As healthcare models evolve, organisations, business owners and operators will risk failure if they don’t fully embrace digital transformation and fortify their cyber defences.

A new report into Australia’s healthcare sector has further found that cost pressures, insolvencies and skills shortages are being compounded with  rising angst amongst medical and other health practices regarding contractor arrangements, which tax authorities are zeroing in on.

RSM Australia Health Services National Leader Peter Saccasan, with the RSM team, co-authored the new report – Building resilient healthcare organisations in Australia:  Innovation, data and security – and said while the COVID-19 pandemic had catapulted a sometimes-reluctant health sector into a new realm of digital change , there was still room for improvement, particularly in relation to cybersecurity.

“No health business can afford to ignore the real threat of cyber-related attacks which could be disastrous for them and their patients,” Mr Saccasan said.

“Cyber security is a critical risk for health businesses particularly given data such as medical records can prove particularly lucrative for hackers due to the richness of personal data and the often-extended length of time they can be used before discovery. A new report into Australia’s healthcare sector has further found that cost pressures, insolvencies and skills shortages are being compounded with  rising angst amongst medical and other health practices regarding contractor arrangements, which tax authorities are zeroing in on

“Healthcare professionals are in the business of saving lives, not protecting data. And yet compromised data compromises patient care.’’

Mr Saccasan said he was surprised that sections of the health sector also continued to lag other industries, such as manufacturing and retail trade, on the Australian Bureau of Statistics’ national measure of innovation activity.

“In terms of being innovation-active, businesses in health care and social assistance ranked seventh out of 17 Australian industry sectors with 57% of businesses attempting some type of innovation, such as introducing a new good, service or process in the two years to 30 June 2021[1],’’ he said.

“While the pandemic accelerated the adoption of digital health services such as eScripts and telehealth, there are endless opportunities with ongoing technological change to improve the operations of health businesses and how they deliver care to digitally-engaged consumers.

“Australian companies are often at the forefront of innovation and I am sure this index will continue to rise.

“From another perspective, historical baggage and tight budgets often means we see healthcare businesses internally operating with legacy systems held together by band-aids.

“At some point, a legacy system has to be replaced. It’s better to proactively choose that time yourself than to be faced with replacing it urgently because its final failure has plunged your business into a crisis. A proactive technology procurement strategy is vital.’’

Mr Saccasan also urged health practices to urgently review their arrangements with contractors in light of a recent court ruling ordering the owner of three medical practices in New South Wales to pay $795,000 in payroll tax after the court found its service arrangements with contractors ‘’bore all the hallmarks of an employer-employee relationship’’. A new report into Australia’s healthcare sector has further found that cost pressures, insolvencies and skills shortages are being compounded with  rising angst amongst medical and other health practices regarding contractor arrangements, which tax authorities are zeroing in on.

“In the worst-case scenario, these rulings could result in medical practices having to close their doors, if the current and historic liabilities for payroll tax and superannuation become financially crippling,’’ he warned.

“RSM Australia understands revenue offices in NSW, Victoria and Queensland were ready to step up their audit activities of health businesses to review healthcare practices with similar contractor arrangements, with further tax cases in other areas of contracting having also recently been decided in favour of the tax authorities.

“In NSW, the Commissioner is likely to go back four years to prosecute any centre operator that fits the profile of the recent medical practice owner case,’’ he said.

Mounting pressures on health businesses have already resulted in a rise in the number of companies in the Australian healthcare and social assistance sector entering into external administration or controller appointments, with 48 already recorded in the first half of 2022[2].

According to data from the Australian Securities and Investment Commission (ASIC), insolvencies were returning to pre-pandemic levels with 75 recorded in 2021-22. This compares with 49 in 2020-21 during the height of the pandemic, 75 in 2019-20 and 90 in 2018-19.[3]

The full report Building resilient healthcare organisations in Australia:  Innovation, data and security is available here.