No place in Australia for US-style healthcare, says Medibank boss

“Very similar to the travel industry, they [health members] wanted greater control, they wanted more transparency, they wanted a greater choice. And when faced with decisions, they wanted people to help them make the right decisions to, to go experience the world,” he says.

The sector is staring down bigger changes, too. As funds weigh up the role of virtual and remote care, they are also looking at new ways to unlock member’s data so they can provide broader services, from wellness to preventative programs for underlying health conditions.

As with former Medibank boss Craig Drummond, Koczkar believes the key to keeping the nation’s healthcare system sustainable lies in both prevention and finding ways to give patients more choice in how they’re treated, particularly at home.

‘If you look at other Western countries, probably 30, 40, 50 per cent of some procedures, certainly joint replacement procedures are done in either day or short stay settings.’

David Koczkar, Medibank Private CEO

One key opportunity on the radar is expanding a pilot of the fund’s no-gap joint replacement program, which focuses on short-stay hospital visits and where members don’t pay out-of-pocket expenses.

The fund will now extend this to seven hospitals, allowing 500,000 members access to it through their cover.


Koczkar says if the private system could target 30 to 40 per cent of procedures such as hip and knee replacements on a short-stay basis, it could save the system hundreds of millions of dollars a year. “This is better for customers, it’s better for the system. And it’s better value for really everyone,” he says.

“If you look at other Western countries, probably 30, 40, 50 per cent of some procedures, certainly joint replacement procedures are done in either day or short stay settings,” he says.

As insurers focus on new models, there are fears from some parts of the medical community that Australia could be adopting US-style healthcare trends that don’t benefit patients.

Earlier this year, the competition watchdog issued a draft decision that would let listed insurer Nib and health services company Honeysuckle Health form a buying group that would collectively negotiate contracts on behalf of a group of health insurers.

Medibank and some other major insurers will not be involved in the group. The ACCC said the proposed setup would result in public benefits including “more choice for insurers and other healthcare payers … increased competition between buying groups”.

However, the move has prompted medical groups including the Australian Medical Association to warn the model gives too much control to funds over how patients receive care, and warned against such models gaining traction.

Koczkar says there is no room in the Australian system for US-style approaches that reduce flexibility for patients. “There’s no place in Australia for US-style managed care. That’s about reducing choice. What we’re about is increasing choice,” he says.

That question of choice is particularly important for persuading younger Australians to pay for insurance premiums, says head of Private Healthcare Australia, Dr Rachel David.


“The current healthcare consumer is now very different to the past,” she says.

“For a younger generation brought up with smartphones, Uber and Amazon – they are not going to be satisfied with a health system that says they will only have an appointment at a random time that they can’t control.”

The sector is well aware of this challenge with quarterly figures from the Australian Prudential Regulatory Authority routinely showing Australians under 35 leaving the system.

“Future membership growth among younger people is likely to continue to be challenged by ongoing concerns with value and affordability of private health insurance,” APRA noted in its May quarterly report.

This is a trend Koczkar is keen to buck. Medibank surprised at its half-year results in February when it reported a 2.7 per cent growth in policyholders. “We’re seeing younger customers growing. In the system, we saw a majority of our growth as a company, in customers under 40,” he says.

Those in the insurance sector say this cohort is also more willing than ever to share more information about themselves to help funds shape more holistic care.

“Our customers are asking us our advice, and information. And they want us to support them in a broader way.”

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.