Misdiagnosis of the system

This is surprising given, first, his conclusion that Queensland’s recurrent expenditure per head was about 20 per cent below the national average in 2003-04 and his portrayal of this as “under-funding”.

And, second, his suggestion that Queensland may need to spend more per head than other states because of various factors, including having the fastest growth in the over 65 age group (which make greater use of hospital services).

Unfortunately, this analysis was again one-sided.

It overlooked that among the states Queensland has the highest proportion of private hospital separations (nearly half of all hospital separations) and that this “saves” much public hospital expenditure.

For example, if in 2003-04 Queensland had had the same proportion of public hospital separations as in the other states combined, it would have put another 150,000 odd patients through public hospitals and incurred $113 per head (about $440 million) more spending.

This budget-saving role of private hospitals has been neglected in the debate on how Queensland’s health system could be improved.

Further, while Queensland has an increasing proportion of medically expensive over 65 year olds, it has the second lowest proportion in that age group. Moreover, with Queensland’s average wages about six per cent below the national average, its public hospitals have significantly lower labour costs.

Finally, the Queensland Government’s policy of running the state with taxes lower than the national average (over $900 million lower in 2003-04) implies that individual Queenslanders are expected to fund more services out of their own pockets.

In short, the Davies Report seriously overstated the extent of Queensland’s lower per head spending on public hospitals and overlooked the state’s high private hospital separations and the implications thereof; failed to adequately assess the roles and responsibilities of both the government and health officials in regard to public hospitals’ budgetary allocations and performance requirements; and too readily accepted critiques by self-interested officials.