Understanding Preferred Provider Platforms
Preferred provider platforms are something you might not be familiar with but you’ve likely had to deal with if you have private health insurance. While these platforms do have benefits for insured patients, they also pose a few not-insignificant challenges for independent health practices.
So, what exactly are the implications of these platforms, and what potential solutions could guarantee fairness for both health providers and patients?
What are preferred provider platforms?
Preferred provider platforms are arrangements where health funds contract specific health providers – like dentists, physiotherapists, chiropractors and other allied health professionals – to provide their services at reduced out-of-pocket costs for the fund’s members. In return, these providers benefit from more patient referrals and a more predictable revenue stream.
At first glance, these platforms seem mutually beneficial. Patients save money, and providers get a steady influx of insured customers. But there’s a catch: providers on these platforms must agree to strict terms that dictate how much they can charge for treatments and how frequently their treatments can be offered.
The impact on independent health practices
For independent health providers who choose not to participate in preferred provider programs, the fallout can be severe. Patients insured by major health funds are often incentivised – whether directly or indirectly – to switch to preferred providers. This can erode the patient base of independent practices, even when they have served loyal patients for years.
Some health funds even actively inform their members about nearby preferred providers when they notice claims from independent practices. This can feel like an aggressive attempt to steer patients away from independent providers while undermining the trust and relationships that have been built over decades.
There are also financial disadvantage for patients, as preferred provider platforms create a two-tier rebate system with:
- Higher rebates for services performed at preferred providers.
- Lower rebates for services performed at independent providers.
For example, a popular extras policy might offer 60–70% back at preferred providers but only 25–35% at independent practices. Bottom line: it’s financial disparity, and it penalises patients for choosing their preferred health provider and pressures them into switching to contracted practices for financial reasons.
How preferred provider platforms create inequity
For providers who join these platforms, the trade-off can be substantial. They lose autonomy over pricing and treatment schedules, as the terms are dictated by the health fund. This can limit their ability to give personalised care or invest in their practices, as their financial margins are squeezed tighter and tighter.
Preferred provider platforms also skew the competitive landscape. Independent health practices, which operate without the backing of major health funds, face an uphill battle to retain patients. It’s an unfair advantage given to preferred providers that undermines the principles of free choice and fair competition in healthcare.
Then there’s the fact that patients will struggle to understand why their rebates vary so much based on the provider they choose. Lack of transparency can lead to frustration, as many feel their health fund prioritises contractual arrangements over their individual needs and preferences.
Are there better alternatives?
Thankfully, not all health funds operate this way.
Many not-for-profit health funds have a much fairer approach by keeping rebates consistent, regardless of which provider a patient visits. These funds prioritise patient choice and support the autonomy of independent health providers. Some examples include:
- Health funds that pay the same rebate regardless of whether a patient visits a preferred or independent provider.
- Funds that offer competitive rebates even for non-preferred providers.
Portability
Don’t re-serve waiting periods when you switch to a new health fund or policy
“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”
The long-term consequences for healthcare
If preferred provider platforms continue to dominate, there’s a very real risk that the healthcare landscape will become overly centralised. Independent practices will struggle to survive, thereby reducing the diversity of care options available to patients. This could lead to even longer wait times and less personalised care in the long run.
As for-profit health funds gain more influence, the balance of power shifts away from patients and providers, further eroding the quality and affordability of private healthcare in Australia.
What can patients do?
- Understand your health fund’s policies: Before making any decisions, look into your health fund’s rebate policies. Compare how much you would receive back for services at preferred providers versus independent ones.
- Support independent practices: If you value your relationship with your current healthcare provider, consider staying with them even if the rebates are slightly lower. The quality of care and trust you’ve built with an independent practice will likely outweigh the minor financial savings of switching.
- Switch to a fairer health fund: Many health funds – particularly not-for-profit ones – have consistent rebates across all providers. Switching to one of these funds means you can support independent practices while still getting a fair deal. Look for plans that include:
- Transparent rebate structures.
- Extras cover with no waiting periods.
- Reasonable rebates for both preferred and independent providers.
How providers can adapt
Independent health providers can take steps to remain competitive even in the face of the challenges posed by preferred provider platforms. Some strategies include:
- Educating patients about the value of their services and the limitations of preferred provider platforms.
- Partnering with fairer health funds that provide consistent rebates for their patients.
- Leveraging community relationships to build loyalty and attract new patients.
Fair Health Care Alliance’s stance
Fair Health Care Alliance believes in preserving the tri-lateral relationship between health providers, patients and health funds. The current system disproportionately benefits large, for-profit health insurers at the expense of independent practices and patient choice. We advocate for:
- Greater transparency in health fund rebate policies.
- Fairer treatment of independent providers.
- Support for patients looking to switch to health funds that prioritise equity and fairness.
Conclusion
Preferred provider platforms might seem like a win for insured patients on the surface, but they come at a big cost to both patients and independent health providers. If you feel pressured to switch healthcare providers for financial reasons, think about changing your health fund instead. Fair Health Care Alliance makes it so easy to compare health insurance and save.
Your health is personal – and so is your choice of provider. Don’t let preferred provider platforms dictate your options.
