Three times the rebate and way above inflation: the medical specialties with sky-high fees

Australians are paying 20 per cent more to see some specialists than they were a year ago as rising fees outpace inflation, reinforcing calls for the government to do more to rein in extravagant charges.

New analysis from the Grattan Institute reveals some specialists are consistently charging patients much more than their colleagues. The most expensive 5 per cent of psychiatrists, for example, charged a median out-of-pocket fee of $669 for an initial consultation – more than double their peers.

The most expensive paediatricians and cardiologists also charged three times more than their peers, setting median fees of $362 and $265 respectively for initial consults.

The influential policy think tank is arguing that Labor should make specialists who charge the most extreme fees repay their Medicare rebates to the government.

Their intervention builds on momentum to overhaul specialist fees, an issue Minister for Health Mark Butler said would be a priority for Labor’s second term. He launched an inquiry into specialist affordability and accessibility in March, triggering a stoush with doctors who accused the senior frontbencher of blaming practitioners while neglecting real reform.

More than 800,000 Australians skip or delay specialist care every year because of the cost, harming patient quality of life and further burdening under-pressure hospitals, the Grattan Institute said on Monday.

The report into what it describes as a broken market builds on previous research that found specialist fees soared 73 per cent between 2010 and 2025 – three times faster than inflation, wages or other Medicare service fees. The latest report found specialist fees grew 4 per cent faster than inflation in the past year.

The median fee for a first visit to a psychiatrist jumped 20 per cent, or $50 a year, while a dermatologist’s rose 7 per cent, and for most specialities, the highest fees grew the fastest.

“This policy failure is hurting patients and exacerbating the cost-of-living crisis,” Grattan Institute health program director and the report lead author Peter Breadon said. “Well over two million Australians now pay at least one extreme specialist fee a year – more than double the number in 2020.”

Some specialties are more likely to charge “extreme fees”, which the think tank defines as more than triple the Medicare Benefits Schedule. This is the amount the government contributes to the cost.

“More than 60 per cent of dermatologists would be classified as extreme-fee chargers, and more than a quarter of obstetricians and gynaecologists,” the report said.

The think tank called for schedule fees to be reviewed to ensure doctors are fairly compensated, starting with those specialties.

Fees vary both between and within specialties, and workforce shortages and swamped public care can exacerbate high costs and long wait times for patients.

The Australian Medical Association argued in its submission to the parliamentary inquiry that access and affordability issues were driven by government underfunding over many years, while private health insurance benefits were also failing to keep up.

The peak body said Medicare had not matched rising costs of providing services after a freeze on rebates and subsequent slow indexation.

“The growing shortfall must be absorbed by medical practices or passed on to patients,” the submission said.

But the Grattan Institute said on Monday that specialists had on average recouped Medicare losses and then some, while rising costs also could not explain the highest fees. The median profitability of specialists grew more than that of GPs.

“The real problem is a market with almost nothing to restrain fees, which has been left on autopilot for far too long,” the report said.

The institute said Labor’s moves to improve fee visibility and speed up the recognition of overseas qualifications were the simplest steps forward and called for the government to go further.

“Rising fees and wait times won’t be reversed by cheap and easy reforms,” the report said.

The Grattan Institute wants the government to require the “small minority” of specialists charging an average of three times more than the schedule fee to repay those Medicare rebates. Less than 6 per cent, or 2000 specialists, would be affected, and the annual assessment would avoid penalising genuine high fees needed for complex or lengthy consultations, the institute said.

All GPs should also have easy access to specialist advice to avoid unnecessary referrals while a shortfall of 7000 specialists by 2033 had to be urgently addressed.

“No one is accountable for how many specialists are trained, in which specialties, or where,” the report said.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.