Privately insured patients treated in WA public hospitals will be encouraged to use health insurance to pay for procedures as part of Health Minister Kim Hames' plan to contain costs in the health system.
And he wants to expand hospital-in-the-home programs, such as those contracted to nursing not-for-profit group Silver Chain, to keep more of the estimated 30 per cent of patients who do not need to occupy a bed out of public hospitals.
The twin strategies will be rolled out in a bid to bring the cost of the average WA public hospital procedure down 8 per cent, to the national average.
WA Treasury has warned closing the gap is essential to the Government's Budget strategy, noting that failure to achieve this will require millions of dollars of extra funding, or cuts.
Health will consume about 28 per cent of the State Budget in 2014-15, up from about 25 per cent five years ago.
"It is unsustainable for us to have an ever-increasing share of the Budget," Dr Hames said.
In NSW, about 15 per cent of public hospital patients call on their private insurance. In WA, it is less than 6 per cent.
Dr Hames said many patients did not call on private insurance because they believed they would be liable for out-of-pocket gap expenses, which was not the case.
He said staff in the health system had not been proactive about encouraging privately insured patients to use their cover.
"When someone goes to a public hospital they are entitled to have free treatment as a public patient. But if they choose to use their private insurance, then the insurance company pays a contribution, and that money significantly reduces our cost," Dr Hames said.
He said the $26 million-a-year hospital-in-the-home program treated about 600 patients a day, 170 of whom would otherwise occupy public hospital beds. "If I had to build a hospital to house 170 people, it would cost $500-$600 million and it would cost about $400-$500 million to run," he said.
"So I'm saving that money by spending $26 million."
Asked if he had a specific target for expansion of the program, Dr Hames said it depended on better co-operation from doctors.
Shadow health minister Roger Cook said Dr Hames' ideas were fine but he had almost six years to implement them and had not done so.
Australian Medical Association WA president Michael Gannon supported both plans but said it would be hard to find enough "quality" home care to free up "hundreds" of beds.