Health Care (Miscellaneous) Amendment Bill

Second Reading

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) (13:00): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech and explanation of clauses inserted in Hansard without my reading it.

Leave granted.

The Government is introducing the Health Care (Miscellaneous) Amendment Bill 2015 to Parliament to amend the Health Care Act 2008 to:

Enable the licensing of stand-alone private day procedure centres;

Remove the prescribed limit of hospital bed numbers in metropolitan Adelaide;

Provide for the standards of construction, facilities and equipment to be set by notice in the Gazette;

Enable a private hospital to provide services both at their licensed premises and approved off-site locations; and

Provide for the inclusion of two new fee types.

The legislative framework governing the licensing of private health facilities in South Australia has essentially remained unchanged since the early 1990s. During this time, there has been a substantial growth in the private healthcare sector, particularly evident in the case of day procedure centres which are not currently regulated in this state.

At present, in accordance with Part 10 of the Health Care Act 2008, only private hospitals are licensed in South Australia. The Act gives the responsible Minister, the Minister for Health, the power to grant licences, impose specific licence conditions, transfer, suspend or cancel licences, appoint inspectors, fix licence fees and apply penalties. There are currently 27 licensed private hospitals operating in the state.

At the national level, the Australian Government Department of Health is responsible for declaring hospitals, including 'day hospitals', under the Private Health Insurance Act 2007 (Cth) and issuing a provider number for health insurance purposes, Medicare benefits and the Pharmaceutical Benefits Scheme. Accreditation by an appropriate accrediting body against the National Safety and Quality Health Service Standards is one of the conditions that the Australian Government Minister for Health must have regard to when deciding to declare a facility or to revoke such a declaration.

If a stand-alone private day procedure centre wishes to obtain a provider number under the Private Health Insurance Act 2007 (Cth), SA Health has an arrangement with the Australian Government Department of Health to undertake an assessment and inspection process in order to provide them with a recommendation. Beyond this however there is no further monitoring of private day procedure centres by SA Health.

The data clearly demonstrates the growth of the private day procedure sector. Between 2001-02 and 2011 12, the number of private day surgery beds and chairs increased by 68.5% and separations increased by 115.6% nationally (Australian Bureau of Statistics, 4390-0-Private Hospitals, Australia, 2011-12). A variety of services are provided by day procedure centres to patients who are not admitted to hospital overnight, including plastic, reconstructive and cosmetic surgery, ophthalmic surgery, endoscopy, ear, nose and throat, fertility treatment and family planning, dental and oral maxillofacial surgery, renal dialysis, cardiac, oncology (chemotherapy and radiotherapy), urology, paediatric, orthopaedic surgery, general surgery and mental health treatment.

The substantial growth of the sector is due to the fact that many procedures which previously required an overnight hospital stay can be performed on a same day basis. The major factors contributing to this growth have been developments in anaesthesia, new operation techniques and improvements in surgery. The sector is expected to continue to expand in the future, accompanied by advances in technology, innovation, new treatments and new service delivery methods.

South Australia and the Northern Territory are the only jurisdictions which do not currently regulate stand-alone private day procedure centres. The absence of a licensing regime applicable to private day procedure centres presents a potential safety and quality risk to the public.

There are currently 30 stand-alone private day procedure centres in South Australia that have been declared as 'day hospitals' by the Australian Government for private health insurance purposes. In addition, there are a number of private day procedure centres operating in this state who have not sought a provider number and who offer procedures that don't attract private health insurance benefits, in other words full fees are charged. By remaining undeclared, and in the absence of a jurisdictional licensing regime, these providers are effectively able to avoid National Safety and Quality Health Service Standards accreditation requirements. A number of these providers are within the plastic and cosmetic surgery industry.

The Government believes that licensing stand-alone private day procedure centres will provide a range of measures, including the ability to impose specific licence conditions, to ensure that potential safety risks to the public are addressed. In addition, it will create a level playing field with private hospitals, subjecting the private sector to the same regulatory compliance requirements.

The Bill proposes that the definition of a 'prescribed health service' for the purposes of requiring a stand-alone private day procedure centre to be licensed under the Act, include the following elements, consistent with the approach of other jurisdictions:

A health service that involves the administration of general, spinal, epidural or major regional block anaesthetic; or

A health service that involves intravenous sedation (other than simple conscious sedation); or

A health service, or health service of a class, prescribed in the Health Care Regulations 2008.

Health services to be prescribed in the Regulations, consequent to any change in the Act, will include:

Cardiac catheterisation or stress testing;

Chemotherapy;

Gastrointestinal endoscopy;

Psychiatric day care;

Radiotherapy;

Renal dialysis;

Reproductive treatment;

Specialist rehabilitation services; and

Services involving significant procedural complexity using local anaesthetic.

Prescribing health services by Regulation, rather than in the Act, will allow the Government the flexibility to add additional services as and when required in response to changes in technology and service delivery methods.

The Government believes that the regulatory impact will be limited. Day procedure centres that provide only low risk or minimally invasive procedures, such as minor cosmetic treatments, will not be subject to licensing. Only services that involve a significant patient risk will be required to be licensed.

In relation to the cap on bed numbers, South Australia is the only jurisdiction which currently sets a limit on the number of hospital beds that can be provided within a prescribed region, in this case, metropolitan Adelaide. The prescribed limit on the number of beds that may be provided by incorporated hospitals and private hospitals combined in metropolitan Adelaide is 5,169. The current limit was set in December 1994 and has not been revised since this time.

It is understood that the limit on bed numbers was first introduced with the justification that it would be used to underpin the planning and coordination of service provision across the private and public sectors. In practice, the introduction of the limit on bed numbers in 1991 resulted in the creation of an artificial market and trade in 'bed licences', which in the past may have served as a barrier to entry to the market and provided a level of protection for existing private hospitals.

The private hospital sector provides an increasing proportion of total hospital services in many different speciality groups, particularly in the areas of cardiac medical, cardiac interventional, oncology, obstetrics, orthopaedics and gastroenterology. A number of complex procedures and treatments traditionally associated with public hospitals are now performed more often in private hospitals, including knee replacements, procedures of the digestive system, prostatectomies, chemotherapy and major malignant breast conditions. In 2012-13, private hospitals accounted for 41% of all hospital separations nationally. From 2003-04 to 2012-13, the total number of private hospital separations increased by 46% (Australian Institute of Health and Welfare, Australian Hospital Statistics 2012-13: private hospitals).

The Government believes that removing the cap on bed numbers will allow the private hospital sector to further expand and complement the public health system in meeting the demands of an increasingly ageing population. Any expansion will still be able to be closely monitored and controlled through the use of already existing provisions allowing an application for a licence to be refused based on the proposed location of a facility, proximity to other facilities and adequacy of existing facilities in the locality. Clearly, a cap on bed numbers is therefore not needed.

In addition, the Bill proposes a number of other legislative amendments aimed at improving the functioning of this section of the Act, including:

Providing for the standards of construction, facilities and equipment to be set by notice in the SA Government Gazette. Many of the prescribed standards, which are currently detailed in the Regulations, are out of date or are duplicated by other regulatory provisions, building and development codes, or professional registration standards and guidelines. Rather than prescribing the standards in the Regulations, it is proposed that they be set by notice published in the Gazette with reference to a requirement to meet Building Code of Australia standards and other relevant guidelines, such as the Australasian Health Facility Guidelines.

Enabling a private hospital to provide services both at their licensed premises and approved off-site locations. Currently, the Act states that health services must not be provided by a private hospital except at premises in respect of which a licence is in force. Over the past decade there has been an increasing trend for hospitals to expand service delivery models to include the provision of off-site services, for example in the area of low acuity post-natal nursing care, sleep laboratories, chemotherapy treatment and rehabilitation services. By requiring approval for services to be provided at off-site premises, the Government is recognising these changes in service delivery models.

Providing for the inclusion of two new fee types. No fees are currently charged for licence amendments or for applications to alter or extend a facility. The inclusion of these fee types would more accurately reflect the cost of administering the licensing regime. In addition, the general level of fees, published by notice in the Government Gazette, will be reviewed in consideration of the fact that licensing fees are substantially lower in South Australia than the national average.

The Government consulted with external stakeholders on the draft Bill, including licensed private hospitals, private day procedure centres, peak industry bodies, and surgical and medical colleges and associations. Stakeholders were sent a copy of the exposure draft of the Bill on 13 March 2015 and were provided with six weeks to lodge formal submissions. Eleven submissions were received. In addition, SA Health coordinated a number of information sessions and individual meetings to discuss the proposed legislative amendments and outline the expected impacts of these changes.

In general, the draft Bill received overwhelming support from the private hospitals and the majority of private day procedure centres also recognise the benefits of the sector being subject to regulation.

A minority of private day procedure centres argued that they should be exempt from regulation in South Australia, having been declared by the Australian Government for private health insurance purposes and holding current accreditation against the National Safety and Quality Health Service Standards. However, it should be noted that for jurisdictions that already regulate private day procedure centres, the Australian Government declares facilities based on their jurisdictional licensing status. If a licensing regime is implemented and some facilities are exempted from the requirement to be licensed, this could lead to the Australian Government revoking their declaration and health insurance funds may choose not to contract with them at a detriment to their business. It is further held that all private day procedure centres meeting the definition of a 'prescribed health service' in the amended Act should equally be required to be licensed.

One private hospital expressed a concern that the removal of the bed limit would result in a reduction in the historical value of 'bed licences' that may be recorded as an asset in private hospital balance sheets. It should be noted however that no other private hospital has raised this as an issue and there has not been a transfer of beds between hospitals for many years.

The Government reflected on the comments and issues raised in the formal submissions and during the information sessions and this informed the drafting of the following amendments to the Bill:

Existing private day procedure centres that have been declared and issued with a provider number by the Australian Government, on the basis of a previous recommendation by SA Health, will be deemed to be licenced under the Act.

The definition of a 'prescribed health service' for the purposes of licensing private day procedure centres has been amended so that the part relating to a health service that involves intravenous sedation reads 'intravenous sedation (other than simple conscious sedation)'. This serves to exclude a large number of general dental surgeries performing low complexity procedures from being subject to licensing, which is consistent with the approach taken in other jurisdictions.

The standards of construction, facilities and equipment, to be set by notice in the Government Gazette, will not be applied retrospectively to already licensed private hospitals and Australian Government declared private day procedure centres. However, the standards will apply to assessing applications from licensed private hospitals and declared private day procedure centres in relation to the alteration or extension of premises or where there is a proposed change in the health services to be provided. The primary concern is that services are provided in a safe environment.

The new section to be inserted into the Act, Part 10A – Private day procedure centres, is very similar to Part 10 – Private hospitals of the Act and the licensing of private day procedures will function in essentially the same manner as private hospitals are currently licensed.

The Government believes that the proposed changes will modernise private health facility licensing arrangements and bring South Australia into alignment with other state and territory jurisdictions, without unnecessarily increasing the administrative burden on private sector providers.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Health Care Act 2008

4—Amendment of section 3—Interpretation

This clause proposes to include 2 new definitions in section 3 (Interpretation) of the principal Act which are consequential on the insertion of new Part 10A in clause 10. The definitions are of private day procedure centre (premises in respect of which a day procedure centre licence is in force under Part 10A) and private day procedure centre licence (which is defined in section 89C).

5—Amendment of section 63—Preliminary

This clause proposes to include an entity that provides health services at a private day procedure centre as a prescribed health-sector body for the purposes of Part 7 of the principal Act (Quality improvement and research).

6—Amendment of section 68—Preliminary

This clause proposes to include an entity that provides health services at a private day procedure centre as a prescribed health-sector body for the purposes of Part 8 of the principal Act (Analysis of adverse incidents).

7—Amendment of section 79—Prohibition of operating private hospitals unless licensed

This clause proposes to expand the exception to the offence in section 79 to apply in relation to the holder of a licence under Part 10 who provides health services at premises in respect of which a licence is not in force under this Part with the written approval of the Minister.

8—Amendment of section 81—Grant of licence

This clause proposes to amend section 81 of the principal Act in 2 respects. Firstly, it is proposed to delete reference to the prescribed limit of hospital beds and the Ministerial power to refuse to grant a licence by reference to that limit. Secondly, it is proposed to insert new subsections giving the Minister the power to establish standards of construction, facilities and equipment for the premises of private hospitals for the purposes of Part 10.

9—Amendment of section 82—Conditions of licence

This clause proposes to make provision for the holder of a licence to be able apply to the Minister for the variation of the licence or a condition of the licence and for the Minister to make such a variation on application in the manner and form approved by the Minister and on payment of the fee fixed by the Minister.

10—Insertion of Part 10A

This clause proposes to insert new Part 10A into the principal Act. Part 10A provides for a licensing scheme in relation to premises where a prescribed health service is provided (other than an incorporated hospital or private hospital). Proposed section 89B provides an offence of providing a prescribed health service at unlicensed premises, the maximum penalty is $60,000.

A prescribed health service is defined as—

(a) a health service that involves the administration of general, spinal, epidural or major regional block anaesthetic; or

(b) a health service that involves intravenous sedation (other than simple conscious sedation); or

(c) a health service, or health service of a class, prescribed by the regulations for the purposes of this definition.

For the purposes of Part 10A, the Minister may, by notice in the Gazette, establish standards of construction, facilities and equipment which may be of general or limited application.

Proposed clauses 89C and 89D of Part 10A provide for applications for private day procedure licences to the Minister and for conditions of licences to be fixed by the Minister. The Minister may, on application or the Minister's own motion, vary or revoke a condition of a licence or impose a further condition by notice in writing given to the holder of the licence. Proposed clause 89E provides an offence of contravening or failing to comply with a provision of the Act or a condition of the licence which carries a maximum penalty of $60,000.

Proposed clause 89F provides that a private day procedure licence remains in force until it is surrendered or the holder of the licence dies or is dissolved (in the case of a corporation). Under proposed clause 89G a private day procedure licence may be transferred in accordance with that clause. Proposed clause 89H provides for the processes of surrender, suspension and cancellation of private day procedure centre licences.

Proposed clause 89I provides for a right of appeal to the Supreme Court against a decision or order of the Minister under Part 10A and provides for the powers of the Court on such an appeal.

Proposed clause 89J provides that the Minister may appoint suitable persons to be inspectors who may, at any reasonable time, enter a private day procedure centre or premises reasonably suspected of being used in contravention of Part 10A and, while on the premises, may inspect the premises or any equipment or other thing on the premises, may require any person to produce any documents or records and may examine any documents or records and take extracts from, or make copies of, any of them. This clause contains an offence of failing to comply with a requirement of an inspector and an offence of hindering or obstructing an inspector in the exercise of the powers conferred by the clause. In each case the maximum penalty is $10,000.

Proposed clause 89K provides for vicarious liability for a principal or employer in respect of an offence committed by an agent or employee unless it is proved that the principal or employer could not, by the exercise of reasonable diligence, have prevented the commission of the offence by the agent or employee. This clause also provides that, if a body corporate is guilty of an offence against Part 10A, each director of the body corporate is guilty of an offence and liable to the same penalty as is prescribed for the principal offence unless the director proves that he or she could not by the exercise of due diligence have prevented the commission of the offence.

11—Insertion of section 99A

This clause proposes to insert new clause 99A that provides for the Minister, by notice in the Gazette, to set fees and charges for the purposes of the principal Act. It further provides that the Minister may remit, reduce, waive or refund a fee (or part of a fee) payable under the Act as the Minister sees fit.

12—Amendment of section 100—Regulations

This clause amends the regulation-making power contained in section 100 of the principal Act to include reference to private day procedure centres.

Debate adjourned on motion of Hon. T.J. Stephens.

Sitting suspended from 13:01 to 14:15.