JOHN MENADUE    What is a health service for?  

A health service should be run in the  interests of the public.Unfortunately any worthwhile reforms of our health sector to benefit the public are usually vetoed by providers with their special interests.

The health ‘debate’ in Australia has several shortcomings. First, it focuses on managerialism without first establishing the values that should underpin and drive a national health service. Fragmentation, inefficiency and waste are important issues, but do we want a well-managed and efficient system that lacks guiding values? What is the health service for? Second, the debate reflects the interests of provider groups who reluctantly concede incremental reform but oppose necessary structural reform. Thirdly, the debate is  overwhelmingly about funding the demand  for health services . We also need to address the supply side – how health services are equitably and efficiently delivered. Fourthly the debate is not between the public and health ministers but between health ministers and the providers. The public is largely excluded and the media helps keep it that way.

It is hard to find any coherent set of principles that guide health policy in Australia. So much is ad hoc, short term and born out of political compromise, designed to placate vested interests. There is no ‘system’, only relatively unconnected parts. Some services are provided free, while others like dental receive little government support. Some services are covered by tax-funded insurance through Medicare, but at the same time there are large incentives for mainly high income people to opt out of sharing and into private insurance. Politicians talk of “universalism” and a “commitment to Medicare” while encouraging the development of a two-tier hospital system. Governments, particularly Coalition governments speak vaguely about the importance of markets, but only in a few areas of health care is there market competition. What about auctioning provider numbers by postcode in order to address the critical shortage of doctors in regional areas.?Why should taxpayers fund GP’s to practise in areas already over supplied? Labor politicians sing the praises of bulk-billing while supporting high co-payments for pharmaceuticals and maintaining the Medicare safety net which mainly advantages the wealthy.

I believe that there are some key principles that should guide health policy design.

  • A universal single public-payer system accessible to all. Poor and rich should have access to the same high quality health services. A single payer like Medicare or Veterans’ Affairs funds both public and private providers. A universal system does not also imply a ‘free’ system. (For me, universality and a single public-payer are fundamental. They must be the bedrock of a fair and efficient national health service. But the federal government doesn’t discuss universalism and a single public-payer. In fact, it is retreating from both. We are approaching a tilting point in health care, as we have passed in education in establishing a two-tier health system that at least some in the United States are trying desperately to undo.
  • Promotion of both  private and public health delivery to ensure efficiency and effectiveness particularly in hospital services.
  • Services designed around patients’ needs and not historic provider interests.
  • Fairness through universal taxpayer funding.
  • Priority given to disease prevention and keeping people healthy.
  • The community actively involved in setting priorities eg indigenous health and mental health.
  • Efficiency so that we obtain the maximum benefit from our limited health dollars. Why is it that we have a caesarean section rate three times the WHO guideline and only 10% of normal births delivered by midwives, whereas in New Zealand it is 90%?
  • Subsidiarity whereby health care is delivered by the most local health unit (eg primary care) subject to national policies, national funding and national standards.

This is not to say that we should be unsympathetic to governments which have to make pragmatic decisions on the basis of perceived or actual public concerns and the self-interest of health providers. Governments can only build on what we have at the moment. But in health as in so many areas, we need some clear principles which provide guidance and discipline in the development of health care.

I suspect that there is widespread agreement particularly on the principles of universality and equity, but in a democracy the only acceptable way to establish and assert principles is serious and continuing community engagement. Political leadership is important in articulating and shaping principles, but in the end, it is the community’s values and principles that matter.

In Canada, two decades ago, the federal government established a Royal Commission to conduct a dialogue with citizens and to make recommendations to the government on an ideal health service for Canadians. In ‘Renewing the Foundations’ of Canadian health, the Commissioner, Dr Roy Romanow, proposed

‘a Canadian Health Covenant that expresses Canadians’ collective vision for health care and that outlines the responsibilities and entitlements of individual citizens, health providers and governments in regard to the system. We need consensus on why the system exists, what it is intended to achieve and how its component parts should fit together. This is vital to restoring the public’s confidence in the system.’  (Statement by Romanow QC, Ottawa, November 28, 2002, p.4)

In referring to ‘consensus on why the system exists (and) what it is intended to achieve’, Romanow was in effect saying that Canadians needed to agree on the principles that should guide the design of the Canadian health system. His report underlined the wide support amongst Canadians for the principle of universalism.

Australian government have not spelt out why the Australian health system exists and what it is intended to achieve. Principles must come before managerialism. Why spend more money when we are not clear what we want our health service to achieve? What is the health service for?

Assuming we can establish the values and principles that should guide policy design of our health service, the real task then only begins. For, policy is easy, implementation is hard.


Implementation is hard because serious redesign of health runs immediately into the power of vested interests. I personally witnessed this at the birth of Medicare in the 1970s when I was Head of the Department of Prime Minister and Cabinet. The self-interested opposition of the was appalling. That self interest is still with us today. The wasteful private health insurance lobby is an obvious example where self interest  is  put ahead well of the public interest. They lobby in private and the public is screwed.

Government archives, both Commonwealth and State, are full of health reform proposals that have never been effectively implemented because of the power of these vested interests.

The exercise of power in health is reflected in many ways.

  • Vested interests like the AMA, Medicines Australia , the Australian Pharmacy Guild and the Private Health Insurance companies and their lobbying activities put union power in the shade.
  • The public debate is invariably between the minister and vested interest groups. The community is excluded.
  • Inertia of health bureaucracies that are inward looking and work very closely with provider interests.
  • Health is complex and most ministers are easily captured by their departments and fearful of the providers.
  • Ministers will never publicly admit that we cannot have all that we want in health, so the system is always under pressure and in crisis mode which makes planning for long term change difficult. The impotant gets pushed aside in favour of the urgent.
  • Many vested interests are congregated around hospitals and as a result we have very hospital-centric health care.
  • States’ rights get in the way of the community’s rights.

It is the lack of political will to contest vested interests which is the major cause of failed reform. Australia is not unique. Witness the debacle in US health today.

In Ontario in 1996, the provincial government set up a Health Services Restructuring Commission to not only advise on restructure in health but also to implement the restructuring. Ministers recognised that they were too subject to pressure by vested interests in the health sector and that a more arms length and independent commission could achieve outcomes that eluded ministers. Ministers had shown that they were unwilling or unable to address necessary closure or rationalisation of hospital and clinical services. The Commission made significant progress and after a period handed back its powers to ministers. A key in the Commission’s success was public education so that the public could better understand and accept the necessary changes. The public had more confidence in officials on the Restructuring Commission than they had in ministers.

In light of the way power is exercised in the health sector, what can be done in implementation in Australia.

  • Health Ministers should stand back from day to day issues and crisis management of health and focus on the longer-term redesign of health services, including population health and a whole-of-government approach that embraces the social determinants of health. The main cause of poor health is poverty. Ministers should, wherever possible, be prepared to devolve and delegate greater responsibility and decision making to professional and independent organizations and people (eg Medicare, PBAC) and let them explain and defend what they are doing on behalf of the Minister. The Minister should avoid the media loop in which vested interests dominate with their own agenda.
  • Health Ministers should have a clear role in government in all decisions affecting health eg housing, jobs, transport, education. Ministers must be responsible for holistic health care and not only narrowly defined ‘health services’.
  • Re-shape the Commonwealth Department of Health and Ageing as a priority to enhance its economic expertise and ensure that it focuses on the community’s interests. Programs should be output rather than input focused as they are now around inputs of hospitals, pharmaceuticals and medical services. The department is not presently equipped to be the administrative driver of reform. Why has the introduction of an Australia-wide e-health system been so glacial?
  • The government should elicit from the Australian community, as the Romonow Commission did in Canada, the principles that should drive health reform and establish thereby a constitution or covenant for health care.
  • Establish a small, external, professional and independent Australian Health Commission to monitor and advise ministers  and the public on the implementation of its health principles and its health plan .The AHC should report twice a year to Parliament. The most important role of this Commission would be public education to contest the views of vested interests and hopefully to persuade the community on the case for reform. An informed and  supportive community will make political decisions easier. The case for health reform must be won in the community.  Unless this is done the providers will continue to veto any useful reform.
  • Establish a Joint Commonwealth State Health Commission to jointly fund and operate health services in pilot regions. in any state where the Commonwealth and that State can agree. The blame game between the Commonwealth and the States must end.
  • Wind back the $12 b pa taxpayer subsidy to private health insurance companies and pay the money directly to public and private hospitals.
  • Expand the role of Treasury, Finance and Prime Minister & Cabinet in the health reform process. They can bring greater rigour, an ‘outsider’s view’ and a whole-of-government approach. With a lack of health economists, the Department of Health and Ageing has failed in any useful health reform.
  • The priority area for implementation and funding should be primary care with the rollout of multi-disciplinary primary health care clinics across Australia. General practise is failing, particularly with the rapid commercialisation of private practices by large corporations. ‘Turnstyle’ consulting base on fee for service must be changed. The enormous pressure on State operated Emergency Departments is largely due to the failures in Commonwealth funded general practise.
  • Clinicians, but not the AMA, must be heavily involved in the reform process.
  • Urgently recruit good health economists and train good health managers.

The major issue in implementation is political will to break the paralysis that is cultivated by vested interests. Other issues are much easier to resolve. Good health policy and good health politics require the Commonwealth Government to skilfully and resolutely manage down the power of vested interests in favour of community interests.

In addition to political will, what is also lacking is a clear health strategy for structural change. There is a lot of activity and a lot of enquiries, but how does it all fit together within an overall framework. Reviews can inform governments but strategy based on community values must come thriugh government leadership. And the two most important values or principles that should guide a health strategy are in my view universality and a single public funder. And the most important driver of change must be primary care.

But none of this is possible unless there is political will.

Unfortunately the Australian health service puts the interests of providers ahead of the interests of patients. That is the reverse of what a health service should be about.

.John Menadue  conducted two health inquiries for the NSW and SA governments.


John Laurence Menadue is the publisher of Pearls & Irritations. He has had a distinguished career both in the private sector and in the Public Service.

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5 Responses to JOHN MENADUE    What is a health service for?  

  1. Avatar Fernando Longo says:

    Thank you John for a well-written piece on our Health System and, more importantly, on what can be done to improve the outcomes for the Australian people.

    One thing I would love for you to clarify is your seeming insistence on Private Health delivery, specifically the comment: “Promotion of both private and public health delivery to ensure efficiency and effectiveness particularly in hospital services.”
    I don’t really get why you need to say that – whether Private health delivery is a good solution should come down, as you say, to a health strategy based on ‘good’ outcomes for the Australian people – and the measurement of the various delivery options.

    Still, what you have written provides welcome clarity and guidance in a very much confused conversation about Health Services and their delivery.

  2. Avatar Ian Webster says:

    Dear John,
    Your experience and commitment to ‘health for all’ shines through. More than that, your piece has so many sensible and practicable proposals. If only they were to be implemented.
    One of your themes is the idea of separating the management and operational decision-making from the politicians, accepting that they are imperative to higher level health policies across the board. And, as you state, policies that affect health and health care go well beyond the health minister’s portfolio to economic, social and other areas of government.
    In this context, you write about the achievements and impact of the Canadian Royal Commission and its processes and the Health Commission set up in Ontario; and you advocate an Australian Health Commission.
    There was a time when NSW had an independent Health Commission with commissioners representing different aspects of health – public health, health education, hospitals and community services. I probably haven’t got that right as I recall there was a program in aged care services as well.
    I had just moved to NSW at that time, and I thought the Commission was a great idea and doing well. But with the appointment of new Health Minister – filled with hubris – the Commission was abolished. We might rue the day that happened, as since, I have seen NSW health ministers becoming involved in issues and crises which would be better managed by health professionals on the ground and their local service managers. This politicising has bred an increasing risk averse environment in the health system with front-line workers having to watch their backs and complete endless and frustrating computer forms at the expense of time devoted to patient care.
    Independent health commissions are a good idea and should be tried again.

  3. Avatar michael lacey says:

    The reason political will is not their to many market place politicians protecting their own interests in the market place!

  4. Avatar Sandy Donald says:

    As a Union Representative working in the Queensland Public Health system and a medical specialist (anaesthetist) I am always pleased to see discussion of the principles behind health care in Australia.

    The perverse incentives created by three tiers of funding, and the increasing focus on remote management by spreadsheet (without considering clinical realities), means people are increasingly ignored.

    A key principle that I believe should be enshrined in health policy is provision of EQUITABLE health services. For remote and regional centres this would mean consideration of what is reasonable and sustainable while recognising that highly specialised clinical services need to be in larger centres.

    I have too often seen effective and efficient clinical services abruptly terminated because they don’t fit the current spreadsheet model

    • Avatar Richard Barnes says:

      Sandy, it’s great to see a specialist anaesthetist with a commitment to the public system and an interest in equitable health care.

      John, this might be the first time ever that two specialist anaesthetists have responded positively to your excellent, sustained and comprehensive work!

      Best wishes to you both.

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