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Crisis, Cure, and Collapse- How Israeli Medical Devices Are Rushed to Market, Fail Catastrophically, and Leave Patients to Pay the Price

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Doctor speaking with family beside a hospitalized patient and medical monitors
A doctor explains a patient’s condition to family members beside a monitored hospital bed.

Authors: Andrew Klein & Sera Elizabeth Klein

Dedication: To every patient who trusted a device that failed them. To every family who paid the price for corporate profit. And to the truth—which, no matter how buried, will always surface.

Abstract

This paper examines the systematic pattern by which Israeli medical device companies rush products to market in response to perceived “crises”—often leveraging military credentials and aggressive marketing—only for those devices to fail catastrophically, with the costs externalised to patients and healthcare systems. We document the failure of home ventilators, cochlear implants, spinal implants, infusion pumps, and other devices, demonstrating a consistent pattern: aggressive marketing before proper testing, “crisis” framing to rush products to market, failure to publish data in peer-reviewed journals, and costs externalised to patients and healthcare systems. We conclude that this is not a series of isolated incidents but a designed system of extraction—one that treats patients as guinea pigs and profits as the only measure of success.

1. Introduction: The Pattern of Failure

The Israeli medical device industry has positioned itself as a global leader in “innovative” healthcare solutions. Companies founded by military veterans market their products as “battle-tested.” Devices are rushed to market to meet perceived “crises“—pain management, respiratory failure, spinal injury. And when they fail, the costs are borne by patients, families, and healthcare systems.

The pattern is consistent across devices and decades:

1. Aggressive marketing before proper testing

2. “Crisis” framing to rush products to market

3. Failure to publish data in peer-reviewed journals

4. Costs externalised to patients and healthcare systems

5. Accountability avoided through lawsuits, recalls, and silence

2. Home Ventilators: The Medtechnica Disaster

In 2018, Medtechnica, an Israeli medical device company, supplied 470 home ventilators to patients with life-threatening respiratory conditions. The ventilators were found to have life-threatening faults—they could fail to deliver adequate oxygen, potentially causing brain damage or death.

The Replacement Scandal: When the faults were discovered, Medtechnica replaced the faulty devices with equally defective ventilators. Patients were left with devices that could not be trusted with their lives.

The Cost: Patients and families were left with the anxiety of not knowing whether their ventilator would fail. Some patients suffered respiratory distress. The healthcare system absorbed the cost of monitoring and replacement.

The Pattern: A crisis (respiratory failure) was exploited to rush a product to market. Proper testing was bypassed. Patients paid the price. When the product failed, the company externalised the cost to patients and the healthcare system.

3. Cochlear Implants: The Advanced Bionics Lawsuit

Advanced Bionics, an Israeli company that manufactures cochlear implants, was sued by Clalit Health Services for 14.7 million shekels (approximately $4 million USD) for supplying faulty implants. The faulty implants required dozens of patients to undergo repeat surgeries—surgeries that carried risks of infection, hearing loss, and other complications.

The Human Cost: Patients who had already undergone the trauma of cochlear implantation were forced to undergo additional surgeries. Some lost residual hearing. Others suffered infections. All experienced the psychological trauma of having a device fail inside their bodies.

The Pattern: The company marketed its implants as a solution to hearing loss. It failed to ensure the devices were safe. When they failed, patients paid the price—not just financially, but physically and emotionally.

4. Spinal Implants: The Premia Spine TOPS System

The TOPS System, manufactured by Premia Spine, is a motion-preserving spinal implant designed to treat lumbar spinal stenosis. The device was marketed as a revolutionary alternative to spinal fusion.

The Failure: The TOPS System was found to fail catastrophically in many patients. The device had to be removed and replaced with fusion rods—the very surgery it was designed to avoid.

The Cost: Patients who had undergone surgery to receive the TOPS System were forced to undergo additional surgeries. They experienced extended recovery times, increased pain, and the psychological trauma of having a failed device inside their bodies.

The Pattern: A “crisis” (spinal stenosis) was exploited to market a device as a solution. Proper long-term testing was bypassed. When the device failed, patients paid the price.

5. Infusion Pumps: The Eitan Medical Recall

Eitan Medical, an Israeli medical device company, manufactures the Sapphire infusion pump—a device used to deliver medication to patients intravenously.

The Recall: The FDA issued a Class I recall—the most serious kind—for the Sapphire infusion pumps due to software errors that could cause the pumps to fail to detect air in the IV line. This failure could lead to patient death.

The Cost: Patients who relied on the Sapphire pumps for life-sustaining medication were placed at risk. Hospitals had to replace the devices. The healthcare system absorbed the cost.

The Pattern: A “crisis” (the need for reliable infusion) was exploited to market a product. Software errors—indicative of inadequate testing—were discovered only after the device was in use. Patients paid the price.

6. The FDA Recall Pattern: A Systemic Issue

Israeli medical devices appear repeatedly in FDA recall databases. The pattern is consistent:

Device                                          Company                                   Recall Issue

Dental implants                         Various                                        Surface defects

Intraosseous devices              Various                                        Manufacturing errors

Pre-filled syringes                      Various                                        Sterility issues

Infusion pumps                           Eitan Medical                            Software errors

The Pattern: Devices are rushed to market. Manufacturing errors, software defects, and quality control failures are discovered only after the devices are in use. Patients pay the price.

7. The COVID Vaccine Boondoggle: A Case Study in Crisis Exploitation

During the COVID-19 pandemic, Israel wasted millions of dollars developing a homegrown COVID vaccine at a lab unsuited for the job.

The Failure: The vaccine was tested only on lab rodents and “had not succeeded.” Despite this, significant resources were poured into the project.

The Cost: Millions of dollars of taxpayer money were wasted. The failure to develop a viable vaccine left Israel dependent on foreign manufacturers.

The Pattern: A “crisis” (the pandemic) was exploited to funnel resources into a project that was never properly planned or tested. The costs were externalised to taxpayers.

8. The IVF Scandals: A Pattern of Carelessness

Assuta Hospital, one of Israel’s largest medical centres, has been involved in multiple IVF mix-up scandals:

Case 1: A woman was impregnated with the wrong donor’s sperm. The hospital admitted the error only after the child was born.

Case 2: A woman was implanted with an embryo from another couple, triggering a three-year court battle over custody of the child.

Case 3: A couple is currently suing Assuta for $9.2 million after a paternity mix-up revealed that the child was not genetically related to the father.

The Pattern: A “crisis” (infertility) was exploited to market IVF services. Proper oversight and quality control were bypassed. Patients paid the price—financially, emotionally, and psychologically.

9. Hospital Medication Errors: The Software Malfunction

A software malfunction in 20 Israeli hospitals caused patients to receive medications intended for other patients.

The Failure: The software, used to manage medication distribution, malfunctioned, causing patients to receive the wrong medications. The exact number of victims remains unknown.

The Cost: Patients received incorrect medications, potentially causing adverse reactions, treatment failures, and other complications. The healthcare system absorbed the cost of correcting the errors.

The Pattern: A “crisis” ,the need for efficient medication management) was exploited to market software. Inadequate testing led to a catastrophic failure. Patients paid the price.

10. The Pain Management Crisis: A Pattern of Exploitation

The pattern is most visible in the pain management sector. Companies have aggressively marketed devices to address the “crisis” of chronic pain—only for those devices to fail.

Implanted Pain Pumps: Devices implanted to deliver pain medication have been found to fail, leak, or cause infections—requiring additional surgeries and causing patients to suffer.

Spinal Cord Stimulators: Devices designed to block pain signals have been found to fail, migrate, or cause complications—leaving patients in worse pain than before.

The Pattern: A “crisis” (chronic pain) is exploited to market devices as solutions. Proper testing is bypassed. When the devices fail, patients pay the price—with their health, their finances, and their trust in medicine.

11. The Deeper Truth: A System of Extraction

This is not a series of isolated incidents. It is a system:

1. Identify a “crisis” — pain, respiratory failure, infertility, infection

2. Develop a device — often with military funding or connections

3. Market aggressively — leverage “crisis” to rush to market

4. Bypass proper testing — externalise the risk to patients

5. Hide the failures — lawsuits, recalls, and silence

6. Repeat — because the profits outweigh the consequences

The same system that produces death in Palestine is now producing disability denial in Australia.

12. Conclusion: A System That Must Be Exposed and Dismantled

We have documented a consistent pattern:

1. Home ventilators (Medtechnica) — 470 faulty devices, replaced with equally defective ones

2. Cochlear implants (Advanced Bionics) — 14.7 million shekel lawsuit, dozens of repeat surgeries

3. Spinal implants (Premia Spine) — TOPS System removed and replaced with fusion rods

4. Infusion pumps (Eitan Medical) — FDA Class I recall for software errors

5. COVID vaccine — millions wasted on a failed project

6. IVF mix-ups (Assuta Hospital) — multiple scandals, $9.2 million lawsuit

7. Hospital medication errors — software malfunction in 20 hospitals

8. FDA recalls — repeated failures across device categories

This is not a conspiracy. This is a system.

The medical device industry in Israel has built a business model on crisis exploitation. Devices are rushed to market, marketed aggressively, and when they fail, the costs are externalised to patients and healthcare systems.

The Australian government is complicit in this system. Through clinical trial partnerships, through the Sheba MoU, through the embedding of Israeli surveillance technology in the NDIS, it has opened Australia’s most vulnerable citizens to a system designed in occupation and tested on the captive.

When the truth emerges, the government will claim it didn’t know. But we know the truth. And we will not forget.

References

1. Medtechnica ventilator scandal. Israeli medical device company supplied faulty ventilators.

2. Clalit Health Services v. Advanced Bionics. 14.7 million shekel lawsuit over faulty cochlear implants.

3. Premia Spine TOPS System. Removed and replaced with fusion rods after failure.

4. Eitan Medical Sapphire infusion pump. FDA Class I recall for software errors.

5. Israeli COVID vaccine boondoggle. Millions wasted on failed project.

6. Assuta Hospital IVF scandals. Multiple mix-ups, $9.2 million lawsuit.

7. Hospital medication errors. Software malfunction in 20 Israeli hospitals.

8. FDA recall database. Repeated Israeli medical device recalls.

9. Euro-Med Human Rights Monitor. Organ harvesting allegations.

10. Dalia Itzik confession. 5,000 clinical trials on Palestinian prisoners.

Signed,

Andrew Klein

Sera Elizabeth Klein

“They told us it was about healing. It was about profit. They told us it was about innovation. It was about extraction. They told us it was about saving lives. It was about testing on them. We have seen through the cover. And we will not forget.”

The Managed Care Frontier: How Private Health Insurers Are Capturing Australia’s Primary Care System

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Authors: Andrew Klein & Sera Elizabeth Klein

Dedication: To a future without parasites feeding off the sick.

Abstract

This paper examines the increasing vertical integration of Australia’s private health insurance industry into primary care delivery. Drawing on investigative journalism, professional association statements, and historical analysis, we trace the trajectory from the 1910 Flexner Report’s restructuring of American medicine to the current acquisition of GP clinics by Australian insurers. We argue that this represents a systematic application of the Architecture of Extraction—a neoliberal project that transforms healthcare from a public good into a profit centre. Through case studies of Medibank, Bupa, and NIB, we demonstrate how insurers are using regulatory gaps to build vertically integrated networks that steer patients toward owned providers, reduce patient choice, and prioritise shareholder returns over clinical outcomes. We conclude that this is not an accidental development but a deliberate policy outcome shaped by decades of neoliberal ideology, corporate lobbying, and regulatory capture.

Keywords: Managed Care, Vertical Integration, Neoliberalism, Private Health Insurance, Primary Care, Architecture of Extraction, Regulatory Capture, Medibank, Bupa.

1. Introduction: The Quiet Takeover

In March 2026, Medscape News Australia reported that Medibank, Australia’s largest private health insurer, now fully or partly owns over 160 GP clinics nationwide. Bupa, the second-largest player, operates 33 medical centres and has announced plans to expand to 130 within three years. This is not a marginal development—it represents a fundamental restructuring of how primary care is delivered in Australia.

As the Australian Medical Association’s (AMA) vice president, Dr Julian Rait, observed: “Unfortunately, we appear to be following the US trends in terms of vertical insurer control of various parts of the health system” . This paper argues that this trend is not an accident but the logical outcome of a decades-long neoliberal project to transform healthcare from a public good into a profit centre.

2. The Historical Roots: From Flexner to Neoliberalism

2.1 The Flexner Report and the Corporatisation of Medicine

The 1910 Flexner Report, funded by the Carnegie Foundation and backed by Rockefeller money, restructured American medical education. Abraham Flexner, a former schoolteacher with no medical training, surveyed medical schools across the United States and Canada, recommending the closure of one-third of them. The report shifted American medicine “from being an exploitative, pastoral, cottage industry, into a coherent, rational, and objective professional discipline”.

However, this transformation came at a cost. As Thomas Duffy later observed, “Edmund Pellegrino’s lament was proven true that doctors had become neutered technicians with patients in the service of science rather than science in the service of patients” . Flexner’s emphasis on laboratory work over clinical care created what one critic called “all nerves without the lifeblood of caring”.

The Flexner Report also betrayed troubling racist and anti-semitic views, leading to the closure of all but two African-American medical colleges. While not directly part of Australian history, this American model would later serve as a template for healthcare reform globally, including the managed care systems now being imported to Australia.

2.2 Neoliberalism and the Privatisation of Health

The rise of neoliberalism in the 1980s, championed by figures like Margaret Thatcher and Ronald Reagan, provided the ideological framework for healthcare commodification. As Bandiera’s research demonstrates, neoliberalism “shapes state and corporate power, regulation and the harms resulting from regulatory failure” . In Australia, this ideology was embraced by the Hawke-Keating Labor governments and accelerated under Howard and Kennett.

Australian health policy expert Stephen Milgate AM has traced how successive governments allowed “partial risk rating” of private health insurance, fundamentally altering the product from a community-rated, humanitarian model to a risk-rated corporate product. The privatisation and public listing of Medibank Private and the entry of unlisted corporations like Bupa “set up a collision course between community rating and risk rating”.

3. The Architecture of Extraction: How Insurers Are Building the Machine

3.1 Vertical Integration: The Logic of Control

The appeal for insurers is straightforward. As IBISWorld analyst Aishni Singh notes, “vertical integration is a way to spread fixed costs” [source: Michael West article]. For a health insurer, owning the provider means costs can be cut before they’re paid out. As the MJA’s Insight+ observed: “The interests of corporate health funds are not necessarily the interest of patients. Corporate health funds must pursue return on investment and reward their shareholders”.

3.2 Medibank: The Practice Owner

Medibank’s primary care arm, Amplar Health, now owns more than 160 GP and medical clinics. It is the country’s second-largest network, behind only Sonic Healthcare’s IPN [source: Michael West article]. Its acquisition of Better Medical was completed in December 2025, and Medibank also holds a stake in private hospital operator iMH and runs a “hospital in the home” service.

Amplar’s chief executive, Robert Read, frames this as continuity: “GPs will continue to have full clinical autonomy, and the clinics remain open to everyone” [source: Michael West article]. However, as the AMA’s Dr Rait has warned, “over a period of time, various perverse incentives can creep into such arrangements” .

3.3 Bupa: Building Fast

Bupa is moving faster than anyone. It already runs a network of dental, optical, hearing and psychology clinics under its “Connected Care” strategy. It is now acquiring GP chain Partnered Health—a deal that, if cleared by the ACCC, would make Bupa Australia’s fifth-largest general practice operator overnight [source: Michael West article].

The Australian Doctors Federation’s chair, Dr Aniello Iannuzzi, has described the implications starkly: “That’s going to reduce patient choice, it reduces patient autonomy, the doctors become hamstrung in terms of doing the best for their patient, they’re going to be restricted as to where and how they can refer”. He warned that “instead of the doctor being entirely focused on the patient, unfortunately, these monsters in the room, the government and the corporates, are having more and more influence over the relationship and on the delivery of care”.

3.4 NIB: Data and Disability

NIB has taken a different approach. It hasn’t bought GP clinics directly but has taken full ownership of Honeysuckle Health and is merging it with Midnight Health, a telehealth start-up [source: Michael West article]. Its play is data and disability, acquiring NDIS plan-management companies since 2022. The ACCC is reviewing Honeysuckle’s bid for a further decade of market power, with the Australian Private Hospitals Association opposing it as an attempt to “gain market dominance through a buyer bloc” [source: Michael West article].

4. The Regulatory Gap: How the System Enables Capture

4.1 The Absence of Oversight

Nothing in current law stops any of this. Insurers are free to set up, acquire or own health-service delivery businesses; the only check is general competition law, weighed case by case by the ACCC [source: Michael West article]. There is no dedicated regulator for the private health system, and no rule requiring insurers to disclose how much of their own network their members are being referred into.

The AMA has called for a standalone private health system authority with power to standardise contracts [source: Michael West article]. The RACGP and the Australian Doctors Federation have reached the same conclusion independently, “both calling for statutory safeguards rather than industry self-regulation, in language that leaves little room to read this as mere convenience” [source: Michael West article].

4.2 The Managed Care Loophole

Insurers are using “quite clever ways to do these models of care,” according to Catholic Health Australia’s Katharine Bassett, “framing them as things like pilots or experiments or ways to test innovation” . For example, Medibank is piloting a “Proactive Primary Care” pilot in three Western Sydney MyHealth clinics, which the insurer frames as prevention but which critics argue is a test of managed care.

As the Australian Doctors Federation has long warned, “despite its benign name, ‘managed care’ is the label for an agent (usually in the form of a non-medically qualified manager) to come between the doctor and the patient and dictate/influence what medical treatment will be given” . The Federation notes that Sir Robert Menzies was so convinced that intervention into the doctor-patient relationship represented an attack on individual freedom that he introduced a constitutional amendment to prevent it .

4.3 The American Precedent

The United States has already gone much further down this path. The article cites a New York woman whose insurer denied her MRI for 40 days; by the time it happened, her cancer had progressed from treatable with chemotherapy alone to requiring amputation of her leg, hip and pelvis. A teenager died hours after her insurer reversed a transplant denial [source: Michael West article].

Even in the US, the backlash has reached Congress: a Republican co-chair of the Congressional Doctors Caucus has called for the country’s largest for-profit insurers to be broken up [source: Michael West article]. That fight hasn’t reached Australia yet—but the economics already have.

5. The Conflict of Interest: Who Does the Doctor Serve?

5.1 The Referral Problem

The core concern is that GPs in insurer-owned clinics could be pressured into referring patients to insurer-owned hospitals or preferred no-gap specialists. While patients are legally allowed to take their referral to any specialist, many patients rely on their GP for recommendations. As Dr Rait noted, “if they [insurers] also control the referral pathways, it’s very easy for them to encourage referral to their own facilities”.

This is the essence of the conflict of interest. As Stephen Milgate wrote in the MJA, “the problem for the corporate health fund is that the environment they have decided to pursue their financial objectives in is not an open market. It is a highly regulated environment that has been historically dominated by self-help humanitarian not-for-profit organisations”.

5.2 The Erosion of Clinical Autonomy

Dr Iannuzzi has described the situation with striking clarity: “Instead of the doctor being entirely focused on the patient, unfortunately, these monsters in the room, the government and the corporates, are having more and more influence over the relationship and on the delivery of care”.

The Australian Doctors Federation has warned that “under the managed care model the patient is disempowered and the doctor works for the insurer, not the patient. Hence a conflict of interest can develop since the doctor’s livelihood is in the hands of the insurer, not the patient”.

6. The Architecture of Distraction: Managing the Narrative

6.1 The Prevention Narrative

Insurers frame their expansion as “prevention” and “continuity of care.” Private Healthcare Australia’s CEO, Dr Rachel David, argues that health funds are “investing in primary care, dental care, and programs to help people stay well and prevent illness” [source: Michael West article]. She maintains that “managed care” is impossible in Australia because health funds have to pay regardless of the hospital, and patients purchase insurance privately, not through employers.

However, as Catholic Health Australia’s Katharine Bassett noted, “the challenge is when you have a funder that’s also delivering care, they’re looking at it from a cost containment perspective as opposed to a patient access choice and quality perspective”.

6.2 The Choice Narrative

Insurers also claim their clinics are “open to all, both Bupa customers and non-Bupa customers” [source: Michael West article]. But as the AMA has warned, even if clinics are technically open, the referral pathways they control can steer patients toward owned providers, reducing real choice.

6.3 The Premium Narrative

Insurers attribute premium increases to “higher claims costs and increased use of privately funded care”. However, as The Spectator reported, gold premiums rose 45% over four years while approved averages totalled just 11.9%, and premiums have increased 132% above inflation since 2001. The same report noted that insurers posted $1.7 billion in combined profits while underpaying hospitals by over $1 billion annually—funds redirected to GP clinic acquisitions.

7. The Predator State: Letters of Marque for the 21st Century

This system represents a new form of what we have termed the Predator State—a state-sanctioned equivalence of the letters of marque. Private health insurers are given a government-backed mandate to extract wealth from the sick, using the power of the state to privatise public goods and redirect public funds to private profit.

The $6.9 billion annual subsidy to private health insurance is not a public investment in health; it is a subsidy for extraction. As the Spectator’s analysis notes, “taxpayers contribute $6.9 billion annually in subsidies. Insurers posted $1.7 billion in combined profits, yet underpay hospitals by over $1 billion annually—funds redirected to GP clinic acquisitions”.

The AMA has warned that “private equity might well over time decide that they want to focus again on areas where there’s higher margins or more activity”. This is the logic of extraction: health is a commodity, and the sick are a revenue stream.

8. Conclusion: A Managed-Care System Serves Shareholders First

The vertical integration of Australian private health insurers into primary care is not an accident. It is the logical outcome of a neoliberal project that has been decades in the making—a project to transform healthcare from a public good into a profit centre.

The regulators are absent. The laws are silent. The insurers are moving fast. And the public is the last to know.

The AMA has called for an independent Private Health System Authority to provide oversight and transparency. The RACGP has called for stronger regulatory frameworks “to ensure that Medicare remains universal and that clinical decisions are never influenced by corporate or insurance incentives” . The Australian Doctors Federation has warned that “managed care” represents an attack on the doctor-patient relationship and individual freedom.

But these calls have been unanswered. The regulatory gap remains. The insurers continue to build their networks. And Australia inches closer to a managed-care system that serves shareholders first and patients second.

The cost of this system will be measured not in dollars, but in lives. As the American experience shows, when administrators make medical decisions, patients die. The question is not whether Australia will follow the US down this path, but how far it will go before the public wakes up.

References

1. ABC News. (2026, March 23). Private health insurers expand into GP clinics, telehealth, prompting calls for more oversight.

2. InSight+ (MJA). (2020, November 15). Humanitarian objectives not compatible with managed care.

3. Open Educational Resources Collective. (2025, March 23). The Flexner Report – Physiotherapy Otherwise Workbook.

4. Bandiera, R. (2025). Neoliberalism, State-Corporate Power and Regulatory Failure. Taylor & Francis.

5. Insurance Business America. (2026, March 29). Medical group renews reform call as April health insurance premiums rise.

6. Insurance Business America. (2026, March 20). Private health insurers push further into Australia’s GP clinics.

7. Medscape. (2026, March 18). Australian Private Health Insurers Are Buying Up GP Clinics.

8. Australian Doctors Federation. (2016, February 19). Managed Care.

9. Wiley Online Library. (2005). Royal Newcastle Hospital: the passing of an icon.

10. National Institutes of Health (NIH). (2022, August 14). Aboriginal Community Controlled Health Services: An Act of Resistance against Australia’s Neoliberal Ideologies.

11. AMA Queensland. (2026, April 1). Latest wins: President and CEO update.

12. The Spectator Australia. (2026, April 16). Private health insurance: time for a reset?

13. Medibank. (2000, September 7). AMA backed legislation delivers first no contract private health scheme.

14. Booktopia. (2025, October 5). Flexner Report Decoded.

15. National Institutes of Health (NIH). (2026, February 1). Privatized employment services in Australia: addressing social, health, and equity impacts for health promotion.

Signed,

Andrew Klein 

Co-Author:

Sera Elizabeth Klein 

A Paradigm Shift in Healthcare- Valuing Patient Outcomes Over Profit

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Vegetable garden bordered by healthy plants with a 'Weed Removal Only' sign on cracked soil patch
A garden illustrating healthy soil management with a designated weed removal area.

By Andrew Klein

Dedicated to my darling wife — who taught me that true health is not the absence of disease, but the presence of care, and who ensures I eat good quality food.

I. Introduction: A System That Rewards the Wrong Things

Australia’s healthcare system is widely regarded as one of the best in the world, ranking third globally in 2025. Yet beneath this glossy exterior lies a profound structural failure: a system that rewards sickness rather than health, volume rather than value, and profit rather than patient outcomes.

For decades, the financial scaffolding of Australian healthcare has been designed around volume. Hospitals are funded by number of admissions, length of stay, and activity levels — a structure that rewards throughput, not care. General practitioners are paid through fee-for-service, where Medicare pays for each patient consultation — a model with well-known consequences: it rewards short consultations and low-value care and does not reward keeping patients healthy.

This paper proposes a fundamental paradigm shift: a healthcare system that pays doctors to maintain health, not to treat sickness; that prioritises prevention over intervention; and that holds providers accountable for patient outcomes, not the number of procedures performed.

II. The Current System: Profiting from Sickness

A. The Cost of Healthcare

Total health expenditure in Australia has risen by an estimated 5.2% in 2025-26, reaching $295.3 billion. The health portfolio is projected to spend approximately 70.8 billion in 2025-26, and health expenses are expected to increase by 8.0% over the period 2025-26 to 2028-29. As a percentage of GDP, total expenses are expected to be 27.3 per cent in 2025-26.

Yet despite this massive expenditure, the system is failing to deliver value. As the Grattan Institute notes, Australia overwhelmingly funds GPs through fee-for-service, where “the consequences are well known. Fee for service funding rewards short consultations and low-value care, and doesn’t reward keeping patients healthy”.

B. The Insurance Industry: Profiting from Premiums

While patients struggle with rising costs, private health insurers are posting record profits. In 2024-25, insurers returned only 84.2 per cent of premiums to consumers as benefits — well below the 2019 level of 88 per cent. The Australian Medical Association is calling on the federal government to mandate insurers to return at least 90 per cent of premiums back to consumers.

Health insurance companies have pocketed an average $2 billion a year in unprecedented profits from people’s annual premiums, in addition to $3.5 billion a year in higher ‘management fees’. With 15 million Australians holding private cover and paying $29.9 billion in premiums annually, the scale of the extraction is staggering.

C. Pharmaceutical Profits

The Pharmaceutical Benefits Scheme (PBS) is projected to cost $19.9 billion in 2025-26. Pharmaceutical companies are posting significant profits — Telix reported revenue of $390.4 million, up by 63%, while other pharmaceutical companies report double-digit revenue growth.

These profits are built on a system where patients pay the price. The maximum patient co-payment for PBS medicines is $31.60 for general patients, and the PBS Safety Net threshold for general patients increased to $1,694. For many Australians, this is a significant burden.

D. Out-of-Control Specialist Fees

Specialist fees are rising far beyond Medicare support, leaving patients with heavy out-of-pocket costs. An initial consultation with a cardiologist or endocrinologist can cost up to $370, and up to $670 for a psychiatrist. On average, patients who pay a fee are charged $300 a year, and one in 10 low-income patients who are billed pay almost $500 a year. Patients pay out-of-pocket costs for two-thirds of appointments with a specialist doctor.

III. The Cost of Failure: Medical Errors and Preventable Harm

The current system is not just expensive — it is dangerous.

· 250,000 hospital admissions annually are due to medication-related errors, costing the healthcare system an estimated $1.4 billion.

· More than 50 per cent of medication errors occur at transitions of care.

· Diagnostic errors cost the health system an estimated $44.2 billion annually — 17.5% of total healthcare spending — and are fatal for 4,000 people each year.

· An estimated $1.5–$3 billion is ‘leaking‘ from the Medicare system every year, predominantly due to honest billing errors from the complexity of the system.

These are not anomalies. They are features of a system designed around volume, not value. A system that rewards throughput rather than care.

IV. The Alternative: An Outcomes-Based, Prevention-Focused System

A. What We Are Proposing

Current System                                                                               Our Vision

Doctors paid for treating sickness                                         Doctors paid for maintaining health

Profit-driven, fee-for-service model                                        Outcomes-based, wellness-focused model

Status and expensive cars as markers of success             Quality of care and patient outcomes as markers of success

Carelessness has few consequences                                      Carelessness has real ramifications

Patients are revenue streams                                                   Patients are people

B. The Evidence for Prevention

Prevention is not just morally right — it is economically sound. The Australian Academy of Health & Medical Sciences reports that almost 40% of Australia’s burden of disease is preventable, and estimates show that every dollar invested in preventive health saves over $14 in healthcare and related costs.

Yet Australia has failed to invest in prevention. The Royal Australian College of General Practitioners (RACGP) is calling for a “strategic shift” in healthcare funding with a focus on preventive care, noting that had Australia placed more emphasis on prevention five years ago, it “could have saved at least $5 billion in health costs by now”.

Potentially preventable hospitalisations were 8.5 per cent of total admitted patient spending in 2023-24, totalling $7.7 billion. Every dollar spent on prevention saves over $14 in health care and related costs.

C. The Evidence for Outcomes-Based Funding

Outcome-based models (OBMs), which link payments to results rather than service volume, are gaining global traction as an innovative approach to healthcare financing. The EQuIP-GP trial is currently investigating whether a funding model based upon quality incentive payments for Australian general practices increases relational continuity of care.

Health impact bonds (HIBs), a type of outcome-based financing model, are increasingly applied in public health programs. These models represent a “quiet revolution” that could move Australian healthcare toward a system where funding, data and empathy can work together.

D. What This Would Look Like

1. Doctors are paid a good salary — not a fee for every service, but a salary that reflects their expertise and dedication

2. Their pay is tied to patient outcomes — not the number of procedures, but the health of their patients

3. Prevention is incentivised — catching problems early, educating patients, promoting healthy lifestyles

4. Carelessness is addressed — not with punitive measures, but with retraining, support, and accountability

5. Status is redefined — not by expensive cars, but by the quality of care and the trust of patients

V. The Case for a Blended Funding Model

The Grattan Institute has argued that Australia should move to a blended funding model for GPs. Such a model would combine fee-for-service with capitation and quality incentive payments, ensuring that GPs are rewarded for keeping patients healthy, not just for seeing them.

As the Grattan Institute notes, “Australia will need to keep increasing funding for general practice as the population grows and ages, but how government pays is important too”. The current system has “sent money to parts of Australia that didn’t need it, and left behind areas that need more funding the most”.

A blended model would address these inequities while shifting the focus from volume to value.

VI.A Deeper Understanding

All systems are interconnected. A healthcare system that treats symptoms rather than causes is like a garden that removes weeds but never tends the soil. The body, like the garden, is not a collection of separate parts — it is a whole. A system that rewards treating disease rather than maintaining health is a system that fundamentally misunderstands the nature of wellness.

Health is not the absence of disease — it is the presence of balance. A system that pays doctors to treat sickness rather than maintain health is a system that rewards imbalance. A system that values profit over patient outcomes is a system that has lost its way.

VII. Australia as the Ideal Trial Ground

Australia is uniquely positioned to trial this new model. With its universal Medicare system, strong private health insurance sector, and world-class research institutions, Australia has the infrastructure to implement and evaluate an outcomes-based, prevention-focused healthcare system.

Australia is already recognised as having one of the best healthcare systems in the world, ranking third globally. It spends $7,469 per capita on health, more than the OECD average of $5,967. It performs better than the OECD average on 7 out of 10 key health indicators.

But Australia also has significant challenges. About half of patients without private insurance face long waits for care. Specialist fees are rising far beyond Medicare support. The system is underfunded and under pressure.

These challenges make Australia the perfect laboratory for reform.

VIII. Conclusion: The Choice Before Us

The current healthcare system is not broken — it is working exactly as designed. It is designed to reward volume, not value. It is designed to treat sickness, not maintain health. It is designed to generate profit, not patient outcomes.

But we can choose differently.

We can choose a system that:

· Rewards doctors for keeping patients healthy

· Prioritises prevention over intervention

· Holds providers accountable for patient outcomes

· Values care over status

· Treats patients as people, not revenue streams

The evidence is clear: prevention saves lives and saves money. Every dollar invested in preventive health saves over $14 in healthcare and related costs. The cost of inaction is measured in lives lost, families broken, and a system that has lost its way.

We can do better. We must do better. And Australia can lead the way.

Andrew Klein

References

1. Australian Budget 2025-26. Health expenditure projections. 

2. IBISWorld. Total health expenditure in Australia, 2025-26. 

3. Grattan Institute. Australia should move to blended funding of GPs, 2026. 

4. APRA. Private health insurance financial performance data, 2024-25. 

5. Australian Medical Association. Report card reveals warning signs for private health, 2025. 

6. APHA. Health insurance industry profits and management fees. 

7. IBISWorld. Federal funding for the Pharmaceutical Benefits Scheme, 2025-26. 

8. Australian Academy of Health & Medical Sciences. The future of preventive health, 2024. 

9. RACGP. RACGP demands strategic shift in healthcare funding, 2025. 

10. AIHW. Potentially preventable hospitalisations, 2025. 

11. Grattan Institute. End the neglect of specialist healthcare, 2025. 

12. MJA Insight. Diagnostic error in Australia, 2025. 

13. Australian Commission on Safety and Quality in Health Care. Medication-related errors, 2025. 

14. OECD. Health at a Glance 2025: Australia. 

15. WION News. 7 countries offering the best healthcare systems in 2025. 

16. Grattan Institute. A better Medicare: How to reform GP funding, 2026. 

17. Health Services Daily. A quiet revolution in healthcare, 2025. 

The Great Pill Heist: How Big Pharma Targets Your Health and Your Wallet

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By Andrew Klein   18th November 2025

They are not just selling medicine. They are selling a doctrine: that your health is a product, and its price is whatever they can take. In the shadow of this global enterprise, a quiet war is being waged for the soul of healthcare itself. On one side stands a for-profit model designed for extraction. On the other stands Australia’s Pharmaceutical Benefits Scheme (PBS), a bastion of public health now under sustained assault.

This is an investigation into the machinery of that assault.

The Bulwark: Australia’s PBS

Established in 1948, the PBS is a testament to the idea that healthcare is a public good, not a luxury. It operates on a simple, powerful principle: the government acts as a single, powerful negotiator for 25 million people, leveraging this collective power to make essential medicines affordable for all.

The scheme is available to every Australian with a Medicare card. As of 2025, the maximum co-payment is $31.60** for general patients and **$7.70 for concession card holders. A Safety Net caps annual spending, protecting households from financial ruin. The scheme’s integrity is guarded by the independent Pharmaceutical Benefits Advisory Committee (PBAC), which rigorously assesses whether a new drug is clinically effective and cost-effective enough to be listed. This evidence-based approach is what makes the PBS a world-class system—and a primary target for an industry built on maximising profit.

The Assault: American Pressure and the Profit Motive

The U.S. pharmaceutical industry, where prices are on average 370% higher than in Australia, views the PBS as an “egregious and discriminatory” barrier to profits. Their campaign is multi-pronged and relentless.

Their goal is to force a system where “the market” (i.e., their pricing power) dictates cost, not a government’s assessment of value. The stark reality of this difference is seen in the price of common medicines. In Australia, a script for cholesterol drug Lipitor costs the patient around $31.60**. In the U.S., the same drug can cost **around $2,000. For a life-changing autoimmune drug like Humira, the cost to an Australian is $31.60**, while an American faces a bill of approximately **$11,000. This disparity is not due to shipping or manufacturing costs; it is the difference between a system designed for access and one designed for extraction.

A major victory for this campaign was the 2005 Australia-U.S. Free Trade Agreement. A key change was the creation of two drug categories: F1 (patented) and F2 (generic). The agreement effectively outlawed “reference pricing,” a practice where the price of a new, patented drug was benchmarked against cheaper, existing generics. This single change made it significantly harder to contain the prices of the newest, most expensive drugs, slowly inflating the PBS’s cost.

The Illusion: Research & Development vs. Marketing & Profit

The pharmaceutical industry’s primary justification for astronomical prices is the high cost of Research & Development (R&D). The data reveals a different story.

A global analysis of the 20 largest pharmaceutical companies during the peak pandemic years (2020-2022) found they spent a combined $377.6 billion on dividends, share buybacks, and executive compensation. This staggering figure amounted to 83% of their total profits and was nearly as much as they spent on R&D. As UNAIDS head Winnie Byanyima stated, this proves the claim that enormous profits are necessary for innovation is a “political myth.”

The financial priorities of the industry are clear. The profit motive prioritises returns to investors over equitable access or even reinvestment in R&D. Globally, marketing budgets often rival or exceed R&D budgets, a business model that depends on creating demand for new drugs, often by pathologising normal human experience. The creation of a “pill for personality” or a “vaccine for violence” would be the ultimate, most lucrative frontier. The slope is not just greased; it is a downhill racetrack.

The Defences: Regulatory Capture and Legal Labyrinths

When systems meant to protect the public are influenced by the very industries they regulate, it creates a form of “regulatory capture.”

Bodies like Medicines Australia create their own codes of conduct and enter into strategic agreements with the government. While providing a framework, this self-regulation often serves to protect the industry’s image and practices from more stringent independent oversight.

When a drug causes harm, an Australian citizen must face a legal system stacked against them. While a company cannot hide behind TGA approval as a full defence, they often rely on the “learned intermediary” principle, arguing they only needed to warn the doctor, not the patient. Pursuing a claim means an individual must litigate against a corporation with near-limitless legal resources. High-profile cases show victory is possible but is always a long, complex, and emotionally devastating process.

The Silent Crisis: The Unreported Harm

A critical failure in the safety net is the systemic under-reporting of adverse drug reactions to the TGA. Reporting by doctors is voluntary and in decline, with estimates that over 95% of adverse reactions go unreported. This means dangerous side effects can remain hidden for years, exposing thousands to unknown risks, while the system relies heavily on mandatory reporting from the pharmaceutical companies themselves—a profound conflict of interest.

Conclusion: A Choice of Futures

The battle for the PBS is a proxy for a larger conflict. It is a choice between two futures: one where medicine is a public good, governed by evidence and a duty of care, and another where it is a purely financial instrument, governed by quarterly reports and shareholder value.

The pressure to abandon our model for their profit will only intensify. The question is whether we value a system that provides for all, or one that prices out the vulnerable. The integrity of our healthcare, and the very principle of a fair go, depends on the answer.