Growing numbers of patients are raiding their savings and superannuation funds to pay tens of thousands of dollars for self-funded surgery rather than languish for years on public surgery waiting lists.

Surgeons and consumer advocates are calling for a national crackdown and warning that people risk falling into severe financial distress if they need to pay hefty follow-up fees when medical complications emerge.

Ray Giddins paid $20,000 after rebates to have a hip replacement, having been told he could be waiting for years on the public waiting list.Credit:Penny Stephens

Private Healthcare Australia chief executive Dr Rachel David said there was a worrying rise in people draining their superannuation to fund medical procedures, reflecting the growing frustration of those left deteriorating for years on public waiting lists, which have blown out significantly during the COVID pandemic.

“We are very concerned about this because it is actually causing inflation in medical out-of-pocket costs,” David said.

She said there was a rise in unregulated commercial operators who purported to help people write applications to release their superannuation funds to pay often exorbitant medical costs.

These companies advertise in the waiting rooms of “less scrupulous” medical practitioners, David said. She called for health watchdogs and financial regulators, including the Australian Prudential Regulation Authority and Australian Securities and Investments Commission, to investigate.

“If it goes wrong, your money’s gone; you’ve lost all your retirement savings,” she said.

In 2020, then-prime minister Scott Morrison allowed people facing economic hardship caused by the pandemic to withdraw up to $20,000 from their superannuation. Consumers pulled more than $30 billion out of their superannuation balances before the scheme ended in December 2020. But early access to super under limited circumstances including for medical treatment has always been possible.

During the state election campaign ahead of last November’s poll, the Labor government promised to increase elective surgery to 125 per cent of pre-pandemic levels, with an extra 40,000 operations to be undertaken this year.

But as The Sunday Age has reported in recent weeks, serious doubts are being cast over the ability of the $1.5 billion plan to clear the massive backlog of tens of thousands of Victorians – including cancer patients – waiting for surgery.

Melbourne orthopaedic surgeon John Cunningham said there was a close link between growing waiting lists and patients self-funding surgery.

Giddins is now able to ride his bikes again.Credit:Penny Stephens

“Many patients will say, ‘Oh, but we have savings we can dip into’, and then I see their faces drop when I tell them how much it is going to cost,” Cunningham said. “What people don’t realise is that there is always a risk that the costs of surgery could increase considerably if there’s a complication.”

The sharp pain in Ray Giddins’ right hip appeared almost overnight. A lifelong cyclist, Giddins was left bedridden, describing it as like having a “great big knife” digging into his groin.

“It just hobbled me; I could hardly walk in the end,” said the 73-year-old Torquay man.

The retired electrician needed a hip replacement but faced waiting for years on the public waiting list.

Giddins immediately signed up for health insurance but faced a year before it would cover treatment of pre-existing conditions.

“When I began moaning in agony in my sleep, my wife said to me, ‘For goodness’ sake! You just need to get this done,’” Giddins said. “The pain was too horrific to wait any longer.”

He dipped into a family inheritance, becoming one of a growing number of people who are self-funding surgery to skip public waiting lists, which lengthened to create record delays during the pandemic.

Cunningham, who describes his public waiting list as catastrophic, said it was becoming more common for patients to take money out their superannuation to pay for surgery.

Complex surgery, such as spinal fusions, could cost between $40,000 and $50,000. The surgeon advises people to sign up for private health insurance if they can afford it, to ensure they are covered for any complications or rehabilitation.

“As a population, we really need to be encouraging people to take their private health insurance again if they can,” he said. “The public hospital system should now almost be seen as the last resort.”

Australian Patients Association chief executive Stephen Mason said there was a pronounced rise in people living in chronic pain searching for alternatives to public waiting lists.

“If it’s life-threatening, like heart surgery or cancer, you understandably go to the top of the list,” Mason said. “But if you badly need a hip replacement which is causing severe pain and disability, you’ll be waiting years.”

In rarer cases, people were so desperate they were taking out loans or second mortgages to fund surgery.

“I’ve got no qualms if people want to pay $30,000 or $40,000 if they can afford it,” Mason said. “I’m concerned about vulnerable people, who are dipping into their super fund, or organising loans they can’t afford.”

Giddins’ hip replacement surgery at Western Private Hospital cost about $28,000. Once Medicare rebates were subtracted, he was out of pocket about $20,000.

Data from the Australian Institute of Health and Welfare, which does not include figures from last year, shows 3.5 per cent of all surgery in hospitals is self-funded.

Self-funded surgery accounted for about 7.6 per cent of operations at private hospitals. However, this included cosmetic surgery patients, who are not eligible for Medicare or private health insurance funding. There were 414,941 Australians who self-funded surgery in 2020-21 compared with 332,001 in the previous year.

Giddins, a self-funded retiree, counts himself lucky he was able to afford to self-fund.

“The wait times are an absolute and utter disgrace,” he said. “After working hard and paying taxes my whole life, I feel very let down by our governments.”

It has been more than three months since his surgery, and last week Giddins went on his first 26-kilometre bike ride along the Great Ocean Road. “I feel fantastic,” he said. “My wife has started calling me Superman.”

The federal Health Department was contacted for comment, but referred the inquiry to Treasury. It did not respond before deadline.

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