ANDREW PESCE. The Health Care Home: too important to fail

Nov 11, 2016


It has been a long road for peak medical organisations in Australia to publicly recognise and support the concept that Fee for Service payments (where medical services attract a Medicare rebate for attendances and/or procedures) may not always be the most appropriate remuneration methods in primary care. Now, both the Royal Australian College of General Practitioners and the AMA acknowledge that alternative payment systems have a place for patients with high healthcare needs because of special circumstances and/or chronic illness. This is a well-established concept, which has shown that primary health care services can establish viable business models based on a mixture of FFS for acute conditions (providing care for a sports injury in a young otherwise healthy person) and payments for annual cycles of care for people living with chronic medical conditions (eg diabetes requiring regular ongoing care from different providers). In New Zealand for example, a shift to up to 60-70% of practice income from blended payments, with the remainder from FFS has been well received from GPs there.

Why hasn’t this happened in Australia already? Although there have been many changes to General Practice over the last decades, almost all primary care is delivered in privately owned general practices and those practices have evolved business models based on the FFS Medicare System. In short, doctors provide the backbone of the primary care “system” from privately owned businesses ranging from solo practitioner to large national corporate practices. They are largely paid for face to face medical consultation time with their patients, and have therefore developed business models based on this system of Medicare rebates, with additional variable contribution from patient co-payments and Medicare practice incentive payments. In a sense, therefore, the current FFS Medicare system provides no incentives for GPs to develop locally flexible models of care in their practices to provide timely and cost effective care -the right care, from the right clinician, in the right place at the right time- where appropriate, which would leave more time for GPs to focus on more complex diagnostic and care tasks.

Historically, Australian doctors and their peak representative groups have vigorously defended the FFS system. The rhetoric of proponents and opponents of FFS will vary, but in a nutshell GPs have strongly preferred FFS because it shifts the financial risk of the transaction strongly towards the payer- in this case, the Commonwealth. In support of this, although the MBS rebate for GPs has been increased at about half the rate of inflation since 1985 (the only lever the Commonwealth has to control its expenditure), the total amount spent on GP attendances increased from $3.1 billion to $6.65 billion between 2004-5 and 2014-15 associated with a 50% increase in number of consultations. [i] This has meant that expenditure per “full service equivalent” GP has increased gradually, just ahead of price inflation[ii] and just under increase in average weekly earnings[iii].

The recent shift in acceptance by doctors and their peak groups that alternative remuneration systems may have a place is a great opportunity to achieve change. Of course there are some doctors who will never want to change. On the other hand, others and especially recent medical graduates are more comfortable with alternative remuneration systems underpinning multidisciplinary care for their patients. The reasonable way forward agreed by the Department of Health and Ageing and the profession has been to establish the Health Care Homes trial, as recommended in the Report of the Primary Care Advisory Group[iv] to improve the care for patients with chronic and complex health conditions.

The aim of the trial is to introduce and evaluate the outcomes of patients voluntarily enrolling in practices where a nominated general practitioner will provide care and co-ordinate management of their medical condition(s). Payment for necessary care will be provided in quarterly bundled payments, set at a level appropriate for the complexity of the enrolled patient’s medical condition. Incidental medical care not related to the chronic condition(s) will still be provided and funded via FFS Medicare payments. This should assist practices to prepare a business model and employ an appropriate mix of multidisciplinary health care professionals based on a predictable income for groups of patients

So far, so good. But, so often attempts at structural and funding reform in Health have come to nought, and as the devilish details of the trial were announced, so did the controversy begin. Both the AMA and RACGP came out publicly criticising the funding provisions as inadequate, as well as an initial position that enrolled patients would only be eligible for 5 MBS funded visits for care associated with conditions not associated with the chronic health problem for which they are enrolled. Despite conciliatory responses in part from Minister Ley’s office, there are now concerns regarding the long term prospects for a move toward some bundled payments to replace some FFS rebates.

What is the way forward? How do we avoid squandering much work by many good people that has made the Health Care Home politically possible?

Those doctors and their peak groups should, now that they have emphasised their concerns about inadequate funding, acknowledge that the Medical Home Trial is just that; a trial. If they are correct and the amount of funding is inadequate (and, having accompanied my 90 year old father with multiple chronic health problems to his weekly GP visits for the past three years, I suspect they might be right), the trial will gather data which demonstrates that. It will also establish much valuable data which can inform future health system design, and measure the extent to which a Health Care Home may or may not improve outcomes, or meet current unmet need. I believe the correct approach to them is continue to support the trial so that we can better understand the benefits and likely costs of the Health Care Home.

From the Government side, Minister Ley should be congratulated for supporting the most meaningful attempt at primary care reform since the introduction of Medicare. She has previously acknowledged that it is always politically difficult to introduce structural health reform, and so it is important to understand that if the issue is clouded by accusations of cost cutting as the main motivation for change, this reform is likely to fail as inevitably as the abandoned GP co-payment proposal. Structural change requires upfront investment. It is not reasonable to manage the Commonwealths current financial risk of the FFS system by completely transferring it to GPs. It is also important to know that the downstream savings of less duplication of services, and a decrease in avoidable hospital admissions are where the real financial benefits of the Health Care Home lie, not on the presumption that we need to pay GPs less for the work they do.

In conclusion, it is vital that the trial proceeds, with a reasonable prospect that it will meaningfully assess the questions that need to be answered. First, does a co-ordinated approach to primary health care improve outcomes for patients with chronic and complex care needs? Secondly, can we reassure GPs that the introduction of blended payments will not financially disadvantage them as they provide better care for their patients and focus on higher value and more complex work?

[i] Dept Health GP Workforce Statistics – 2004-05 to 2014-15 accessed via

[ii]Real value calculated using

[iii]Calculated on basis of AWE growth accessed at


Andrew Pesce is an Obstetrician and former National President of the Australian Medical Association.

Share and Enjoy !


Receive articles straight to your Inbox

How often?

Thank you for subscribing!