JON BLACKWELL and KERRY GOULSTON. Aspects of Australian healthcare reform (part 3 of 3) – Big problems and big opportunities

Jan 22, 2020

In the first of this 3 part series, we outlined the shortcomings and achievements of our efforts to plan and implement Healthcare Reform in NSW some years ago. In the second paper, we outlined the more recent approach in Denmark, which had a wider and more inclusive Reform Plan. In this third paper, we stress the enormous difficulties currently facing all Australians needing healthcare both now, and in the years ahead, and propose a way forward.

Challenges arising from Australia’s current healthcare system

Over recent years the Australian health system has developed into a fractured and uncoordinated mess, characterised by conflict and competition for limited resources and political point scoring.

The Australian healthcare system is not working well. The mixed model of health funding from the Commonwealth, State and private sectors ensures opaque financial arrangements at best and encourages creative cost shifting by health providers at other times.

The universality of Medicare has been undermined. As Jennifer Doggett and Lesley Russell noted in an opinion piece in March 2019: “In almost all areas of our supposedly ‘universal’ health system, increasing costs are preventing average Australians from getting the care they need. Last year over 600,000 people avoided or delayed going to the GP due to cost. Almost one million people who needed a prescription medication avoided or delayed filling their prescription for financial reasons. Cost was also a barrier for over two million Australians who avoided seeking needed dental care.”

Planning for effective healthcare services is close to impossible in an environment that has so many players with such diverse interests and drivers.

There has been a lack of political, clinician and academic leadership, with some notable exceptions. Decisions have been unfairly influenced by lobby groups (the Australian Medical Association , Specialist Colleges, Australian Dental Association, Pharmacy Guild, pharmaceutical and prothesis industries and the Private Health Industry, to name but a few) all of which have little hesitation in quickly pulling the shrouds out of their linen closets for a good old shaking, particularly when the State or Federal political cycles reach their heights at election times.

For some years, State and Federal Governments have been involved in short-term band-aid solutions depending largely on the timing of Elections, and mostly dealing with hospital-based services.

Little emphasis has been given to the broader health system and keeping patients out of hospital in the first place through health promotion and other multi-disciplinary community based preventative services. We need better ambulatory care services; we need to re-set the mindset of “if you feel sick, go to an emergency department.”

There are many voices in Australia on this issue. But many are not speaking up, or just not being heard. Low income and rural families are increasingly unable to access timely healthcare, which is surely a universal right, but has become a two-tier system in Australia. The gap between rich and poor has widened both economically and in relation to access to quality universal services such as health.

Gap payments have spiralled out of reach

The out-of-pocket or “gap” paid by patients and their families continues to grow. As noted in the November 2019 Grattan Institute Report entitled “Saving private health 1: reining in hospital costs and specialist bills”: More than 2/3 of services are charged up to 50% above the scheduled fee and about 7% of specialists charge twice the scheduled fee. Report author, Stephen Duckett, stated in a related AFR opinion piece “Our report shows that private patients had to pay more than $750 million in out-of-pocket costs to specialists in 2018-19 for in-hospital medical care.” Of course, these costs do not include further out-of-pocket payments to specialists for consultations before and after operations.

These fees are charged by a range of doctors and dentists operating both in the private hospitals and in their rooms. Yes of course they’ve trained for years under sometimes very stressful and unhealthy conditions, and now it’s time to command a decent income. But is it ethical to charge patients at levels which at times require them to take out a loan to pay their medical bills? No wonder patients are shaken when they receive their bills. “But I had top cover………had it for years” is the common cry.

Private health system is too costly, and becoming more unsustainable

And what about the private hospital system itself, and its feeding mechanism, private health insurance. Australians have been traditionally wedded to the private system and there appears to be a notion that its one’s civic duty to hold private health insurance, and pay for one’s own treatment. However, as the Grattan Institute’s Stephen Duckett noted in an opinion piece in the AFR on 26 November 2019: “…subsidies to private health insurance cost the taxpayers $6 billion per year, and a further $3 billion of annual subsidies are provided for medical costs in hospitals.”

The system worked well in the distant past when doctors provided services to the private sector for reasonable fees and to the public sector for free as honorary appointees to public hospitals where the indigent were treated. Those days are long gone, and health insurance premiums have soared as the population (particularly the young) abandons private health insurance – with policies which often cover only a fraction of the total costs of an admission to a private hospital. The public are beginning to realise that private health insurance provides no real assurance.

Private health insurance is in a death spiral and Francesco Paolucci and fellow authors, writing in the Conversation, note that “health insurers are failing to stop the exodus of young people dropping their cover”, preventing such insurers from leveraging off the young and healthy to cross-subsidise the older, sicker members of our community. See also a recent article by John Dwyer on P&I’s blogsite

Private Hospitals concentrate on operative and procedural medicine. They play a minor role in Emergency Medicine, or ambulatory out-patient care. Communication between them and the Public Hospitals—even if co-located –is minimal. Patient outcome data is hard to come by.

Increasing corporatisation of medical services

Corporatisation is growing. This involves Radiology and Pathology, and, increasingly, even General Practice. General Practice itself is in dire straits, many do not do “house calls”, and some are open only part of the time. Morale is low, and less medical graduates want to go into General Practice. GPs are under remunerated compared with their specialist colleagues.

Absence of an oral health policy

The importance of Oral Health has increasingly been recognised. See for example a recent article on P&I’s blogsite by Alexander Holden and Heiko Spallek. The absence of an oral health policy as part of Australia’s overall health policy and priorities is shameful. Too many Australians cannot afford or delay seeing a dentist.

Declining numbers in nursing

Nurses are not listened to. Many leave the profession early. There are insufficient registered nurses in the community or aged care facilities. Few of them practice alongside GPs or specialists, outside hospitals.

Unnecessary use of hospital emergency departments

Hospitals are crowded with patients who would be better cared for in Ambulatory or Out-Patient Departments, in Multidisciplinary Clinics, or in their homes. Hospital Emergency Departments are under enormous and increasing stress. Australian Institute of Health and Welfare figures for 2017-18 put Emergency Department attendances at 8 million or 22,000 per day, figures which represent a 3.4% increase on 2016-7 numbers. The overall proportion of patients seen on time declined by 5% since 2013-4.

We now need a plan to keep people out of hospital where they can be satisfactorily treated as out-patients.

In summary, Healthcare in Australia is in crisis. Emergency departments are overflowing with patients who should be treated in the community, patients with chronic conditions go untreated and suffer unnecessary pain and disability, and the Private Health system has become inaccessible to many Australians. In essence access to timely and appropriate health care is quickly becoming restricted to the better off in our community.

A proposed way forward, following the example set by Denmark

Australia needs a carefully thought out healthcare reform process, one which (like in Denmark) involves input from patients, carers, the community, clinicians (nurses, allied health professionals, doctors) and health administrators, hopefully, even citizen juries. Very recently, and quite remarkably, the CEO of Vincent’s Health Australia has called for a transformation of our health system, learning from Denmark, reducing the number of hospitals and refocussing the health system on prevention and primary health care. Toby Hall, CEO of one of Australia’s leading providers of public and private hospitals, Vincent’s Health Australia, has recently pointed to the Danish healthcare reforms, and predicted a reduction in the need for hospitals if we embark on suitable healthcare reform.

We are a much bigger country than Denmark, but their principles and methodology of reforming health are ones we can learn from. The Danish political system and the Danish people make their healthcare reforms specific; but we would argue that the principle of keeping people out of hospital can be applied to other countries, including Australia. See also this very recent article by Lisa Rosenbaum MD from the New England Journal of Medicine.

The influence of a range of healthcare providers with vested interests must be nullified. As it is, such providers have “captured” their funders and regulators.

On 2 January 2018 the Ministerial Advisory Committee on Out-of-Pocket Costs was established to provide advice to the Minister for Health on possible reforms in relation to out of pocket expenses. Among a range of laudable recommendations, the advisory committee proposed a website on which “individual specialists’ fees for treatments and information about their billing practices (for example, if they provide concessional pricing for some patients); would be published”. The Advisory Committee issued its Report in November 2018.

The Minister initially accepted this recommendation, however, following pressure from specialist groups, when the website “Medical Cost Finder” went live on 30th December 2019 it neither named specialists nor disclosed their fees. As reported by Kate Aubusson in the SMH on 30 December 2019: “Last week, chairman of the Australian Medical Association’s federal board Associate Professor Gino Pecoraro said that, of the hundreds of doctors he had spoken to, not one had indicated a willingness to publish their fees.” Hardly surprising, of course, but yet another demonstration of provider “capture” of the regulator in the Australian health system.

Adele Ferguson gives an excellent description of how this occurred in the financial services and banking sectors where providers cosied up to regulators (ASIC and APRA) in her August 2019 book “Banking Bad”. In many scandalous instances the regulators clearly failed to protect the Australian public from corporate and individual greed and gouging. Sound familiar?

There is an urgent need for the development of a national approach and plan, developed with the health of the whole population at the centre of all consideration. Health must be depoliticised, free from interference by the multiple stakeholders and based on evidence.

This could best be developed by an independent Australian Healthcare Commission, properly resourced and headed up by an eminent figure – perhaps a judge of the stature of Michael Kirby, the first Chair of the Australian Law Reform Commission – and isolated from political and lobby group influence. There is no need, in our view, for a Royal Commission or a Productivity Commission report, as they would be overkill and simply result in further delays in actually embarking on sensible reform.

We call for such an Australian Healthcare Commission to be supported by federal and state politicians to assess the present situation and evolve a national plan of healthcare for all Australians.

Before the last election, John Menadue supported Labor’s proposed establishment of an Australian Health Reform Commission, composed in a manner which would obviate political and provider influences. It would be a permanent, independent, and legislated body.

We unreservedly support such an approach.

Without urgent action, the Australian healthcare system is neither “fit for purpose” nor sustainable.

See also:
Aspects of Australian healthcare reform : Part 1 Some History, Part 2 Learning from Denmark

Jon Blackwell has managed hospital and health services in the Pilbara and South Australia and was the CEO of the Central Coast Area Health Service from 1997-2003. He was subsequently CEO of Workcover NSW from 2003-2009.

Kerry Goulston was convenor of the Health Reform Group from 2002-2018. He worked for many years as a Gastroenterologist in hospital salaried positions and in private practice.


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