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Federating health care would mend our health system

By John Dwyer - posted Monday, 10 May 2004


The recent meeting of Australia’s Health Ministers appeared an affable affair. Most of the media focussed on their laudable attempts to increase the number of human organs available for transplantation. There seemed no contentious issues on the agenda and a visitor to our shores might have concluded that our health care system needed no more than some fine-tuning.

Of course the reality is very different.

When our health ministers went to bed that night, they were presiding over a health system that is increasingly, and to most Australians, disturbingly dysfunctional.

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It is also increasingly less fair.

Recent research clearly demonstrates that health outcomes for our citizens are linked to socio-economic circumstances rather than need. People living in poorer suburbs or many rural areas can expect to die prematurely from a preventable disease respectively five and eight times more frequently than their richer cousins in wealthy suburbs.

The situation is of course, much worse still for our indigenous Australians.

The College of General Practitioners has recently learnt that 21 per cent of poorer Australians don’t have their prescriptions filled, while 17 per cent decline necessary investigations because of personal cost.

Recent changes to Medicare will, at best, halt the pace of the decline in bulk billing rates but do nothing to help Australians in most need of quality time with their doctors.

Contemporary health demands require primary care physicians to be able to do more to prevent illness and care for sicker patients in their home or community rather than hospital but these are unattainable goals in our current system.

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The health care system we need at the start of the 21st Century should be patient focussed (as opposed to provider focussed) and feature the integration of all the various elements that must work together to supply our health care system. Improvements in quality, safety and cost effectiveness are rewards for so doing. In our country it is proving to be impossible to provide such desirable and professionally achievable goals because of the wretched jurisdictional inefficiencies inherent in the fragmentation of health care responsibilities among our governments.

To save money, hospitals (the responsibility of state governments) discharge patients with one or two days worth of medication so they must race to their doctor for a further prescription (a Commonwealth Government responsibility). So it’s tough if you can’t get an appointment with your GP for a month!

The Commonwealth Government’s ability to provide health care directly is limited by the Constitution. It helps Australians by purchasing health from independent providers (doctors, nursing home providers, drug companies etc) and provides support for the hospital system delivered by state governments. This system has now reached a point where it is unworkable. At this crisis point it is surely the responsibility of the health ministers to accept informed advice on how to rescue us from a mess, so colourfully and accurately described by Tony Abbott as a “dog’s breakfast”, and one that has too often been placed in the “too hard basket”.

Before the health ministers meeting, representatives from 28 health related organisations met to discuss solutions to the above problems. These solutions were presented to the ministers who had invited the Australian Healthcare Reform Alliance to make a presentation at their meeting. The delegates represented rural, metropolitan and indigenous interests. Peak medical, nursing and allied health professional organisations as well as health policy institutes were all involved. Many consumer organisations participated. Significantly, these broadly representative and informed conferees have reached a unanimous conclusion:

“The quality and fairness we wish to see characterise our health care system can only be achieved by restructuring the system around a unitary source of funding.”

Such a conclusion did not, of course, represent instant revelation but was the result of years of looking at viable alternatives to the status quo. This is a carefully considered blueprint for urgent change from experts who expect their proposal to be taken seriously.

In essence, the proposal calls for the establishment by July 2006 of an Australian Healthcare Corporation (AHC). The corporation will assume all the health care responsibilities currently discharged by commonwealth, state and territory governments. All the taxpayer dollars used for hospital, community services and primary care would be “cashed out” by current stakeholders to be placed in the AHC “Pot”. The corporation would then use those dollars to create the integrated, fairer and more cost effective service we need.

Initial studies anticipate savings of at least two billion dollars annually.

The corporation will divide Australia into health care regions based on geography, population size and demographics. Each region will have a budget to run hospitals, nursing homes, hostels, community services and pay for GP and specialist services. Most importantly, the regions will be able to integrate the totality of their services. Blessedly, state and territory borders will become irrelevant (currently they are a major cause of the health-planning nightmare). Regions will be funded by a sophisticated Resource Distribution Formula (RDF) that importantly will address the correction of known poorer health outcomes. With much reluctance the funding model proposed does not place in the “pot” the tax dollars used to support wealthier Australian’s private health insurance. Neither major political party seems ready to abandon a policy that has not met its objective of relieving pressure on the public hospital system despite the fact that all Australians contribute to a benefit enjoyed by only 43 per cent of us.

The proposed funding model is linked to an important reality, namely the joint ownership of the AHC by state, territory and federal governments. Why would the NSW Treasurer, for example, give ten billion dollars to a corporation over which he had no control? To create a first budget, the AHC’s proposal for the division of Australia into health regions (areas) would need to be agreed to by all governments. All public sector money historically available to a region from both state and federal resources would then be pooled and adjusted for anticipated inflation and growth in demand to create a five-year budget.

Under this system no region could be less well resourced than at present. The flexibility to enhance funding to address inequities and inefficiencies would however, be vital to the success of the plan. Savings from a stream lining of the health bureaucracy and the elimination of duplication would be available for such purposes.

The Alliance’s call for an appropriate taskforce to develop the details associated with the proposed agreements and anticipate difficulties that would need to be addressed represents a vital first step in this reform process.

The AHC would replace state and commonwealth departments of health incorporating the existing bureaucracy it needed. It would have numerous and major central functions such as the setting, implementing and monitoring of standards for quality and safety and collecting and publishing equity of access and outcome data. The AHC would be in a position to negotiate directly with private hospitals to forge the necessary partnership between both hospital sectors so lacking in our current system.

What about Medicare in a system run by the AHC?

The current MedicarePlus package would continue to be available to GP’s and specialists but the AHC would be charged with the task of developing a new primary health care model.

Since it is highly unlikely that either electable party will chase with tax payer’s money the work value dollars needed by GP’s to stay in business, we face the perpetuation of a two tiered system in which incomes are equalised either by volume or a co-payment unless we can move away from the traditional “fee for service” model.

AHC regional areas would offer contracted or salaried positions to a number of primary care providers including GP’s who could then work within an integrated team. Health promotion and better rationalisation of the use of appropriate skills would allow many patients to be cared for in the community rather than hospital. Many GP’s are already working for private consortia which often restrict services such as home visits. Many doctors, nurses and allied health professionals will be attracted to a stronger clinical environment where a patient’s needs, not the clock, determine consultation times. No coercion is involved as duality is assured by maintaining the existing Medicare options.

What about accountability for an organisation that would become Australia’s biggest business?

This was the only aspect of the plan commented on by ministers at their meeting. It’s an important matter but accountability could hardly be said to feature strongly at present, when daily accusations flow back and forth from the states and Canberra as everyone plays the “blame game”. The AHC would have a board of Governors with representation from all states, territories and Canberra. Consumers and clinicians would be board members. The board would report to all state ministers and the federal minister at their regular meetings. All parties would enter into five-year plans and could withdraw at such intervals if unhappy with the operation.

The AHS will not be owned by either Canberra or the States. It is a creation of state/federal collaboration and would run much the same way as do our Universities and Water Authority. The board of the AHC could be dismissed by a majority of ministers, as could the corporation’s CEO. An independent authority would investigate complaints about any aspect of the AHC’s performance. The Australian community would be the ultimate arbiter.

Many details of the plan must unfold for debate and an article such as this, one hopes, will generate many questions - a good thing. However without a radical overhaul along the lines suggested, we are likely to see our health care system steadily deteriorate. The Alliance requested that the ministers immediately establish a top-level task force to analyse this proposal in depth and report on its deliberations at their July meeting in Hobart. This they declined to do, much to our disappointment.

They did not however, dismiss the idea and will have bureaucrats examine the concept. It is not clear if that strategy can add much value to the work already done. What is certain is that this broad coalition of informed professionals and consumers will continue to pursue the concept with our politicians in this election year, and do all we can to have the public understand the concept, and embrace the solutions on offer.

The current system is so seriously flawed than nothing less than this major restructuring would give Australians the health care system they want, need and can afford.

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Article edited by Fiona Armstrong.
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About the Author

Professor John Dwyer is Founder of the Australian Healthcare Reform Alliance and Emeritus Professor of Medicine at the University of NSW. He is co-founder of the "Friends of Science in Medicine".

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Department of Health and Ageing
Faculty of Medicine, University of NSW
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