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Mobile technology has changed consumer expectations. Image sourced from

Modernising Medicare is a great idea but needs a radical approach

The Australian government is investigating the possibility of privatising the payment services associated with Medicare, the Pharmaceutical Benefits Scheme, aged care services and veteran affairs.

Health Minister Susan Ley says payment systems associated with these services have not kept up with the times and are not delivering the types of user-friendly, functionality the public expect, especially on mobile devices.

The Department of Health says a Digital Payments Services Taskforce headed by John Cahill had been put together to investigate options.

Payments processed for Medicare, the Pharmaceutical Benefits Scheme and aged care total A$42 billion a year. The payment services process payments to and from providers of healthcare like GPs and allied health professionals, services like pathology and imaging, hospitals and ultimately the Australian public. The rules governing the payments for services are complicated and subject to frequent change as a result of shifts in government policy.

At the end user level however, the interface to the payment systems has changed very slowly, and in recent years, been left behind by the pace of technological change. The system was archaic and monolithic to start with, relying on delayed “batch” processing of payments rather than the instantaneous real-time transactions customers now expect. For a GP surgery for example, problems with payments that are made one day may only be sorted out the next day because it takes that long for the Medicare systems to process them.

It is understandable that the government would look outside of Medicare to get the efficiency-related changes it wants. If Medicare was capable of delivering those changes, it would have already done so. Finding another organisation that can deliver these services at a reduced cost with increased functionality, especially to the consumer of these services, makes absolute sense.

The objections to making such a move will be about the potential loss of jobs from Medicare. Given how labour-intensive the current system is, this will be a genuine concern, but one that is facing all industries dealing with modernisation through improved technology.

Privacy fears

Other concerns that have been voiced such as those about privacy are not as valid.

For a start, there is absolutely no reason that a private company under contractual obligations should not be as trusted with personal health information as a public organisation such as Medicare. There are millions of private organisations from laboratories to hospitals that process private information and are trusted explicitly to do so. There is no reason that this processing would need to be done outside of Australia, even if a foreign company was selected to run the payment services.

The real challenge facing the government in privatising Medicare payments is finding a company that will actually be able to deliver improvements.

Suggestions that Australia Post could be asked to do this would seem to be fraught with risk given that it is already struggling to stay digitally relevant to its own customers.

The same could be said for other entities reportedly interested in bidding for the work such as the banks, eftpos providers and Telstra. All of these organisations are potentially able to manage the scale of the business, but getting them to take on the payment services would simply be replacing one monolithic organisation and system with another. All of these organisations are very conservative and adapt to change extremely slowly. There is no evidence they would be able to offer systems and services significantly different from the existing ones.

Quarantining innovation

Attempts by Australian governments to architect the relatively simpler MyHealthRecord system through companies outside of Medicare were not a resounding success. The system ended up being extremely expensive, poorly designed, and anything but user-friendly and technologically modern.

The sorts of systems and functionality that should be being built today are those that most of the modern technology companies like Facebook, Google, Twitter and other business-focussed companies like and Xero are using to run their companies.

An alternative for the government would be to put together a team of developers recruited from these types of companies, place them outside of the civil service and get them to build a system that reflects their (hopefully modern) approach to architecting software. At least then there might be a chance of delivering the sort of functionality that consumers now expect.

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