Bundaberg Friendly Society Medical Institute Limited and Australian Community Pharmacy Authority
[2012] AATA 748
•30 October 2012
[2012] AATA 748
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/0756
Re
Bundaberg Friendly Society Medical Institute Limited
APPLICANT
And
Australian Community Pharmacy Authority
RESPONDENT
DECISION
Tribunal Senior Member Bernard J McCabe
Date 30 October 2012 Place Brisbane The decision under review is set aside. The Tribunal decides in substitution that a recommendation be made to the Secretary pursuant to s 90 of the National Health Act 1953 (Cth) that the applicant be approved to supply pharmaceutical benefits from a pharmacy established at the Friendly Society Private Hospital in Bundaberg.
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Senior Member Bernard J McCabe
CATCHWORDS
HEALTH AND COMMUNITY SERVICES – Pharmaceutical benefits – Approval to supply pharmaceutical benefits – Private hospital – Number of licenced of beds – Other approved health services – Sufficient number of licenced beds and/or patients to satisfy National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (Cth) – Decision under review set aside and substituted.
LEGISLATION
Health Insurance Act 1973 (Cth)
National Health Act 1953 (Cth) ss 90, 94
National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (Cth) r 135
Private Health Facilities Act 1999 (Qld) ss 8, 9, 10
Private Health Insurance Act 2007 (Cth) s 121-5
CASES
Re Issa and Australian Community Pharmacy Authority [2012] AATA 374
REASONS FOR DECISION
Senior Member Bernard J McCabe
30 October 2012
This case considers the effect of r 135(4) in Part 2 of Schedule 1 to National Health (Australian Community Pharmacy Authority Rules) Determination 2011 (“the Rules”) which deals with the circumstances in which a pharmacy dispensing medicines under the Pharmaceutical Benefits Scheme (“PBS”) can be established within a private hospital.
BACKGROUND
The applicant, Bundaberg Friendly Society Medical Institute Limited (“the Society”), operates a private hospital in the regional Queensland city of Bundaberg. The hospital is licensed under the relevant Queensland legislation to have 113 beds. But like many private hospitals, the Society’s hospital provides additional medical services which do not involve an overnight stay. Those additional services are authorised by the licence from the Queensland Department of Health, although the licence does not specify how many people the hospital may treat in these services. The applicant says the hospital has the capacity to treat in excess of 150 people at any time if one includes the 113 licensed beds (which are almost always occupied) and other facilities. The Society wants to add a pharmacy that will service those patients and others, including members of the general public.
In order to establish a pharmacy that is authorised to dispense PBS medicines to the public, the applicant must obtain an approval from the Secretary of the Department of Health and Ageing under s 90 of the National Health Act 1953 (Cth). The Secretary refers applications to the Australian Community Pharmacy Authority – the respondent in these proceedings – for a recommendation. In the course of its deliberations, the Authority considers the applicable provisions in the Rules. The rule which governs the approval of pharmacies located within a private hospital is r 135.
After considering the Society’s application, the Authority concluded it could not recommend that an approval be granted. It was satisfied the Society met all aspects of the rule save the criteria in r 135(4). Rule 135(4) provides:
The private hospital is registered or licensed, under the law of the State or Territory in which the private hospital is located:
(a) to contain at least 150 beds to provide health services to patients; or
(b) to treat, accommodate or lodge at least 150 patients at any one time.
The Society has asked the Tribunal to reconsider that decision.
I note the Society has recently held an approval to dispense PBS medicines under s 94 of the National Health Act. That approval is of a limited nature: it permits the PBS medicines to be supplied to patients of the facility, but not more widely. That approval was relinquished immediately before the hearing so that it would not be an obstacle to making a recommendation pursuant to rule 135, although it does not appear there would be any obstacle to reactivation of the s 94 approval were the applicant unsuccessful in these proceedings.
THE FACTS
In order to get a complete picture of the facts, it was necessary to ask the applicant to provide some additional information. That information could only be provided if requested by the Tribunal, for the reasons explained in Re Issa and Australian Community Pharmacy Authority [2002] AATA 374. I was satisfied the evidence provided in the affidavit of Mr Cooper dated 26 October 2012 (exhibit 3) and the other material tendered in the applicant’s bundle of additional material (exhibit 2) was relevant for the purposes of the hearing because it clarified aspects of the evidence and arguments. I note the original application was prepared without the benefit of legal advice and there is no suggestion the applicant has engaged in strategic behaviour. Some of the information from Queensland Health – the most recent iteration of the licence for example – has only become available recently. In those circumstances, and in the absence of objection from the respondent, I decided the material should be admitted into evidence.
I have already noted the applicant conducts a private hospital in Bundaberg, but one arrives at that conclusion via a tortured route. A private hospital for the purposes of the National Health Act is a facility which has been declared to be a private hospital under the Health Insurance Act 1973 (Cth). That Act says a private hospital is a private hospital if it has been identified as such in a statement issued under s 121-5(8) of the Private Health Insurance Act 2007 (Cth). As it happens, no one was able to locate the statement in relation to the Society’s hospital and copies were unavailable from the relevant authority. Even so, I understand from correspondence with the Department of Health and Ageing that there is no doubt the Society’s facility is a private hospital for the purposes of the Act.
The Society also holds a Licence to Operate a Private Health Facility issued by the Queensland Department of Health under the Private Health Facilities Act 1999 (Qld). The current licence is numbered QDH1031/73 and its most recent iteration is dated 17 September 2012. A copy of the licence is annexed to the affidavit of Mr Cooper, the chief executive of the Society’s hospital (exhibit 3, annexure ADC-7). The licence says:
(a)The Society is licensed to operate a private health facility called Friendly Society Private Hospital which is a private hospital;
(b)It is licensed for 113 beds;
(c)There is a list of specialist and general medical or surgical services that may be provided in the private hospital, and an allocation of a specific number of beds for each service out of the total of 113 beds.
I interpolate that s 8 of the Private Health Facilities Act defines a private health facility to include a private hospital or a day hospital. A private hospital is defined in s9(1) as:
… a facility at which health services are provided to persons who are discharged from the facility on a day other than the day on which the persons were admitted to the facility.
…
A day hospital, in contrast, is defined in s 10(1) as:
… a facility at which day hospital health services are provided to persons who are admitted to, and discharged from, the facility on the same day…
The licence does not expressly authorise the Society to conduct a day hospital. But the conditions of the license elaborate on what the licensee may do. The conditions identify additional “approved health services” that are, for the most, day hospital services. After noting the licensee must comply with the requirements contained in the Clinical Services Capability Framework published by Queensland Health (which sets out minimum standards and requirements for the conduct of particular services), condition two states:
The type of approved health services are those stated in this licence plus: Anaesthetic Lvl 4 Adult & Adolescent and Lvl 3 Child > 1 year; Endoscopy Lvl 3 Adult & Adolescent; Medical Oncology and Haematology (Day) Lvl 4; Ambulatory Rehabilitation Lvl 5; GP - Primary Lvl 6; GP – after hours Lvl 5; Medical Imaging Lvl 5; Nuclear Medicine Lvl 4; Pathology Lvl 4; Medication Lvl 4.
The respondent notes the licence does not allocate bed numbers to any of the additional “approved health services” listed in condition two the way it does in relation to the private hospital services listed at the top of the licence. That may be significant, for reasons I will explain in due course.
If the licence does not allocate numbers, how can one determine how many patients can be treated in the course of providing the additional approved health services? The Society says that is easy enough to do. It relies on the evidence of Mr Cooper, who provided a statement and gave evidence at the hearing. He explained the Clinical Services Capability Framework imposed detailed requirements as to the number of trained staff, type and range of equipment and the physical facilities that had to be available to provide each service to a patient. The interaction of those variables enabled one to determine a maximum number of patients that could be treated. Using that approach, he was able to estimate the number of patients who could actually be undergoing treatment of some kind within the complex at a given time. His estimate is set out in detail at annexure ADC-13 to his affidavit.
In summary, the Society says 61 patients might be receiving the additional approved health services at any given time. Some of those services were provided by contractors, like the radiology and pathology firms that occupied space at the hospital, but I do not think anything turns on that distinction since the services are provided pursuant to the licence and could not be provided in that location at that level without a licence. The Society says the 61 patients should be added to the 113 beds referred to in the licence. I do not think it is quite that simple: in cross-examination, Mr Cooper agreed some of the people undergoing treatment and counted as part of the 61 would actually be inpatients who occupied some of the 113 beds. But Mr Cooper said no more than 10 inpatients would be counted as part of the 61 receiving additional approved health services. In the absence of evidence to the contrary, and given:
(a)Mr Cooper was a knowledgeable and credible witness; and
(b)The correspondence from Queensland Health in annexures ADC-10 and 11 of Mr Cooper’s affidavit appears to support his view.
I accept his evidence. I am satisfied the Society’s private hospital routinely treats 113 persons as inpatients and at least 50 others who consume the “approved health services” referred to in condition two of the licence.
APPLYING THE LAW
The Society’s case is simple given the factual findings they urged me to make (and which I have made): the Society is able to satisfy r 135(4)(b) because the hospital treats at least 150 persons at a time. Mr Favell, for the applicant, says a plain reading of the rule admits of no other conclusion.
Mr Dillon, for the respondent, urges a different approach to the interpretation of r 135. He says r 135(4) was drafted with two limbs – one referring to a number of licensed beds and another referring to the performance of functions for a specific number of people – because the rules are drafted under Commonwealth legislation that applies to a number of different systems of state regulation. Mr Dillon pointed out the Queensland regulator of hospitals licensed them to operate with a specific number of beds. Not all of the other states operated in this way, which is why the second limb was included – so that even if a hospital licensing regime in a state did not allocate beds to the hospital in a general way, the licence in those jurisdictions still identified functions to be carried out on a finite number of individuals. In other words, the rule was drafted with two limbs to accommodate different state licensing regimes, not to provide applicants with two different ways to meet the test. The respondent says the Society could only meet r 135(4)(b) if a specific number of persons was identified in the licence as being eligible for treatment in the course of providing the additional “approved health services”. Since the Queensland regulator did not include such a number in the licence for that purpose, the only way a Queensland hospital could satisfy r 135(4) was by meeting the requirement in r 135(4)(a).
The dispute between the Society and the respondent comes down to this: the respondent says there must be an express provision in the licence authorising the treatment, housing or accommodation of at least 150 patients. Without such an express provision as a limiting factor, the respondent fears any private hospital of any size would be able to establish a pharmacy. The Society says there is no need to specify a number in the licence because it is possible to derive a finite number by examining what services the applicant is authorised to provide in light of the requirements imposed by the Clinical Services Capability Framework. In other words, there is a definite number that is implicitly authorised pursuant to the licence, and that number in this case is in excess of 150.
I disagree with the respondent. I do not think it is necessary that the licence expressly nominate a finite number of patients to be treated, accommodated or housed in order to attract the operation of r 135(4)(b). It is enough if it is possible to derive a number in excess of 150 through a process of reasoning that provides the respondent with the certainty it needs to carry out its function of ensuring that pharmacies remain viable and deliver PBS medicines to the community. In this case, that process is provided for in the licence. It expressly identifies the approved health services that are authorised under the licence. It also refers to the Clinical Services Capability Framework that is used to regulate the way in which the service is delivered. Through an audit process, every hospital in Queensland that is subject to this licensing regime will be able to identify the precise number of patients it can treat at a given time by reference to the matters referred to in the Clinical Services Capability Framework.
While the total number of patients who can be treated is not expressly identified on the face of the licence, I am satisfied the applicant in this case is licensed, under the law of the State … in which the private hospital is located … to treat, accommodate or lodge at least 150 patients at any one time.
CONCLUSION
The decision under review is set aside. The Tribunal decides in substitution that a recommendation be made to the Secretary pursuant to s 90 of the National Health Act 1953 (Cth) that the applicant be approved to supply pharmaceutical benefits from a pharmacy established at the Friendly Society Private Hospital in Bundaberg.
I certify that the preceding 21 (twenty one) paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe. ..............................[Sgd]......................................
Associate
Dated 30 October 2012
Date of hearing 26 October 2012 Counsel for the Applicant Mr Favell Solicitors for the Applicant Gadens Lawyers Counsel for the Respondent Mr Dillon Solicitors for the Respondent Australian Government Solicitor
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