Specialist fee shock is a thing

There’s no evidence that high fees mean better care – although they clearly harm patients and put extra pressure on the health system.

One million Australians skip or delay specialist care each year because of the cost. That means delayed diagnoses, deteriorating disease, and more demand for hospital beds. And fees keep surging higher.

To its credit, the Australian Medical Association, which represents doctors, has long acknowledged that some fees are far too high. But the AMA has placed much of the blame for high fees on declining government funding for specialist doctors.

It’s true that Medicare payments to doctors haven’t kept up with inflation. Between 2010 and 2025, the real value of Medicare payments fell by about $8 for an average appointment.

But fee increases have made up for it many times over. Across the same period, specialists charged patients $34 more per appointment. That’s an extra $4 for every $1 lost.

For some Medicare items, fee growth has been even faster. Medicare payments for initial psychiatry consultations decreased by $13, in real terms, from 2018 to 2023. But average out-of-pocket costs rose $108: more than eight times as much.

Doctors point out that their costs have risen a lot in recent years. But these figures are all adjusted for inflation, which seems like a good guide to the growth in private specialist clinic costs. Between 2006 and 2021, their costs grew by about 2 per cent a year, while inflation grew at 2.2 per cent.

Meanwhile, fees have far outstripped growth in inflation or wages. That’s one reason that specialist businesses are more profitable than almost any other industry, with profits rising by about 5 per cent a year over the same period.

With such high average profits, it’s hard to justify an across-the-board rebate boost, which could cost billions, and may not help patients much. When governments tipped more money into the Medicare Safety Net or GP rebates in the past, patients saw just part of that funding – doctors held on to the rest.

But Medicare rebates haven’t been assessed for decades. For some specialties, and some types of care, they might be too low. That’s why we recommended the federal government review them to ensure they reflect the cost of providing care.

Adjusting Medicare rebates isn’t a panacea, and it won’t be enough to stop excessive fees. The root causes must be addressed, and they go far beyond the Medicare Benefits Schedule.

Workforce shortages, months-long public waitlists, and a fragmented system add up to a system running amok. Urgent reform to fix these underlying problems should be part of the national health funding and reform deal that the federal and state governments are currently negotiating.

Governments should commit $500m to fund one million new public specialist appointments in the worst-served parts of Australia, and make public clinics more productive, so they can see more patients.

Governments should reform the training system so that we plan and pay for the specialists we’ll need in future, where we need them. And they should support GPs to manage more care in the community, reducing unnecessary referrals to non-GP specialists.

Long-term reform is vital. But it won’t take the pressure off extreme fees today. Fees are surging, and there is too little competition and choice – and no regulation whatsoever – to deal with the problem of excessive fees.

Specialist doctors are highly trained experts. They train for more than a decade and do crucial work. They should earn a good living, and we haven’t recommended slashing their funding. But Australia does need cautious and commonsense rules to stop unreasonable fees.

We propose withdrawing taxpayer funding for the small minority of specialists who charge patients on average more than three times what the government pays them. That would affect less than 4 per cent of specialists.

Specialist fees aren’t a neat formula defined by taxpayer funding and the cost of delivering care. That’s why more taxpayer funding won’t be enough to stop excessive fees. Instead, we need new rules to rein in the worst excesses. Otherwise, patients will keep facing bills they can’t afford, for care they can’t afford to miss.