The hidden healthcare cost no one wants to talk about, with Dr Margaret Faux

When we talk about healthcare innovation, we usually reach for the visible things first. AI. Digital health. Virtual care. New devices. Better apps. New care models.

All of those matter. But my conversation with Dr Margaret Faux was a timely reminder that some of the biggest opportunities in healthcare sit much deeper in the system. They sit in the incentives. The payment models. The billing rules. The lack of transparency. The leakage that consumers rarely see, but ultimately pay for.

Margaret is the founder and CEO of Synapse Medical, a lawyer, nurse, author of How to Avoid the Medical Bill Rip-Off!, and one of Australia’s most direct voices on healthcare billing integrity.

Her view is blunt.

“My style is not to sugarcoat things.”

And this episode certainly doesn’t.

Australia has a strong system, but not a simple one

Margaret was clear that parts of Australia’s health system still work well. She pointed to the public hospital system, and the people inside it, as one of the system’s great strengths.

But she also argued that primary care is no longer working well enough for many patients.

“Mostly people tell me they can’t afford it. And they have to wait a very long time and by then they’re so sick they’ve gone to a public hospital anyway.”

That matters because primary care is meant to be the front door of the system. If people cannot access it, cannot afford it, or feel rushed through it, the pressure simply moves elsewhere.

For insurers, governments, providers and consumers, this is not just a patient experience problem. It is a cost problem.

A poor primary care experience can become a specialist referral. A missed early intervention can become a hospital admission. A frustrated consumer can disengage entirely until the system becomes unavoidable.

The GP model needs a rethink

One of Margaret’s strongest arguments was that Australia is still operating with an old view of primary care.

“We’re still living in a bricks and mortar, old-fashioned model.”

That does not mean GPs are not valuable. Margaret was careful to say that. Her point is that GPs should be working at the top of their scope, not spending precious clinical time on lower-value activity that could be handled by other parts of the health team.

That means greater use of nurse practitioners, physiotherapists, paramedics, pharmacists and other professionals, particularly for routine care, repeat scripts, basic monitoring and supported navigation.

As Margaret put it:

“We want general practitioners working at the top of their scope.”

This is where the opportunity starts to become more interesting for private health insurers.

Health funds have traditionally sat downstream of many of these issues, paying claims once care has already occurred. But if access, affordability and early intervention are becoming bigger drivers of member value, funds will need to think more seriously about the health workforce models, navigation services and care pathways they can help enable.

Fee-for-service is the incentive problem underneath it all

When I asked Margaret what was stopping the system from reallocating work more effectively, her answer was simple.

“Fee for service, in a word.”

She described fee-for-service as one of the worst ways to pay for healthcare because it rewards activity, not necessarily value.

“Every service you provide you get a fee and the more services you provide the more fees you get.”

That is the central tension. In a system where revenue follows activity, providers are incentivised to do more. Sometimes that activity is necessary. Sometimes it is valuable. But the model itself does not naturally reward prevention, coordination or avoided care.

Margaret contrasted this with capitation, performance-based models and salaries. None are perfect. All can be gamed. But the bigger point is that payment models shape behaviour. If we want different outcomes, we need to be honest about the behaviours our current models reward.

The underbelly of healthcare is bigger than most consumers realise

The most confronting part of the conversation was Margaret’s discussion of medical billing fraud and leakage. She spoke about upcoding, fictitious services, ghost patients, unbundling, falsified records, double billing and hidden fees.

“The underbelly of the health system is teeming with criminal conduct.”

That is a big statement. But Margaret’s point was not that every provider is doing the wrong thing. It was that the system has too little visibility, too little enforcement, and too few consequences when bad behaviour occurs.

One of her most striking lines was this:

“If you know you’re going to get away with it and have for a very, very long time, why would you change?”

For health insurers, this is not abstract. Leakage in healthcare claims flows directly into premiums, affordability pressure and member value. Margaret was especially direct about private health funds.

“The health funds I think are more motivated to really do something about this now because every April the cycle comes around and on the 1st of April we have the premium increases.”

That should land with every insurer. Each year, health funds are asked to justify premium increases to members, media, government and regulators. Yet one of the most material areas of potential savings may be sitting inside claims leakage, provider behaviour and billing integrity.

Margaret’s estimate was blunt:

“When I say to them, you’ve got 20% leakage, that translates to tens of millions, maybe hundreds of millions of dollars.”

For member-owned funds in particular, that money has a direct member value implication. Every dollar lost to leakage is a dollar that cannot be returned through better benefits, lower pressure on premiums, improved services or reinvestment in better models of care.

Transparency is now a strategic issue

Healthcare is built on trust. Most patients assume that if something is billed, it must be legitimate. Most consumers do not check their Medicare record. Most people do not have the clinical or billing knowledge to challenge a fee, an item number or a provider’s explanation.

That trust is important, but trust without transparency is fragile. Margaret made the point that hidden fees are difficult because they are often invisible to the system.

“Because no one can see them, they are not counted.”

This is where billing integrity becomes more than a compliance issue. It becomes a trust issue. For health insurers, the opportunity is not just to detect fraud after the fact. It is to build more transparent, member-centred systems that help people understand what they are paying for, what is covered, what is not, and where their money is going.

Members do not need insurers to become adversarial. They need insurers to be useful. They need someone helping them navigate complexity, avoid poor experiences, and understand the value of their cover.

Consumers may drive the next wave of change

One of the most interesting parts of the episode was Margaret’s view that reform may not come from the top.

“I think we’re going to see bottom up change, not top down.”

Consumers are already making decisions differently. They are using telehealth. They are searching for alternatives. They are questioning fees. They are avoiding care they cannot afford. They are looking for providers who are transparent, accessible and practical.

That is not always a good thing. Deferred care can create bigger problems later. But it is a signal that consumers are no longer passively accepting the system as it is. Margaret believes consumer pressure will keep building.

“Consumers are starting to vote with their feet.”

For insurers, this creates a strategic choice. They can continue to operate mainly as payers of claims, or they can become more active partners in helping members access better, more affordable, more transparent care.

That does not mean trying to own every part of healthcare. It means being much clearer about where insurers can add value beyond reimbursement.

The real innovation opportunity

The healthcare sector often talks about innovation as though it is mostly about technology. Technology matters. Margaret acknowledged that there is exciting work happening across devices, rehab tools and digital solutions. But she also made the point that every innovation eventually runs into the same question.

“Who’s going to pay for it?”

That is why the real opportunity is not just inventing new things. It is creating the commercial, clinical and funding pathways that allow useful things to scale.

In health insurance, that means getting much sharper on three questions:

1. Does this improve member access, affordability or experience?
2. Does this reduce avoidable cost, leakage or downstream claims pressure?
3. Can we create a model where the value is clear enough for the fund, the provider and the member?

The winners will not just be the organisations with the best technology. They will be the ones that understand how money, incentives, trust and behaviour actually move through the system.

The uncomfortable conclusion

This episode is uncomfortable because it challenges some of the polite assumptions we often make about healthcare. That more funding will fix the system. That activity equals value. That billing is mostly an administrative issue. That consumers do not need to understand what is happening behind the scenes. That trust alone is enough.

The reality is more difficult. Australia has a health system worth protecting, but protecting it requires more honesty about where value is created, where money leaks, and where incentives are working against the outcomes we say we want.

For private health insurers, this is a significant moment.

Affordability pressure is rising. Members are questioning value. Government scrutiny is increasing. Provider costs are difficult to control. Consumers are becoming more active and less patient. That makes billing integrity, transparency and better care models central to the future of health insurance. Not peripheral. Not back office. Strategic.

As Margaret said:

“We need to have some really hard conversations about what’s really going on.”

This episode is a good place to start 👇🏻

Related resources

If you are a health fund leader thinking about affordability, member value and the next generation of health insurance, start with our 2025 Private Health Insurance Innovation Report.

If you are a health or digital health company trying to understand how to work with private health insurers, explore our PHI Partnership Accelerator.

If you want to pressure-test where your organisation is positioned against the forces reshaping private health insurance, complete the PHI FACTORS™ Scorecard.