Public Hospitals' Private Practice Scheme Failing: Auditor-General Treating private patients in the public hospital system has cost Queensland taxpayers more than $800 million in the past 10 years. But the actual cost is likely to be higher because public facilities have been absorbing and subsidising the costs of treating private patients, which should have been charged to the referring doctor, the Queensland Auditor-General Andrew Greaves has found. Having reviewed private practice arrangements in the state's public hospital system, Mr Greaves found the system itself and the senior medical officers (SMOs) who participated in it had "lost sight of, or never had sight of the objective of cost neutrality" which was one of the justifications for originally introducing the scheme. Instead, in a report tabled on Thursday, Mr Greaves said most participating senior medical officers used the scheme to top up their own salaries, with little benefit flowing on to the public system. Without proper understanding or administration of the scheme, which was introduced by the Goss Labor government in 1992, the public system has been left with a glut of SMOs, but no clear idea of how many were actually needed, he said. Under the private practice scheme, SMOs employed by Queensland Health treat people who elect to be treated as private patients in public hospitals. The fees charged under the arrangement are meant to flow back into the public system. Most of the SMOs participating in the arrangement (86 per cent) receive a base salary and a private practice allowance. In exchange for the allowance, the health workers, including specialists, are meant to assign all the private practice revenue they generate to the public facility where they work, which absorbs the direct and indirect costs. Known as the assignment model or Option A, the scheme has cost Queensland Health $725.69 million in the nine years to June 2012. Mr Greaves found the scheme was extended in 2006 to include SMOs who were either unable or had limited ability to generate revenue, such as those working in emergency departments. Allowance rates for specialists had also increased, but the revenue raised by most SMOs under the scheme was "significantly less" than what they were paid, he wrote. In short, there was nothing extra to be paid back to the public hospital or health service whose facilities were being used. Mr Greaves concluded this had not been seen as a problem because there was "significant confusion and misinformation" about the arrangement, with most administrators and staff believing the arrangement "has always" been about salary top-ups with the aim being to attract more senior staff to public hospitals. This - which was a secondary justification of the scheme when it was introduced - had been achieved, Mr Greaves wrote, but he found it had been done without any clear target of how many were required by the system. The findings could mean a review of how SMOs are paid. "In light of the new funding framework with the Commonwealth, Queensland Health now needs to look at how best it can utilise private practice arrangements to benefit not just SMOs, but the public health system and its patients," Mr Greaves reported.