Agreement a positive step on slow road to change

16 February 2011

The Council of Australian Governments meeting in Canberra on Sunday agreed to a reform program for Australia's publicly funded health service, a service already light years ahead of many countries in its concern for the individual and high-quality care.

The COAG proposals can be simply put:

  • A new financial arrangement between the states and the Commonwealth to progressively share equally the costs of growth in the public hospital system. The Commonwealth guarantees to contribute up to 50 percent to growth, and similarly, the states and territories 50 percent of funding by 2017, with a contribution of about $16 billion of Commonwealth money over the next decade.
  • The Commonwealth and the states and territories to establish a single national funding pool administered by an independent body to start in July 2012.
  • Public hospitals to be funded wherever possible on the basis of a national efficient price - so many dollars for a hernia operation, so much for managing a heart attack, etc. Calculating an efficient price for services will require good data.
  • Progressively all hospital services and most community services to be funded centrally. They are also to be more responsive to local needs through local networks of hospitals with boards and primary health service aggregates known as Medicare Locals.

These proposals won state and territory approval more readily and completely than did those put last year by then prime minister Kevin Rudd that involved a GST claw-back.

Changing anything as complicated as the health service is a huge challenge. Rarely does it occur radically - as with the introduction of Medibank and then Medicare - and even then it takes a decade or more for the change to be institutionalised. The COAG reforms will take years to achieve their full effect. This is no criticism, but citizens should not expect instant changes.

The fundamental reasons for wanting to change the Australian health service are similar to those confronting many economically advanced societies: the combination of more people with chronic problems and growing technological capability means that we enable best-quality care for people with long-standing health problems by spanning both the hospital and the community sectors.

Now, with one branch of government paying for one form of care and another branch for the other form of care, people with these problems slip between the cracks and costs go up. We need to reform the way we pay for care.

In addition, medical technology - drugs, diagnostics and treatments - is growing in brilliance and in cost every day. Looking for ways to use it most efficiently leads us to examine the efficiency of the total health service, and there is great opportunity for improvement. So efforts to link hospital and community services make sense in humane and economic terms. Rigorous research into the cost-effectiveness of new technologies before their widespread adoption does also.

We need stronger investment in prevention, keeping in mind that prevention extends from the larger environment to a concern for the identification and support of vulnerable individuals.

Underneath all substantial health reforms are three foundations. There must be clarity and strong leadership in the political arena about their purpose, with reference to the larger social progress agenda, including equity. Second, the patient and carer must be involved in the discussion as to what a reasonable health service should look like and do. What that service does and does not do should surely be debated more broadly than it is now.

Third, the involvement of all concerned professional groups, including those engaged in health research and education of the future health workforce, should be secured, and the reforms argue strongly for this. The research ethos is sorely needed in assessing which of these reforms works and which doesn't, and why. The educational ethos in healthcare is needed not only in workforce development but also to ensure new research knowledge is applied to the care of patients as expeditiously and humanely as possible.

Australia needs to change its way of providing its health service. The COAG reforms are a positive and valuable expression of national willingness to change.

Professor Stephen Leeder is director of the Menzies Centre for Health Policy at the University of Sydney.

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