The earliest involvement of the Australian medical profession in health insurance was the brainchild of Ronald Grieve (MBChM Sydney 1920), elected to the Council of the NSW Branch of the British Medical Association [now the Australian Medical Association (NSW) Limited] in 1937, and President of the Council from 1947 to 1948. From 1932 to 1934, he had been a member of the NSW Legislative Council.
Grieve had been approached by Dr Geoffrey Howe, who had asked a patient why she had not called him earlier. She had told him that she could not afford doctors’ fees. She died not long afterwards.
Until then, patients had, since 1934, been able to insure against the costs of hospitalisation, but not for medical costs. Howe, disturbed by her inability to pay for medical care, suggested to Grieve that something needed to be done.
Grieve, a member of the Branch’s medical assurance committee between 1938 and 1945, floated, in 1941, the idea of establishing a fund to reimburse subscribers’ fee-for-service medical bills. In October 1946, with a thousand members each contributing £10 (±$650 in 2011 currency), the AMA founded and underwrote the Medical Benefits Fund in NSW (MBF). MBF was presided over by Grieve until 1975, by which time the MBF had become an open unrestricted fund and a national organisation.
A young ex-serviceman, Jack Cade, employed as accountant and general manager, led the MBF for many years. Knighted in 1958, Sir Ronald was, between 1968 and 1970, president of the International Federation of Health Service Funds, of which Cade was the Australian representative. Between 1978 and 1997, the MBF extended its operations into the Northern Territory, Victoria, South Australia and Western Australia.
The arrival of Medibank
In 1976, the federal government’s Medibank, guaranteeing all Australians a refund on doctors’ fees, had come into effect. Until that time, most doctors had not charged for professional services to colleagues or to their colleagues’ families. The custom of the times was for doctor-patients to acknowledge their appreciation with a gift – often a bottle of whisky.
Medibank, however, funded by taxation and a special levy, meant that rebates became available when doctors treated other doctors and their families. This triggered the practice of doctors’ beginning to charge their colleagues the Medibank rebate. Private health funds were permitted to reimburse patients 85% of the fees in the Medibank schedule for doctors’ services performed in hospitals.
The AMA NSW establishes The AMA Health Fund
In 1976, Dr Phillip Cocks, representing the resident medical officers’ group on the NSW Branch Council of the AMA, suggested a way of resolving embarrassment on the part of both doctor-patients and their treating doctors, regarding the charging of fees. He considered that, if doctor-patients belonged to a health fund which paid the permitted 85%, there would be no need for embarrassment on either part.
He proposed that the AMA launch its own health insurance fund for its members. The AMA Health Fund commenced operating in 1977, initially in NSW, then in 1987, membership was opened to AMA members nation-wide.
The Fund’s nine directors were appointed by the AMA (NSW Branch), which had majority representation. Professor Ross Webster, previously Professor of Community Medicine at the University of Melbourne and a former Chairman of the AMA’s Federal Council, the only non-NSW member on the board, was Chairman from 1993 to 2002. On his retirement, he was succeeded by Dr Peter Arnold (also a former Chairman of the AMA’s Federal Council). Dr Paul Nisselle, CEO of the Medical Indemnity Protection Society in Victoria and former President of AMA (Victoria), joined the board.
In 2000, new legislation required that funds offer ‘gap’ insurance, namely, cover for the difference (in whole or in part) between 75% of the Medicare schedule fee and doctors’ actual fees. The AMA Health Fund then decided to offer rebates based on the AMA’s own list of services and fees, further reducing any embarrassment about treating doctors’ not being fully recompensed by their doctor-patients.
In 2004, the General Manager, John Mackenzie, died suddenly. The Chairman, Dr Arnold, took over as honorary CEO, while Mrs Sabrina Gonsalves supervised day-to-day management. At the same time, the Private Health Insurance Administration Council (PHIAC) assessed the Fund’s governance and performance. While satisfied with the Fund’s financial position, PHIAC made many recommendations concerning governance. Chief among these was that the Board be re-constituted to ensure appropriate financial, legal and insurance, as well as medical expertise.
Accordingly, the majority of the Board stood down in 2005, leaving Dr Arnold as Chairman, Dr Nisselle with his expertise in professional indemnity insurance, Dr Douglas (in active surgical practice) and Dr Ian Woodforth (in active anaesthetic practice). Mr Neil Hanlon, the Chief Finance Officer of the AMA’s publishing company, agreed to be appointed as an interim director.
Fund members were then asked if any members of their families had the expertise deemed necessary by PHIAC. Mrs Patria Mann (BEcon, CA, MAICD – daughter of a member) and Mr Anthony Harris (BComm LLB – husband of a member) were selected from amongst the two dozen members offering to serve on the board. They were appointed in 2005. Having helped re-structure the Board, Dr Woodforth stood down.
Change of name and new growth
Following concern expressed by the AMA, at both federal and NSW levels, about the continued use of the name, The AMA Health Fund, when the AMA no longer appointed the directors, the name of the fund was changed in September 2005 to The Doctors’ Health Fund.
Early in 2006, Mr Bruce Foy (BComm, LLB, FAICD), was appointed Executive Director, managing the running of the Fund until a Chief Executive Officer could be appointed. Under his guidance, the management of the Fund was stabilised in accordance with PHIAC’s requirements and recommendations of. The Board, reviewing the lack of growth of the Fund, decided on a ‘thrive’ strategy, with aggressive recruitment of membership. From a coverage of 5,806 persons in 2004, the Fund has, at mid-2011, almost trebled in size, now covering 15,135 persons.
In 2007, Dr Arnold stood down as Chairman, and was succeeded by Dr Paul Nisselle. Mr Peter Aroney (BComm, Associate ICAA), Head of Finance at AMP General Insurance) was appointed CEO in mid-2008. Mr Harris resigned from the board in late 2008.
Following the death of Dr Douglas in January 2009, the board sought a new medically qualified director from amongst the membership. Dr Janette Stening (anaesthetist and manager of her husband’s orthopaedic practice) was appointed the following month.
In June 2009, Dr Nisselle resigned from the board to accept an appointment in the United Kingdom. Mrs Mann was elected Chairman. Dr Dominic Barnes (MBBS, MMEdSci, MBA) formerly in general practice and consultant to the National Prescribing Service and Asia-Pacific medical director of Jansen-Cilag, was appointed to the vacancy created by Dr Nisselle’s resignation.
As at August 2011, the board consists of Mrs Patria Mann, Chairman; Mr Bruce Foy, Chairman of the Audit, Risk and Compliance Committee; Dr Dominic Barnes, Chairman of the Marketing and Business Development Committee; Dr Janette Stening and Dr Peter Arnold. The CEO is Mr Peter Aroney.
Compiled on behalf of the Board by Dr Peter Arnold, September 2011
Sources:
Medical Benefits Fund of Australia: The MBF Story: Celebrating 60 Years. MBF. 2006.
http://adb.anu.edu.au/biography/grieve-sir-herbert-ronald-robinson-12567
http://www.tripinsurance.com.au/trip-insurance-articles/2005/4/26/pioneer-of-private-health-insurance/
AMA Health Fund and Doctors’ Health Fund Annual Reports, 1996-2010