John Dwyer. Commentary on John Menadue’s blogs on the barriers to health policy reform in Australia.  (Part 1)

Feb 5, 2015

As I suspected  would be the case with many readers who enjoy “Pearls and Irritations”, I experienced in equal measure, satisfaction and frustration as I absorbed John  Menadue’s informed and insightful analysis of the problems that beset our health system and prevent urgently needed structural reforms. His three essays accurately explore the major issues. He has experienced political power and politician’s motivations from the inside. Fortunately, his passion for good government has, for two decades or more, been particularly interested in improving our health system. Here too, importantly, he has had first hand experience of how the system works (and doesn’t work). His recent survey provides us with a very valuable document, as it is, in fact, a template on which we must build a reform agenda.

What about my feeling of frustration engendered by these essays?  While comprehensively exposed and explained, few of John Menadue’s conclusions are controversial among would be health system reformers who have first hand knowledge of the issues and who are studying the results of health system reforms in other countries. As he highlights, we have benefitted from political leadership willing to embrace major reforms to our financial systems but both sides of politics in Australia have failed us leaving health reform in the “too hard basket”. I remember a conversation with health minister Roxon on the need to introduce Integrated Primary Care into Australia.  She appreciated the benefits but as such a reform would increase Medicare expenditure she told me, “like many good ideas this will just have to lie on the table till the time is right”. The time was right 15 years ago.

The comments that follow presume that readers will have read John Menadue’s important analysis. In this first part I will address some of the issues he presented and in a second part expand on the strategies need to progress reforms and what those reforms should embrace.


As highlighted, the power of vested interests to urge lay politicians, who don’t understand our complex health system anyway, to hold to the “status quo” is frustrating. Recently “Australian Doctor” asked doctors (mainly GP readership) who was the least competent of the last ten health ministers. Peter Dutton won in a landslide but I feel this was a measure of current frustration rather than an historical analysis of the question.  I would have voted for Kay Patterson. As the new century started health reform advocates were active and the then minister for health in NSW, Craig Knowles, listened and accepted our argument that the next round of negotiations re commonwealth funding of state public hospitals should include a reform agenda not just a dollar agenda. The States and Commonwealth agreed and 13 sub committees were established to prepare structural reform agendas on everything from indigenous health to the funding of prevention strategies. After months of work and legitimate expectations that we were entering a new era for health reform, Minister Patterson pulled the plug on the reform agendas and reduced the COAG negotiations back to dollars. Had those reforms and the methodology for creating those reforms been accepted we would have a far better health system today. As John Menadue has highlighted here was another example of vested interests derailing a most important initiative.

John Menadue emphasised the importance of every Australian having access to Medicare funded Primary Care with ability to pay being irrelevant to the quality of the service received.  Rightly, he warns us of the possibility of Primary Care becoming a two-tiered service with better access and facilities being available to those with private insurance. Such an arrangement has destroyed equity in the US system and dramatically pushed up costs. The Abbott government does not seem to understand that inequity is not only “unaustralian” it’s also very expensive. In 1900 the average Australian died aged 56. Many deaths were attributable to unavoidable and untreatable conditions particularly those caused by infectious organisms. The great flu pandemics did not discriminate between rich and poor. Today we can avoid most of those causes of early death and we live remarkably longer. Disease patterns today focus on dangerous life-style choices that lead to the development of Chronic and Complex problems which kill us slowly and for too many rob their extended years of life of quality. With the exception of poor health caused by excessive alcohol consumption all the risk factors for chronic disease are more prevalent among socio-economically disadvantaged Australians. We only spend 2% of our health budget on trying to help people avoid lifestyle induced illness and so we all end up paying much for the care of our fellow Australians with advanced disease.

We need new money to fund important structural reforms so it’s appropriate that John Menadue looks at dollars we use poorly in our current system. He correctly targets the lack of leadership that has us paying far more for drugs than other similar countries. The duplication of health bureaucracies (nine departments of health for 23 million people) cost us 3-4 billion dollars annually, while the estimated 600,000 admissions to public hospitals that could have been avoided if the infrastructure for management in the community was available would save us at least 15 billion dollars. Over servicing by my profession when performing non-evidence based investigations and procedures of low value is estimated to cost 20 billion dollars a year. And then there is the Private Health Insurance Rebate that John Menadue discusses in detail.

With some means testing now the rebate probably will cost taxpayers this year closer to 5 billion dollars rather than 7 billion but there is no doubt that the amount of health available from this initiative is not worth the price. While the Insurance industry and government disagree two facts are indisputable. The first is that the rebate has not been responsible for a significant number of Australians taking up private health insurance. After the introduction of the rebate, health insurance rose by no more than2%. The stick that did increase coverage was the whole of life rating system and tax accountants telling clients they would pay more tax if they did not sign up. The second fact is that the rebate and indeed the increased uptake of PHI did not reduce pressure on public hospitals. As John Menadue rightly points out increased activity in Private Hospitals where 75% of the patients have surgical problems, has seen a loss of surgical capacity in public hospitals greatly increasing the ability of surgeons to charge more while public hospitals are swamped with chronically ill medical patients and not able to offer as much timely surgery as they would wish.

An obvious but important point emphasised by John Menadue reminded us that the PHI rebate and the pressure to hold PHI is vey unfair to many rural based Australians for there are no private hospitals available in the majority of rural communities. In truth many health inequities are entrenched in rural Australia. The 35% of Australians who live in the country and supply 66% of the nations wealth have far poorer health outcomes than their city cousins. White Australians living in rural communities are likely to live 4 years less than average city dwellers. From depression to heart disease to infant mortality to cancer, outcomes are inferior in rural Australia. This gross inequity is not being addressed despite numerous enquiries highlighting the changes needed to reverse the situation.  (e.g. reducing dependence on overseas trained doctors by training more rural based students in medical schools established in a rural setting and (as John Menadue emphasised) far better use of the existing non medical workforce, and numerous other evidence based strategies.) How frustrating for country citizens that the National party promised major rural reforms if the coalition won the last election when, in reality, they have had no power to influence rural health initiatives.

Talking of the better use of the non-medical workforce brings me to one point where I would place a caveat beside one of John Menadue’s recommendations. Pharmacists are men and women trained at university to understand scientific methods and appreciate the importance of evidence based Medicine. Indeed their professional charter demands they only offer medicines know to be clinically effective to their clients. Certainly they should be integrated into our Primary Care system. However there is a professional (commercial) cancer eating away at their integrity as they offer so many products that have no real value to customers. Their prescription services are usually assigned to the back of a shop in which 80% of the space is provided to offering health products that are no doubt lucrative but of little value. Recently calls for Pharmacists to rid their shelves of Homeopathic products following the NH&MRC report emphasising they can have no more than a placebo effect, have been rejected. Pharmacists should be telling clients that the 2 billion dollars spent each year on supplements and vitamins is largely a waste of money and that you can’t neutralise an unhealthy lifestyle with something from a bottle.

In many countries any clinical observations made and the drugs supplied to an individual are entered into the persons electronic health record in real time. John Menadue criticises the Department of Health for failing to roll out an electronic health record for Australians, an initiative he describes as a minor reform.  In fact an electronic health record is a much-desired major reform and can be the lynchpin for much needed integration of patient focused care. Many countries are now reporting on a decade of experience with an electronic health record and the improvement in care made possible by this initiative and clinician and patient satisfaction with the system are most impressive. Kaiser-Permanente in the US is reporting that in the last decade it has turned two million face to face consultations into email consults. The organisation’s initiatives, which include major prevention strategies delivered via an Integrated Primary Care system, have seen it have the best health outcome results nationally in 10 of the 12 major indicators used to measure success in treating chronic diseases.

So summarising John Menadue’s concerns, we have a health system that by international standards is not meeting our contemporary needs, is provider, disease, and hospital centric, held hostage by vested interested that dissuade governments from embracing structural reform, is very cost ineffective, does not focus on efficiency and equity while Medicare, which though in need of reform remains invaluable to Australians, is at risk.  In the second section of this commentary I will comment and expand on John Menadue’s suggestions for breaking the impasse and providing a structure on which we might be able implement needed change.


John Dwyer is Emeritus Professor of Medicine at UNSW.


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