John Menadue. Health Part 2 – what can we learn from overseas health services?

Feb 1, 2015

Part 2 in this series was originally posted in August last year.

In my blog of 6th October on what we can learn from overseas health systems, I drew attention and warned against government subsidised private health insurance. Any growth in this industry spells trouble for a good health service.

Another thing that we could learn from overseas experience is that our fee for service (FFS) for GP consultation results in higher costs and inferior treatment. There are many disadvantages in FFS.

  • It drives up costs
  • It encourages ‘turnstile medicine’ whereby the GP earns more money the more patients he or she treats. It is sometimes called ‘ten minute medicine’. Follow up appointments are encouraged.
  • FFS leads to overprovision of care through over servicing. In Australia for example we see our doctor much more than patients in the UK or NZ where FFS is not practised at all or is being wound back.
  • For many patients with chronic or multiple health problems, FFS is inappropriate.
  • FFS is paid to the general practitioner in such a way that it discourages ‘team medicine’ and the use of other health professionals, particularly practice nurses, nurse practitioners and many other allied health persons, such as dieticians and physiotherapists.

Many countries have moved away from FFS in favour of paying GPs, at least in part, on a capitation basis. Patients are enrolled in a practice and the GP is paid for ‘looking after them’. FFS may be appropriate for occasional care but it is not appropriate for long-term care of chronic patients.

Capitation arrangements are widespread in NZ particularly for those with chronic healthcare problems. For 100 years capitation has been the principal means of paying GPs in the UK. In ‘managed care’ in the US capitation is widely used.

A capitation scheme in Australia could not be introduced overnight but we need to scale back FFS to improve the quality of care and to discourage over-servicing and over prescribing. FFS is a perverse incentive. It rewards doctors when patients are sick. Doctors should be paid to keep people healthy.

Another matter that we could learn from overseas is that we must find ways to overcome the split between commonwealth and state responsibilities in health. Broadly, the commonwealth funds general practice in the community and the states run public hospitals.

This division of responsibility between hospital and non-hospital care is a major barrier to integrated and effective health care. Successful countries in health care, again like the Nordics and the UK, don’t have this split responsibility. They all have unitary systems with delegated health delivered  to local levels within a defined national policy.

A major objective of any health service should be to keep people out of hospital. Hospital care is intrinsically more expensive and much more traumatic for patients. In his blog on August 20      Professor John Dwyer pointed out that if we had had a more effective integration of hospital and non-hospital care, we could have avoided 600,000 hospital admissions if there had been appropriate general practice care in the three weeks before hospital admission. That would be a very large saving.

A good health service must have a strong grounding in primary care and general practice. This is one reason why the UK system is so good. In the UK they understand better than we do that hospitals should be the last and not the first resort.  Unfortunately government ministers put priority into iconic hospitals rather than primary care. We spent for too much in hospitals and not enough in primary care

Primary and GP care provides the cheapest and best quality care and it can keep hundreds and thousands of people out of hospital. And when we have a good linkage between hospital and non hospital care, patients discharged from hospital can be effectively supported again by their local doctor.

But because of our federal system the integration of hospital and non-hospital care is difficult. In my blog of June 3, 2014 I outlined a way to address this issue through a single funder in each state. This is fundamentally a political problem which causes difficulties in the health sector. Unfortunately commonwealth and state health ministers and their health bureaucracies seem more concerned about health territory rather than a health system that best serves our needs. The ‘blame game’  in health is unresolved.


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