Former federal health secretary Professor Brendan Murphy has entered the increasingly contentious debate over specialist fees, urging doctors to voluntarily reduce charges or risk a government crackdown.

Writing last month, Professor Murphy, who served as Commonwealth Chief Medical Officer from 2016 to 2020 before becoming health department secretary until July 2023, noted specialist incomes rose 35-70% between 2010-11 and 2021-22, while CPI grew just 27%. Average out-of-pocket gap payments surged 136% over a similar period.

Professor Brendan Murphy

“Specialists would do well to reflect on the impact of their fees on patients and potentially consider a minor trade-off in income in recognition of the now improved working hours,” Professor Murphy wrote in perspective for the MJA [link here].

Likely to be controversial among doctors, his intervention followed a Grattan Institute report proposing radical measures including stripping Medicare rebates from specialists charging “extreme” fees, and Labor’s election commitment to mandatory fee transparency through an upgraded Medical Costs Finder website with no opt-out option for specialists.

The government announced in March it would spend $7 million on technical upgrades to display average fees charged by each specialist for common medical services, eliminating the current voluntary opt-in system. As of now, the government is yet to back down from the commitment, though it has not yet implemented the changes.

Professor Murphy, who has a clinical background in nephrology, argued current specialists worked fewer hours than their predecessors yet expected similar incomes. “A voluntary acceptance of this trade-off would improve patient access and reduce the risk of government intervention,” he stated.

The former CMO acknowledged the challenges facing doctors, noting that “Medicare Benefits Schedule indexation has fallen behind cost-of-living increases” and that young specialists “start practice with significant education debts” after completing an average of two degrees and waiting for advanced training positions.

However, Professor Murphy contended these factors didn’t justify fee increases that had far outpaced inflation. He pointed out that between 2010-11 and 2021-22, surgeons’ taxable incomes increased 35% to $460,356, anaesthetists’ rose 44% to $431,193, and psychiatrists’ jumped 61% to $276,545.

“Despite the changes in clinical practice (fewer hours, more review consultations, etc), specialists feel that they are making the same commitment as their role models, often in a more technically advanced way, and, accordingly, feel a strong sense of entitlement to the same level of income,” Professor Murphy wrote.

The article came as the medical community digested the Grattan Institute’s comprehensive blueprint for specialist service delivery reform. That report found close to one million patients were skipping or delaying care due to cost, with out-of-pocket patients charged around $300 per year on average.

The AMA has backed fee transparency but rejected the Grattan proposal to strip Medicare rebates from high-charging doctors. “The report goes too far in suggesting the government should deny patients access to their Medicare rebate simply because of their choice of specialist,” AMA President Dr Danielle McMullen said back in June.

She said the AMA had consistently pointed to years of “stagnant” Medicare rebates as the key factor in high out-of-pocket costs, though Health Minister Mark Butler told media that rebate rises for specialists were “not on the table” at present.

Professor Murphy proposed mandatory fee transparency before initial appointments as a requirement for accessing provider numbers, and called for “better discernment on the capacity of patients to pay” while wealthy retirees may afford substantial fees.

He also suggested the current primary care reforms could improve specialists’ business models by shifting more appointments back toward more initial consultations rather than ongoing chronic disease management.

“Self-regulation is the simplest option,” Professor Murphy wrote. “Given the community and government angst about this issue, specialists would do well to reflect on the impact of their fees on patients.”

He acknowledged his perspective may be unwelcome to many colleagues, noting his reflections “are not intended as a criticism of most medical colleagues who are rationally responding to pressures and drivers, albeit sometimes without as much consideration for consumers as would be ideal.”

Health fund lobby group Private Healthcare Australia has endorsed the idea of axing Medicare rebates for high-charging doctors, blaming rising out-of-pocket costs for “decimating demand” for private hospitals. It said Medicare data showed initial specialist consultations dropped from 5.64 million in 2019 to 5.09 million in 2024, despite Australia’s population growing by 7%.