is worked out on. I don't want to paint a completely negative picture but the government is assisting obstetricians, GP obstetricians and proceduralists and neurosurgeons, in meeting their indemnity costs and the IBNR levy is going to be included in those costs.

So some of the levy is going to come back to those high risk groups and so I think especially in those country areas there will be some assistance there but I guess the point I'm making is that that it is actually a significant cost, it's not just a token cost, it's not just another $20 a patient or something like that. There's quite a significant cost even for the average obstetrician and certainly in rural areas a very impressive cost.

PHELPS: More than, one minister said, might be a golf club membership. It's going to be more than that.

Thank you all for your questions and your attention.

Ends