Variation in the fees of medical specialists: problems, causes, solutions

Ian S McRae and Kees C van Gool
Med J Aust 2017; 206 (4): 162-163. || doi: 10.5694/mja16.01297

Greater transparency in setting charges may be the most efficient way to rein in excessive fees

Articles in this issue of the MJA1,2 and elsewhere3-5 have reported significant variation in the fees charged by specialist physicians and surgeons. These variations raise questions about excessive health care costs, as well as about barriers to access for patients.2,4,5

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  • Ian S McRae1
  • Kees C van Gool2

  • 1 Australian National University, Canberra, ACT
  • 2 Centre for Health Economics Research and Evaluation, University of Technology, Sydney, NSW


Competing interests:

No relevant disclosures.

  • 1. Freed GL, Allen AR. Variation in outpatient consultant physician fees in Australia by specialty and state and territory. Med J Aust 2017; 206: 176-180.
  • 2. Hillis DJ, Watters DAK, Malisano L, et al. Variation in the costs of surgery: seeking value. Med J Aust 2017; 206: 153-154.
  • 3. Johar M, Mu C, Van Gool K, Wong CY. Bleeding hearts, profiteers, or both: specialist physician fees in an unregulated market. Health Econ 2016; doi: 10.1002/hec.3317.
  • 4. Callander EJ, Corscadden L, Levesque JF. Out-of-pocket healthcare expenditure and chronic disease: do Australians forgo care because of the cost? Aust J Prim Health 2016; doi: 10.1071/PY16005.
  • 5. Australian Bureau of Statistics. 4839.0. Patient experiences in Australia: summary of findings, 2014–15. Nov 2015. (accessed Dec 2016).
  • 6. Schoen C, Osborn R, Squires D, Doty MM. Access, affordability, and insurance complexity are often worse in the United States compared to ten other countries. Health Aff (Millwood) 2013; 32: 2205-2215.
  • 7. Duckett S, Breardon P, Farmer J. Out of pocket costs: hitting the most vulnerable hardest. Melbourne: Grattan Institute, 2014. (accessed Dec 2016).
  • 8. Joyce CM. The medical workforce in 2025: what’s in the numbers? Med J Aust 2013; 199 (5 Suppl): S6-S9. <MJA full text>
  • 9. McRae I, Butler JR. Supply and demand in physician markets: a panel data analysis of GP services in Australia. Int J Health Care Finance Econ 2014; 14: 269-287.
  • 10. Van Gool K, Savage EJ, Viney RC, et al. Who’s getting caught? An analysis of the Australian Medicare Safety Net. Aust Econ Rev 2009; 42: 143-154.
  • 11. Royal Australasian College of Surgeons. Code of conduct. 2016. (accessed Dec 2016).


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access_time 11:18, 12 March 2017
Arthur Lachlan Doughty

Supply and demand should also be understood in terms of the supply of billable patients. Particularly in rural areas a reduced number of patients compared to metropolitan areas will need to provide a comparable income for the practitioner to come and stay. Simple arithmetic determines a higher percapita fee is required.
The second growing cause of fee variation is the increasing admission of insured patients to public hospitals. They are usually then billed at a "No Gap" rate, with the hospital doing the billing (on Drs behalf) and retaining a variable percentage of the revenue collected. The consequences of this practice are; Increased claims on health funds contributes to rises in premiums; Health Fund premiums are partially being used to subsidise Public Hospitals; Admission of fee paying patients contributes to the prolongation of public waiting lists and deprives the private sector of revenue required to provided the facilities and services for which the patient was admitted to the public hospital; finally an expectation is generated in the population that "No Gap" fees are the "proper"fees, which ignores the "double dipping" often associated with charging the insured patient admitted to a public hospital.

Competing Interests: I am Visiting Specialist at a regional Public Hospital and also practice in the local private hospitals

Dr Arthur Lachlan Doughty
Launceston General Hospital

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