John Dwyer. Wasting precious health dollars.

Nov 18, 2015


In the last eighteen months our coalition government has repeatedly warned that the rate at which we are increasing health related expenditure is unsustainable. The attempt to extract a co-payment from Australians visiting their GP was justified using this concern. However it is the better use of the currently available health dollars that should be given priority rather than asking Australians pay more for a health system that no longer adequately meets contemporary need. It is true that a considerable amount of the cost ineffective expenditure on health is generated by members of my profession with low value and sometimes no value tests and procedures wasting at least 10 billion dollar a year. While there are vested interests hampering necessary reforms, progress is being made as critical pathways, generated from the best available evidence by independent and expert clinicians, are developed centrally for application locally. The Institute for Clinical Excellence in NSW is one organisation facilitating this type of reform which should improve the standardization of evidence based clinical decision making.

Looking more broadly at the inefficient use of precious health dollars we could discuss the 600,000 or so avoidable and expensive admissions to public hospitals each year and the billions of dollars wasted as 24 million people are served by nine Departments of Health. However there are two other examples of cost ineffective expenditure that are in the news and worthy of further comment; the Private Health Insurance rebate and the subsidy tax-payers pay to the private heath industry as they pay for a raft of useless pseudo-scientific modalities. Both of these have been addressed recently and unsatisfactorily by health minister Sussan Lay.

Interviewed on the 7.30 report Minister Lay defended the need for government to use six billion dollars of our money to reduce the cost of Private Health Insurance claiming it was needed to relieve the pressure on the demand for public hospital services. She has no doubt been told and believes that this is so. It is not.

The Howard government introduced the taxpayer-funded rebate at a time when private health insurance rates were falling. In the ensuing twelve months private health insurance rates increased by only 2% and there was an almost negligible decrease in admission to public hospitals. After that year there was no noticeable effect even though additional strategies did significantly increase the uptake of private insurance. Making insurance more expensive as one aged and demanding a significant levy be paid by wealthier Australians who did not have private insurance, did have the desired effect on participation rates but not on helping public hospitals.

Private and public hospitals operate in different health care universes. Both by and large offer excellent services but one has a fixed budget and an average annual increase of 3% in the demand for admission that is fiscally intolerable. The other makes more money when more patients are admitted. More than 70 % of the patients in public hospitals have serious and often chronic medical conditions while more than 70% of patients seeking private hospital care need day only procedures or surgery. As cash strapped public hospitals were forced to close beds without being able to escape the demands from sick medical patients, elective surgery became increasingly difficult to deliver in a reliable and timely matter and much surgery (and the surgeons needed for that surgery) moved to the private sector.

Had the six billion dollars worth of subsidies been available to public hospitals many could have continued to offer more of the surgery required by patients who reluctantly paid for private insurance to get their operations in a timely manner. With the public sector increasingly unable to compete, volume wise, with the private sector surgical fees have skyrocketed contributing significantly to the 29 billion dollars of out-of-pocket expenses Australians fork out each year for their health care.

A number of health insurers, responding, they say, to consumer demand, will pay for treatment from a range of “Alternative” practitioners. The Labor government concerned, at the growth in such payments, asked the Chief Health Officer and the NH&MRC to examine some 18 modalities to see if there was “credible scientific evidence for their clinical effectiveness”. The committee assembled looked at practices such as Iridology, Reflexology, Homeopathy, Reiki etc. and reported to the current government that there was no evidence that any of them offered clinical benefit. The government was urged to stop public subsidies for these pseudo-sciences and, in so doing send a message to the public emphasising the need to enquire about the evidence base for any care they receive. The report is “lying on the Minister’s table”. For decades I have been depressed by the influence the “Alternative” industry has on governments so I was not that surprised at the response when, at her Press Club presentation, reporter Sue Dunleavy asked her the following question.

“Every year health insurers are paying $180 million for natural therapies for which there is no evidence,” she said.

“You already have the review of the worth of those therapies conducted by the chief medical officer on your desk.

Can you tell us what that report said and what you are doing about it?”

The nonsensical and depressing response was “…the issue of complementary therapies is an issue of great interest to Australian patients and certainly to private health insurers and those concerns about the budgetary implications of which you speak.

But I don’t propose to take any piece in isolation out of the complex mix of interests, stakeholders (for want of a better word) and, of course patients and taxpayers, when we look at the important issue of private health insurance.

To pick up one report commissioned by a previous government (not that necessarily has to be an issue in itself) and make it something that this government has to respond to almost at the micro level, without regard to the intersecting policies issues and interests, I don’t believe is sensible public policy.”

Many contributors to “Pearls and Irritations” have noted that for a cost effective sustainable health system providing better health care, we, as is the case in much of the developed world, must invest in Primary care that emphasises prevention, in house team management of chronic diseases and the ability to care for many in the community currently sent to hospital. Quality hospital care is totally dependent on our reducing the need for so much hospital care. The currently wasted dollars, if applied to fund needed reforms could provide us with the excellence we need without increasing the % of GDP we spend on health. Such reforms should be a major issue for the coming election.



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