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Can this election bring affordable, equitable, quality services?

By Fiona Armstrong - posted Thursday, 23 August 2007

Despite our reputation as the driest continent on earth, Australians are shocked to find our water supply suddenly tenuous and our food security under threat. But how many are aware our health care system is also in grave danger?

Current political debates around climate change and the drought have shifted the eyes of the public from mounting pressure in the health sector for reform. Despite the shock announcement of federal government initiatives in the Northern Territory, the pressure in the health sector for change to ensure equitable access to services continues to build.

Concerns about the sustainability of our environment extend also to the sustainability of resources in the health sector, as our ageing population puts pressure on a diminishing and ageing workforce. Ballooning costs associated with rising demand, as well as unprecedented use of technology, are placing huge pressure on health care budgets, while workforce shortages are creating unsustainable workloads for those delivering services.


Given the quantum of funds involved (about $80 billion annually) and the inescapable pressures on the health budget, it is vital to ensure funding is delivered by the most effective, cost effective, and equitable means.

However, there is substantial evidence to suggest this is not occurring, with conservative estimates of $2 billion being wasted annually (there are higher estimates kicking around), attributable to the inefficient division of responsibilities for health funding between the federal and state governments alone.

The current division of funding and service provision responsibilities sees (in very broad terms) the state and territory governments responsible for hospital services, and the federal government responsible for funding GPs and aged care services.

The tensions inherent in this arrangement were on full view in the report released in June 2007 by the eight state and territory health ministers, called Caring For Our Health?, commenting on the federal government's record on health funding. This report is a clear demonstration of the pitfalls inherent in the current funding arrangements, and further evidence that blame shifting between the states and the federal government takes precedence over co-operative approaches.

While most users of health care services are not concerned about what level of government is providing their care, the division means when people move between services, for example from a (federally funded) general practice to a (state/territory funded) hospital, they are moving in a separate “system”. Very often their information and records of their care do not travel with them. Lack of co-ordination and failure to transfer vital information not only risks the safety and quality of care to individuals, but costs money when tests and investigations are repeated, medications reordered, and so on. It also means that no single provider clearly takes responsibility for the patient - leading to poor continuity of care and wasted money and resources.

Other examples of cost-shifting and the consequent inefficiencies include that of (state/territory funded) emergency departments being overrun by people who are unable to get an appointment to see a (federally funded) GP. Or the situation where elderly people, unable to access a (federally funded) aged care bed, are forced to languish in a (far more expensive, but state/territory funded) hospital bed.


Simply put, the separation of funding streams leads to cost-shifting, fragmentation of services, duplication of services and massive investments in administration in an effort to try to co-ordinate it all, much of which could be reduced and quality of care improved if the system was reformed.

One potential solution is the creation of a single fundholder responsible for financing all of the services provided to a patient. This was advocated in the 2004 review of the Tasmanian hospital system, toyed with in the Queensland Health Systems Review in 2005, and was apparently a key recommendation of the 2006 review undertaken by former health department head Andrew Podger. Podger's report, however, has never been released, presumably reflecting the federal government's lack of enthusiasm for the recommendations.

The arguments for a single funder are that it would have the effect of reducing much of the administrative inefficiency, making services more cost-effective, and ensuring a seamless transition between all of the services provided to a single individual. (A single funder does not mean a single supplier - services are generally best provided closest to the patient.)

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First published in The Weekend Australian on June 30, 2007.

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About the Author

Fiona Armstrong is a Melbourne based public policy analyst and commentator. She has a background in health policy and is an active campaigner for health reform in Australia. A longstanding environmentalist, she has recently turned her attention to climate policy.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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