If I were the Federal Minister for Health

May 13, 2022
A doctor holding a stethoscope to the elements of health care
Image: iStock

I would introduce a new way of paying health providers, address the Commonwealth/State blame game and reform the health workforce.

The first thing I would do is to change the funding system for all the clinical services under my control from a fee for service basis to a capitation basis. These clinical services would include primary care, mental health, disability services, aged care and indigenous health. There would need to be a capitation loading for specific vulnerable groups, many of whom would be addressed within the groups identified above, but also adding other chronic and complex care requirements into the mix. James and Poulsen make a strong case as to the amount of waste this would save in the Harvard Business Review. Kenen identifies the following advantages:

  • It encourages clinicians to limit unnecessary medical services that raise costs without adding value.
  • It makes it easier for providers to use things like telemedicine that aren’t easily compensated under traditional fee-for-service models.
  • It makes costs much more predictable for payers and gives the doctors and other providers a more predictable monthly cash flow.
  • It can be simpler to administer – a fee per patient rather than complicated billing and elaborate coding for every visit and procedure.

I would reduce the incentives for private health insurance and add these funds to the capitation funding. How the jurisdictions choose to interact with private providers would be a matter for their discretion. I would retain responsibility for matters that ideally require national oversight, such as health workforce, health and medical research, therapeutic goods and IT.

The second thing I would do would be MOST uncharacteristic for any Minister with a major portfolio. Having reformed the funding system, I would then transfer the funding for clinical services to the States and Territories on a capitation basis, moving to an 80:20 split between State & Territory: Federal funding. This is the only real way we will ever have seamless movement of care between the acute and community sector. Furthermore, we have seen so clearly in the pandemic that the states and territories manage the delivery of clinical services so much better than the Federal government. It is also the only way that we will develop a system of care and funding that consumers will be able to navigate, instead of the labyrinthine processes they currently must traverse. The fact that the Royal Commission used the term “Navigating the maze” in its background paper of an overview of Australia’s current aged care system makes this point strongly.

Since I clearly don’t want to leave myself without any work, there is one critical matter that needs to be addressed far more effectively and that is the Australian health workforce. It is essential that a comprehensive plan is drawn up to address the inevitable fall out, both mentally and physically, that the ongoing onslaught of COVID is creating, despite the fact that, as Booker and Sambul point out, nobody outside of healthcare seems to be talking about it. What we have witnessed during COVID has been akin to the moving of pawns on a chess board – “Do we need another vaccination or testing clinic? Then we must close a different service and move the staff across” Our borders were closed. No staff could be recruited from overseas. And this is a global phenomenon. The International Council of Nursing published a report in January of this year that shows that the global nursing workforce was estimated in 2019-20 as being 27.9 million nurses. Prior to the pandemic, the global shortage of nurses was estimated at 5.9 million nurses and nearly all of these shortages were concentrated in low- and lower middle-income countries. The pandemic has exacerbated the existing nurse supply shortfall and has forced rapid and “emergency” policy responses to try to increase nurse supply, at the system level, in all countries. However, there is a growing evidence base on pandemic impact, both on the personal level (stress, workload, infection risks, demands made of nurses to “cope” and be “resilient”, and concern about “moral injury”) and on the implications of the system responses (re-deployment, new responsibilities, access to PPE, etc.).

What is needed to address these workforce issues, both in terms of caring for our existing workforce and in recruiting and growing new staff is a dedicated workforce agency, akin to the former Health Workforce Australia, whose role is to research and systematically plan for the health needs of our country. If I were the Minister for Health, this would be one of my most critical tasks to implement.

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