Not all health sector interest groups lobby for the public interest - Grattan Institute

Formulation of COVID policy, as with other aspects of health policy, has involved stakeholders voicing their opinions about what’s in Australia’s best interest. Or at least, that is how their lobbying is framed.

For example, the pathology lobby tells us that access to pathology testing is improved if every private pathology company could be involved. The fact that this approach creates a huge revenue stream for these companies would – sarcasm alert – not have even been considered in pathology lobbying on this issue. Similarly, pathologists opposed (until recently) the use of rapid antigen testing in Australia because it is not as good as the ‘gold standard’ PCR test. Again, the fact that rapid antigen tests do not generate income for pathologists never entered the heads of the lobbyists — it was all about what was best for the public.

Why has the involvement of pharmacies in the vaccine roll-out been so slow? Surely the medical profession hasn’t stymied that initiative?

What we see here is a fundamental problem for health policy in Australia playing out in the specific context of our COVID response. The health sector is riddled with well-funded groups established to advocate for their interest, often at the expense of the public. Invoking terms such as ‘access’ or ‘quality’, these groups regularly portray their self-interested advocacy as being in the interest of patients. Let’s call it stakeholder magic: successfully disguising grabs for more income and power as selflessness.

Stakeholders will claim that a policy that adversely affects their financial interests or autonomy also affects the interests of consumers, dressing up their opposition as concern for the hypothesised impact of the policy on consumer quality, access or choice. One recent example of this is the campaign that doctors and private hospitals ran against private health insurance insurer contracts, characterising them as ‘US-style managed care’.

What stakeholder lobbyists would like us to forget is that all health care funding ultimately comes from households. Some of it comes directly as out-of-pocket payments, some through private health insurance premiums, and some redistributed through taxation. And all health funding goes to providers in, or to suppliers to, the health industry: to hospitals and other organisations to employ doctors, nurses, allied health professionals, managers, and support staff; to private providers, including doctors, allied health professionals, local pharmacies; and to suppliers, such as pharmaceutical manufacturers, diagnostic equipment suppliers and catering providers. This highlights the importance of what we might call accounting identity: that every dollar of health expenditure is a dollar of someone’s income or revenue.

The accounting identity is important because it directs our attention to a critical factor to be considered in health policy formulation: the role of interest groups that benefit from current payment flows. Given the significant proportion of health funding that flows through government, lobbying government to maximise funding and to influence how government funds flow — for example, fee-for-service versus other methods — is a key focus of interest-group activity.

Government strategies to reduce health expenditure often involve reducing the number of health professionals being paid, or the amount each is paid. Such proposals naturally attract the ire of relevant interest groups, who will often attempt to shift cost-containment efforts to other groups, or to consumers.

The interests of those who manage expenditures, such as government, are not always aligned with those who gain income from the health sector. Providers’ organisations generally are interested in maximising the income of providers, while governments are interested — or should be — in value for money. Sometimes, though, there is a coincidence of interest in advocating improvements in the public’s health: reducing road trauma and tobacco control are examples.

Although many interest groups are self-interested — ‘rent seeking’ is the term

economists use to describe this behaviour — some do advocate for consumers and the public. The table classifies key Australian health sector interest groups into the two

broad categories: those who pursue sectoral interests, and those who advocate for consumers and the public interest.

Health sector interest groups

The groups in the left-hand column are much better resourced than the ones in the right-hand column, so the voices of the consumer and public interest advocates will often be overpowered by well-funded sectoral groups.

So, what is the lesson from all this? The public should always be sceptical of the claims of groups on the left-hand side of the table. When they intervene in a public debate, what is their real motive? Are they hoping that the stakeholder magic will work, and they will mobilise the media and consumers to support their disguised grab for money and power?

Organisations on the right-hand side of the table, as well as journalists and academics, should also be alert to these plays and call them out when they surface.

Stephen Duckett

Health and Aged Care Program Director
Dr Stephen Duckett has held top operational and policy leadership positions in health care in Australia and Canada, including as Secretary of what is now the Commonwealth Department of Health.    

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