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Health sector has third highest inflation in Australia: ABS


Matt Woodley


5/06/2024 4:53:45 PM

New figures show the 6.1% increase for the 12 months up to April was only exceeded by alcohol and tobacco, and insurance and financial services.

Flames blowing up in to hot air balloon
Latest figures show health inflation for the past year has greatly outstripped cost increases for the overall economy.

Healthcare inflation is placing growing pressure on already vulnerable general practices, with the rising costs threatening clinic viability and leading to higher patient fees.
 
The Australian Bureau of Statistics’ (ABS) Monthly Consumer Price Index (CPI) Indicator shows health inflation for the 12 months up to April (6.1%) greatly outstripping cost increases for the overall economy (3.6%).
 
Alcohol and tobacco (6.5%), and insurance and financial services (8.2%) are the only groups that experienced higher inflation over the same period.
 
Dr Yee-Shing Kan, Chair of RACGP Specific Interests Business of General Practice, told newsGP the issue is eating into wafer-thin profit margins and adding to stress associated with looming payroll tax changes, further threatening the viability of many clinics.
 
‘It’s a major problem,’ she said. ‘A lot of smaller practices end up closing their doors, because they just can’t run the business anymore.’
 
Dr Kan also noted that smaller practices, as well as those which bulk bill and are entirely reliant on income generated via patient rebates, are often in underserviced areas.
 
‘They tend to be in areas of unmet need, or that have populations with a lower social economic group, and they are the ones going to be most affected,’ she said.
 
According to Dr Kan, the best and simplest way to ease the pressure on general practice – and the rest of the healthcare system – would be to increase Medicare patient rebates.
 
‘A lot of patients are asking us to bulk bill them … [but] we can’t afford to keep bulk billing people when other costs are increasing,’ she said.
 
‘You are forced to try to squeeze more in, which cuts down on their [consultation] time and is not going to deliver the best care.
 
‘It would be fantastic if the [Federal] Government increased Medicare rebates.’
 
An annual fee indexation of 3.6% was applied to most MBS services in July last year, which was augmented with a further 0.5% rise in November 2023.
 
The 2% gap between healthcare inflation and indexation means rebates have effectively gone backwards in the past 12 months, following a trend that began in 2006–07 and was exacerbated by the Medicare freeze – a policy decision that cost general practice $4 billion since its introduction.
 
The next round of indexation is due to be applied on 1 July.
 
‘The Government has to think it through very carefully,’ Dr Kan said.
 
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ABS Australian Bureau of Statistics inflation Medicare rebates


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