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Lawyers bandage the hospital pains

Lawyers bandage the hospital pains

A need for lawyers in the Federal Government's potential healthcare reform is likely to be the legal sector's greatest foray into the health sector yet, writes Angela Priestley. While both sides…

A need for lawyers in the Federal Government's potential healthcare reform is likely to be the legal sector's greatest foray into the health sector yet, writes Angela Priestley.

While both sides of Government are currently at war over the Prime Minister's proposal to takeover the funding of public hospitals, it's the spectators on the sidelines who may be the ultimate beneficiaries of reform - no matter what the outcome is.

Whether or not the Rudd Government's ambitious takeover of state-run hospital systems becomes engrained in legislation remains to be seen, but one thing is for sure - health work is big business.

It has become clear that reform of the health system is necessary, and such reform will send dramatic changes cascading down the industry. No matter who wins the next federal election, no matter what structure health reform takes, the health sector is in for some major changes in the coming years and that will mean a whirlwind of legal work for those at the heart of the sector.

Health law through the decades

The health sector did not always present such necessities of legal work. Typically - at least until the 1980s - hospitals and medical centres were relatively small on scale and, for the most part, privately run.

But over the last couple of decades, new pieces of legislation have drastically changed the game. Some of these include the Medicare revamp of 1984, the Area Health Services Act of 1986 and the Private Health Insurance Bill of 2007.

As a veteran of the legal health industry, Ron Heinrich, a partner with Tresscox, has seen his fair share of debate regarding healthcare reform through the years. He says that the provision of healthcare today is vastly different to its provision two decades ago and that such changes have carved out a significant role for lawyers to play.

"We've already seen a big change from what you might call a cottage industry of medical practice 20 years ago, to health business as I'd describe it now, where you're seeing more and more medical centres and clinics and day-care centres," he says. "There's a lot of work involved in that on a whole range of fronts for law firms and we [still] see a lot of that work every day of the week."

The overarching theme of the evolution of healthcare is that it is becoming more corporatised, according to Heinrich. "The requirement for legal work has increased quite dramatically over the last decade in relation to a range of fronts - from structuring advice to tax advice, contract advice, employment law advice, and every advice on property acquisitions - every facet of the law, whereas once upon a time it used to be quite simple."

For lawyers, that meant charting the course of change for those parties involved, as well as the associated legal work - thus ultimately supporting the rise of a niche market for health lawyers and specialist teams.

And into the present...

The 70-odd page document outlining Kevin Rudd's proposed health and hospital reform - and notably his bid to seize control of the system from the states - may still be getting the workaround from all sides of politics and the front pages of the news, but it is already raising questions among the clients of health law specialists.

"It's already having a big impact at the moment," says Lucinda Smith, partner at Thomson Playford Cutlers. "I'm working on a big hospital deal and it's becoming very pervasive in that transaction, but also other clients are thinking about what a 'change in funding' model means to them."

Smith adds that there are also some obvious financial issues which ultimately translate into legal issues - particularly for clients who have service contracts or other arrangements with government for the purchasing of health and hospital services from a third party.

Heinrich says the proposed reforms are causing, in some instances, a degree of uncertainty across his client base too. "What clients are doing is seeking advice on some of the issues that they anticipate may affect them," he says. "But it's very difficult to give them advice until we know the details of all these proposals and just how it's going to work."

According to Ken Ramsay, a consultant who has recently started with Thomson Playford Cutlers, comparisons can be made between these current potential reforms and the levels of legal work which were sparked by new legislation during the 1980s which, he notes, changed everything.

"The changes now are likely to be more significant than that, because we have the funding changes and the state Commonwealth relationship changes," he says.

Ramsay goes so far as to label Rudd's hospital reform as the Y2K of health lawyers. "The Y2K analogy relates to the fact that something is going to happen and there is a lot of work that is going to be done in the lead up to it happening and advice given ... to make sure the transition is smooth," he says. "It's Y2K in the sense that it will end, and then it will be in place, it's not something that we will continue. The structures will always be there but there will be a surge of work that leads up to it ... and then people will have to live with the new regime."

Still, major increases in health-related work will not end should significant reform of the healthcare system actually occur - and eventually be completed. As Smith notes, there is a macro-economic element surrounding health that must be considered. "There has just been a natural economic increase in the amount of money that's being spent on health and aged care due to changing health needs, ageing population, all those things," she says.

Who wins in health reform?

Few answers can be provided yet as to just what national healthcare reform will look like in Australia, but like all proposed reforms of such scale, lawyers are needed, and will ultimately play a hand in carving out the final version.

But is healthcare an area in which all multi-disciplined law firms can actually come to the table? Heinrich notes that health law is now so vast that it usually merely requires a selection of general legal expertise - covering everything from tax, to M&A and industrial relations - in order to service the sector. Still, in many cases, the healthcare sector can be intrinsically complex - if not overly political. The health law specialists who Lawyers Weekly spoke to agree: it takes a deep understanding of the sector in order to truly service its legal work.

"It really does help if you understand the nuances of the healthcare industry," says Wayne Cahill, a partner with Blake Dawson, "particularly because there is often a degree of immediacy with particular issues and you need to have an ability to deal with things straight away, rather than say, "how do you spell 'hospital'?"

According to Smith: "It's an area where I believe that genuine and deep industry understanding is important to clients and I don't think that is something you can fake."

Where it can't be faked is when the question arises - does the legal sector have the capacity to service the changing needs of healthcare? Heinrich has few doubts about the profession's ability: "People are being marketed as health lawyers, or as M&A lawyers. The bottom line is that businesses require a range of advice, and that legal advice - whether it's the health industry, manufacturing or whatever - often requires the same skill sets and disciplines."

There's little doubt also that those firms with the health expertise will continue to reap rewards.

"The [healthcare] percentage of the GDP is so significant, it sits around 9.6 per cent," says Cahill. "I don't think that's going to reduce and I think we'll always have that level of interest in it."

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