News

Answering hard health questions



4 March 2010

If anyone doubted Kevin Rudd's determination to honour his promise to attend to the nation's ailing health services even if it involved a Commonwealth takeover yesterday fixed that.

The announcement of an Australian health and hospitals network, with federal government funding of up to 60 per cent of costs in public hospitals, constitutes serious reform.

However, while this is a step in the right direction, there is no single magic bullet for Australia's health system and it is important to be realistic about what the plan might achieve.

On the positive side, Rudd seems to have acknowledged the need for more local flexibility and control in healthcare, balanced by leadership from a higher level of government. The new network would distribute the billions the Commonwealth now provides directly for public hospital services (35 per cent of total costs) and add to this enough GST clawed back from the states to lift Canberra's share to a controlling 65 per cent.

This would enable the Commonwealth to put in place the first substantial service change: to bring public hospitals together in local networks with a high level of autonomy and the capacity to respond with greater agility to local need. The motto is "Funded nationally; run locally".

Rudd's commitment to meeting 60 per cent of capital and infrastructure funding for new and existing health facilities is welcome and should not be overlooked. Again, this commitment gives the Commonwealth a controlling, but not monopolistic, interest.

Importantly, the plan rids the system of the blame game and incentives for cost shifting due to different levels of government paying for different parts of the health system. The continuing role of states and territories in the management of public hospitals would change substantially, and the details of how this might work will need careful clarification.

But by leaving one-third of public hospital funding with the states and territories, the Prime Minister sees a continuing role for them in management and delivery of care. He spoke of enfranchising clinicians in the management of local hospital networks, which, he hoped, would be better integrated with community services, including general practice.

By ensuring in future that all community services, including major integrated clinics of general practitioners and others, were centrally funded, the incentive to move patients prematurely from hospital to home to avoid state-based costs, or from home to hospital to avoid Commonwealth costs, would be reduced.

The blame game and cost shifting would become less satisfying and less lucrative.

But it is not all about finance and governing bodies. The network, Rudd says, would take an active interest in standards and quality of care. Much remains to be done. National standards for waiting times, for example, would be established.

This has previously not attracted investment because of its complexity and political sensitivity, yet it is critically important. To manage a health system in which demand for the care of people with long-term chronic problems already consumes about 75 per cent of the budget, the search for efficiency is essential. Modern technology allows more to be done more efficiently, and areas such as the treatment of trauma and cancer continue to justify increased investment.

But in other fields, high-tech does not hold the answer. A failure to achieve the balance of community and hospital services for the care of people with chronic illness is a glaring example. We need information on the best way to provide this care and the political will to change the allocation of resources. At present, too little is spent on community care and too many people are in hospital inappropriately as a last resort.

This is but one example of the challenge facing the Australian health and hospitals network.

If one adds, as Rudd did, how best to provide mental health care a desperate defect of our system and dental care, then a decade-long agenda is easy to foresee.

The Prime Minister referred to direct payments to hospitals for services provided, which would be a good prelude to moving progressively to payment for services that we know are good value for money.

While it is always a vexed question as to what we should pay to save a life or preserve a year of life, treatment options may make no sense at all in some circumstances, as signalled by wide regional variations in procedure rates that cannot plausibly be related to variations in illness.

To quote British health policy academic Nick Bosanquet: "There will be no incentive to invest in a new kind of health service while the easy option of continued growth in high spending in the old one remains." The proposed network has the word "health" in its title and we may therefore hope that prevention may surface again because of what it offers in many fields: indigenous health, mental health and dental care among them.

And while Rudd made reference to his commitment to workforce development, the broader matters of education and research that are crucial to the future of healthcare and medical science are yet to come.

Nevertheless, yesterday's proposals are a good beginning to ensure that we have a health system attuned to special needs and opportunities of the future.

Stephen Leeder is a Professor of Public Health and Community Medicine at the University of Sydney and Director of the Menzies Centre for Health Policy.

Media inquiries: Sarah Stock, sarah.stock@sydney.edu.au, 0419 278 715.