Report on the regulatory framework for hearing services

General observations about the scheme

Review of the efficiency and effectiveness of the regulatory framework for hearing services July 2012. The Report was prepared for the Office of Hearing Services by MP Consulting

Page last updated: 28 November 2012

The following general observations about the scheme provide a context for the assessment criteria and the assessment findings.

In summary, the scheme:

  • is quite large in terms of its reach – the scheme provides services to approximately 600,000 clients. Streamlined processes are therefore important to minimise unnecessary overhead expenses for government, service providers and device suppliers
  • has a relatively significant overall budget. In 2010-11, the administered expenses were $358,138,0004 Source: Department of Health and Ageing, Annual Report 2010-2011, Commonwealth of Australia, 2011, p.223
  • receives a small number of complaints and the OHS initiates very few actions for non-compliance. It is not clear whether this means that:
    • clients are generally satisfied with the scheme; and/or
    • providers are generally compliant with the scheme

    or:
    • clients are unaware of the opportunity to complain or are disinclined to complain; and/or
    • the OHS does not identify and act on areas of non-compliance.

  • deals with subject matter that is non-controversial. In essence, the regulation supports the delivery of free hearing services and devices to clients. As a result the level of Ministerial and Parliamentary oversight expected by stakeholders is not as great as for those types of services that are more controversial (for example, reproductive services or organ and tissue transplantation)
  • provides services which present low clinical risk. It is unlikely that serious physical or mental harm will flow to clients as the result of testing, assessment, fitting of devices or provision of rehabilitation. The most obvious risk is that poor service delivery may result in poorer results than would otherwise have been expected (sub-optimal utilisation of Australian Government funding)
  • operates in a horizontally and vertically integrated sector. There is increasing consolidation of providers in the market place and also some evidence that device manufacturers and service providers are also consolidating their operations (for example, device manufacturers purchasing service provider companies).
    For example, based on advice from the OHS:
    • In 2010-11, 189 corporate entities owned the 220 active service providers. The majority market share rests with several service providers.
    • In 2010-11 there were 24 takeovers - 13 transfers from one business to another and 11 acquisitions where the original provider is retained but there is a new corporate owner. Of the 24 takeovers, in 10 cases a device supplier (who is also a hearing services provider) bought out another service provider.

The demand for the scheme is increasing. The Medicare Australia Annual Report 2010-11 notes that in 2010–11 Medicare Australia processed more than 1.1 million services and made payments totalling $310.3 million to hearing services providers. This was an extra 70,211 services in 2010–11, resulting in an additional $16.3 million in payments to hearing services providers.

4] Source: Department of Health and Ageing, [Annual Report 2010-2011, Commonwealth of Australia, 2011, p.223