Risk equalisation and MSK: the case for intervening upstream

Risk equalisation is a mechanism that redistributes costs across the private health insurance sector. What it doesn't do is make those costs smaller.

That distinction matters enormously when you're looking at musculoskeletal conditions — the conditions that consistently sit at the top of orthopaedic claims spend for most Australian health funds.

The question isn't whether you'll pay for MSK. You will. The question is when in the pathway that cost lands — and whether anything was done to reduce it before it arrived.

What risk equalisation actually means for MSK strategy

Under Australia's community rating system, private health insurers are required to accept all applicants at the same premium regardless of health status. Risk equalisation is the mechanism that prevents this from becoming financially catastrophic for funds with older or sicker member bases.

It works by transferring high-cost claims — including many orthopaedic admissions — across the industry. Funds with younger, healthier member bases effectively subsidise those with higher-risk cohorts.

This creates a structural reality that's worth naming directly: if your MSK claims are high and your member base is ageing, a portion of that cost is shared — but a significant portion isn't.

And even the shared portion ultimately returns to the system as higher premiums, reduced affordability, and member churn. The redistribution mechanism doesn't make the underlying problem disappear. It just obscures who's bearing it.

Where MSK costs actually come from

Musculoskeletal conditions are responsible for a substantial share of private hospital admissions in Australia. Hip and knee replacements are among the most frequently funded elective procedures, and surgical costs are only part of the picture.

The full cost chain includes pre-surgical consultations and imaging, hospital admission and theatre costs, implant costs, post-surgical rehabilitation, and downstream complications including revision procedures and extended recovery.

There's also a less visible cost stream: the members who aren't surgical candidates yet, but who are accumulating extras claims — physiotherapy, pain management, specialist consultations — while their condition gradually worsens.

1 in 3 Australian adults live with a chronic musculoskeletal condition, according to the AIHW. Many of them are in your member base right now, using services inconsistently, without a coordinated plan that actually addresses the underlying trajectory.

The upstream argument

If most MSK cost is generated at the surgical and post-surgical end of the pathway, the question worth asking is: what proportion of those surgical cases were inevitable?

The answer, based on available evidence, is: fewer than the current system implies.

A meaningful proportion of people who reach surgery do so not because conservative care failed, but because they never received it — or because they received it too late, too inconsistently, or without enough clinical support to actually engage with it.

The opportunity for health funds isn't to prevent all orthopaedic surgery. It's to identify the members who are on a trajectory toward surgery but still within the window where structured, supported conservative care can change the outcome.

That requires three things: early identification, appropriate triage, and a care model that people actually complete.

What identifying MSK risk early looks like in practice

One of the core challenges in upstream MSK intervention is that risk is often invisible until it's advanced.

Members with mild-to-moderate joint pain rarely present it as a health concern. They adjust their behaviour — walking less, avoiding stairs, stopping activities they enjoy — and the fund doesn't see it until they claim for a GP or physio visit. By then, the window for lightweight intervention may already be narrowing.

The Joint Health Profile, developed by Beyond The Clinic, is designed to change that. It's a validated screening tool that assesses joint function, pain levels, mobility risk, weight status, and psychological wellbeing — and groups members into four practical risk profiles.

In the Project Mobilise pilot, the JHP identified that around 77% of participants had some degree of functional limitation. About 10% sat in the highest risk category, where conservative-only management may not be appropriate without formal surgical assessment.

That information — gathered at the point of member engagement, before a claim is lodged — gives health fund partners the ability to route members to the right level of support from the start.

Why the care model matters as much as the screening

Identifying at-risk members is only useful if you can connect them to care that actually works.

This is where most previous attempts at upstream MSK intervention have fallen short. A pamphlet, an app, or a generic exercise guide doesn't create the accountability and personalisation that drives adherence.

Beyond The Clinic's JointFit program pairs a structured digital program — guided exercises with motion tracking, education, and progress monitoring — with real physiotherapist support delivered via telehealth.

In the Project Mobilise pilot, this combination produced a 4% opt-out rate among members who commenced the program. 87.7% of enrolled participants were retained through the full six-week window. The physiotherapist experience received a Net Promoter Score of 9.1 out of 10.

These retention numbers matter because retention is the mechanism. A program that members don't complete doesn't change outcomes. A program with 4% opt-out, across a real-world cohort averaging 58 years of age, does.

Early clinical outcomes from the pilot showed 60% of participants reporting meaningful improvement in pain, and 71% increasing their daily step count — with an average increase of 2,242 steps per day.

These are early pilot results and not yet validated in a randomised controlled trial. They're published here as indicative data, not definitive proof. But they reflect real change in a real-world cohort that looks very much like a standard health fund membership.

Connecting clinical outcomes to fund economics

The financial case for upstream MSK intervention rests on a few assumptions that actuaries and procurement teams can stress-test.

If structured conservative care reduces surgical conversion by even a modest percentage across a large member cohort, the claims savings are material. Hip and knee replacement episodes — including pre- and post-operative care — represent some of the highest-cost procedures in the elective private hospital setting.

If members who engage with effective conservative care require fewer ad hoc allied health claims over subsequent years, the extras savings compound over time.

If member experience improves — reflected in NPS and retention — the fund benefits from reduced churn among members who are already in the higher-utilisation life stage and therefore represent longer-term claims risk.

None of these outcomes are guaranteed. But the direction of the evidence, and the economics, consistently point in the same direction: the earlier you intervene in MSK, the cheaper and more effective the intervention.

What health fund partnership looks like with Beyond The Clinic

Beyond The Clinic's insurer model is designed to integrate into existing member pathways without creating administrative burden.

It starts with the Joint Health Profile — deployed to members through your existing digital channels — and automatically triages them into appropriate care streams based on their risk profile.

High-risk surgical candidates are identified and can be escalated. Members in the conservative care window are onboarded into the JointFit program with active physiotherapist support. Outcomes data flows back to your team in a format that connects to your reporting and value-based care requirements.

Our insurer program page has more detail on the model and what partner arrangements look like. If you'd like to understand the data and discuss fit for your fund, we'd welcome that conversation.