Media Conference - Dr Kerryn Phelps, AMA President, Melbourne

27 May 2001

PHELPS: Dr Chris Maxwell, who has been running the medical indemnity issue for the AMA for the last fourteen years. Dr Michael Sedgley, who is Chair of our Medical Indemnity Taskforce. Both Dr Maxwell and Dr Sedgley are both obstetricians and gynaecologists. Dr Nicholas Little, from New South Wales, who is a neurosurgeon - another one of the groups very severely affected by the current medical indemnity crisis. Dr Penny Gregory, who is from the ACT, and is currently working on the reform agenda with the Australian Health Ministers Advisory Council. And Dr Shane Sondergeld, who is a rural general practitioner…

PHELPS: …I think all of you can see by the strength of passion in that room today, that medical indemnity is right at the top of mind for doctors in Australia. It's hit a number of specialties first, and that's particularly obstetricians, GPs who perform obstetrics and other procedures, and neurosurgeons. But it's fast starting to hit other groups as well. And unless we do take urgent and immediate action to do something about reforming the whole system, then we are truly facing a crisis which may take generations to resolve. We need to act now, so that we don't lose our obstetricians and our neurosurgeons; that we don't lose the skills from our general practitioners working in rural areas. We already know that about a half of new graduates from the Obstetrics and Gynaecology Training Program are planning to practice only gynaecology and not obstetrics. And I think that this is going to have serious implications for future service delivery. We have a crisis on our hands - it is an urgent matter for us to do something about it. It's not just one person's responsibility, or one organisation's responsibility. It's a responsibility that must be handled by the whole community and by that I mean the Federal and State Governments, the doctors of this country and the lawyers of this country, who also see that reform is essential in the community, as we heard today. We may, on some issues, differ a little on the minutia but, basically, the decision that you heard today and the conclusions that we're getting from all sectors of the community would indicate that tort law reform, structured settlements, and reform of the whole way we handle medical mishaps and misadventure needs to be reformed. I would like to now hand across to the panel … Shane, if you would like to join the panel and we're open for questions.

JOURNALIST: Can I just ask you one more question, before you go, Dr Phelps?


JOURNALIST: If this crisis isn't resolved, who will ultimately end up paying the price, if it's not resolved satisfactorily?

PHELPS: If this crisis is not resolved, and soon, it's the patients who are going to have to pay, because while on the one hand there's an increase in doctors' indemnity premiums, on the other hand, we're seeing that patients will have to pay more for their medical services because that cost has to be passed on as a practice cost.

JOURNALIST: If I can ask, the information paper - it would suggest that maybe insurance is ……?

SEDGLEY: Well, the structured settlements depend on support from all types of areas of government but particularly, of course, from the Attorney-General. Federal AMA, we have been lobbying him, we have been talking to him, we have huge support, including support, as you would have noted today, from the Australian Plaintiff Lawyers Association (APLA), amongst many other groups, to advocate for structured settlements. These will never happen until we can get tax reform to allow them and, at the moment, the negotiation process seems to have stalled.

JOURNALIST: Can you just explain in plain English terms what you mean by structured settlements?

SEDGLEY: Yes, the meaning of structured settlements is quite complex. We're not trying to necessarily to form organisations that will dole out little bits of money every month to plaintiffs but, the thing about structured settlements is that it is, in the end, the injured party receives a regular income, and we believe that that's a much better way to go than a large lump sum settlement because there are lots of instances where lump sum settlements have been lost by poor management very quickly, and then, of course, the injured person has no other recourse but to come back into the social service system and come back on to Medicare, and in that way becomes a cost to Government again.

JOURNALIST: Does it also help, as you spread the penalty over a longer period, it's not such a big impact…?

SEDGLEY: It's not such a big immediate impact. One of the difficulties, of course, is that we're not sure whether, at the end of the day, structured settlements are necessarily going to reduce our premiums or not. We just think it's a very good way to go because it will give injured people security for life. I guess there is one other side of this, that if the injured person doesn't survive as long as it was predicted, then, of course, at the end of the day, the money that's for their ongoing care can go back into a fund to care for other injured people.

JOURNALIST: Dr Sedgley, in relation to HIH, how would a levy, along the lines of what you've outlined, work on the members of those funds, if there's large exposure to HIH?

SEDGELY: Well, frankly, I think that another levy would pretty well…that would be close to the end of the road. It would impact on our profession, enormously in various areas, and it would really lead to doctors actually just having to say, 'we can't go on practicing in this way'. Each of the medical defence organisations (MDOs), in its articles of association, has the right, each year, to make a levy on its members equal to the amount of the annual premium. So, the fact that all the MDOs have made levies in the last two or three years doesn't mean that they can't make another one next year. And, in effect, it just doubles the premium load for that year.

JOURNALIST: The APLA also seem to be suggesting that the MDOs were not being well managed and there's a need for change at that level. Do you think there's a case for that?

SEDGLEY: I think there's a case for finding out what's going on in the industry. Yes, I do. I certainly would not make the allegation that they're not well managed. But we'd like to know. And this is one of our motions we're putting forward at National Conference is that we should get de-identified information and statistics from all the MDOs so that we can make rational decisions regarding medical indemnity, or regarding change in this area.

JOURNALIST: Why has it been so difficult just to get information on clients costs and all of that...?

SEDGLEY: The MDOs are business organisations and like anyone else, and the information, at times, has great commercial sensitivity. If one organisation was to admit, for instance, that it was totally exposed to HIH, what do you think the members would do? So, there are great difficulties there for them. That's why we want aggregated data from all the MDOs to look at the whole medical defence industry.

JOURNALIST: So, in effect, at the moment, if they say, 'we need an extra $10,000 from you each year', you don't know the basis for why they need it and have to justify it?

SEDGLEY: No. The justification comes from the MDO but there is no overall way of reviewing that, unless the members themselves hold special general meetings and try to get that information. It can be got through by the members, themselves, of the organisations, but I think we want to go beyond that. We're looking at a whole picture where people may not be able to practise in various areas of medicine because of this. And, we need to restructure the entire industry, not just one MDO.

JOURNALIST: Does anyone else here want to comment on what Dr Sedgley is talking about on the HIH issue?

MAXWELL: Certainly not on the HIH issue, but I'd certainly like to comment on the rural ramifications. Our President spoke about the monitoring costs that might be faced by our patients. But I think in rural areas what we're looking at here is an inordinate social cost because, at the moment, with less and less of our rural practitioners actually now delivering babies, what we're finding, of course, is that families and, of course, mothers are having to move to regional centres and now, in these regional centres, what we're establishing, of course, is that many of the people there are being impacted by the higher premiums. So what's going to happen in times to come? Are we going to find that our rural patients have to go right to the major cities? And then what are they going to find? Will private obstetricians still be practicing obstetrics? So, the point is this: that we're seeing a great exodus now of babies actually being delivered in the bush, and this is at an enormous social cost to our patients.

JOURNALIST: So would you support that when they were talking in the session before about obstetricians in the country who are only delivering, say, only five or ten babies a year compared to the big city obstetricians, having some differential in their premiums based on the amount that they're practicing?

MAXWELL: This certainly has to be explored - there is no doubt about this. But the trouble is that we're already going passed that now, that many of these obstetricians - the GP obstetricians, that do deliver five to ten babies a year - most of them are already out of business, and this is the travesty of it. We've gone past that, now, and so people are going into the bigger regional centres. The trouble there is that insurance premiums are starting to bite. So, less and less of them are supporting the public system and the result is that now we're even bypassing those centres.

JOURNALIST: So it's becoming much more of an almost an urban problem?

MAXWELL: Well, it's interesting to see what's happening in rural areas because the experience overseas is that once people stop delivering babies, they don't come back. And so, if we see this in Australia, there is no turning back. So, if we do not act now, unfortunately this is a problem that is going to besiege rural Australia, and yes, we're going to see babies delivered almost exclusively in the urban domain.

JOURNALIST: Doctor Little, we've heard quite a bit about what's happening in obstetrics. Can you tell us about what's happening with neurosurgeons?

LITTLE: Yes. I guess our context is that neurosurgeons are the second lowest earning specialty from Medicare, so, as of last year, our earnings from Medicare, for example, well, significantly more than 50 per cent of our Medicare earnings go straight into medical defence. So that's an equation that doesn't work, really, in the current reimbursement system that we have. And it was interesting that Peter Cashman said that the way he likes the system to work is fair, because no one else thinks it's fair. It's unfair at two ends of the spectrum - one end is, if I'm spending 60 or 70 per cent of my Medicare revenue just on one expense, then obviously my fees have to go up. Apart from the financial impost on patients, it just restricts access. There's patients that can't afford to come and see a practicing neurosurgeon - that is another impact on services. Unfortunately, we don't have GP neurosurgeons, so you don't have people just backing out of doing neurosurgery and doing other things. You know, I can't drive a taxi - this is all I know. The other end of the fairness spectrum is that Peter Cashman said that if I was injured by someone on the road, I would want fair recompense, and that's true. And, I strongly agree that patients should be compensated and looked after. However, also, if I broke my neck in the surf and didn't happen to find anyone to blame I would also like to be looked after - not in the capricious manner that things work at the moment. So, there's nothing fair about the system - at either end it's not fair, and the patients, in the end, either by having to finance it or by having access blocked to services, are the ones that are losing. We're just intermediary that are losing in the meantime.

SEDGLEY: I'm hoping that the big message to take home here is that Australia is one of the most safest places in the world for people to receive their health care, and that safety and those high standards which are admired throughout the world are now at risk because medical defence costs are threatening the provision of vital health services and unless something is done, and unless the situation is confronted and the community and the Government and the medical profession work together to solve the issue, then services will not be available for men and women in this country, and children, and our standards will drop and it will be a great shame. So, it's a very important issue for the community to address.

GREGORY: Can I just add to proceedings to say that I'm here as a speaker at this conference, to convey the fact that Health Ministers nationally have recognised that medical indemnity is an issue that we need to look at fundamentally. That they have set up some resources and mechanisms to do that and I'm committed to the fact that we need to work closely with the medical profession, with the insurance organisations, the MDOs, with other arms of government, Attorney-Generals, to try to bring about some reform in this area. It's not something we can easily pick off one by one, but it is something that we need to put our heads together and come up with some equitable solutions that, in the end, taxpayers have some consistency and equity in where the resources go.

JOURNALIST: When are you expecting, you know, the working party that's been established, when are you expecting it will deliver its report to the Health Minister? Is that the next meeting?

GREGORY: We will certainly be providing a progress report to Ministers early in August. But, we're hoping to have some proposals put together that we can then have a range of experts looking at, that would include the MDOs and the medical profession - a whole range of people, including consumers, probably mid to late August we're hoping to have a forum then that would have some results of all the deliberations that we've been having together.

JOURNALIST: In view of what's happened in New South Wales so far, is that the way you might go?

GREGORY: I can't comment on New South Wales' proposals, and no, they're not the basis of the work we're doing nationally. They may coincide in some way but we're not using them as the basis for our work, no.


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