MICHAEL LAMBERT. The Productivity Commission on Improving Productivity and Health Reform PART 2 OF 2.

In part 1 yesterday, I outlined the five key areas or themes where the Productivity Commission believes that reform is essential and would deliver major benefits to individuals, the community and the economy. These five themes are summarised below.  

Improved Integration of Health Care

There is poor coordination between and within primary care and secondary care and poor to non- existent multi -disciplinary management of persons with multiple chronic diseases. One telling example of poor primary to secondary coordination cited in the report is that less than 20% of Australian GPs were informed when a patient was seen in an emergency department of a hospital, much lower than in the UK, Europe or New Zealand. This should not be the case as there has been recent progress on creating regional health structures: Primary Health Networks (PHN) to coordinate primary care in regions and Local Health Networks (LHN) to coordinate State funded hospital care. In the mission of these organisations is the goal of working to effectively coordinate between primary and secondary care.

There are some tentative signs of progress in the area of integration of care. The Commonwealth has begun trialling an approach to coordinate health care for patients with multiple chronic conditions called Health Care Homes whereby the GP acts as a health care navigator and coordinator to assist patients develop and then implement a care plan. This is only at a very early stage, being trailed in a number of locations and does not apply on a preventive basis to those at risk of developing multiple chronic conditions. Furthermore it does not involve the LHNs.

The Commission proposes that the States/Territories and the Commonwealth establish a formal collaborative model between PHNs and LHNs across the country which includes measures of performance in integrating care and achieving improved health outcomes. In addition, at a more specific level, the Commission proposes the outline of a model to focus on and fund both chronic condition prevention and management. There is a clear benefit for LHDs to seek a reduction in chronic conditions that present at hospitals. The proposal is for States and Territories to establish a fund in each local health district dedicated to both chronic care prevention and management and for the relevant LHD to work in full collaboration with the relevant PHN to determine the most effective way to use the funding. It should be noted that this will require Commonwealth regulatory change as public hospitals are at present precluded from funding GPs.

Improved health funding models aligned with high value care

Fee for service is the dominant funding/payment model for primary care and similarly public (and effectively private hospitals) are funded on the basis of activity at a standard efficient cost. However while this approach pays for activity it does not directly address health outcomes and does not reward successful efforts at prevention. In fact successful prevention is subject to a penalty in the form of lower revenue.

Private health insurer’s premiums are set on a community rating basis, which while equitable, reduces the incentive for private insurers to engage in funding chronic condition prevention.

There are also many medical procedures that are undertaken with no established clinical evidence of effectiveness.

One of the approaches to address these problems was identified above with respect to chronic condition and care funds being established at a regional level. The Commission also proposes a number of other funding reforms directed at improving quality of care and encouraging chronic condition prevention, these being:

  • Adopting a mixed funding model in primary care, maintaining fee for service as the major funding mechanism but combining this with a risk adjusted capitation payment for GPs that would be intended to fund population health including prevention. This would be coordinated by the PHNs
  • Changing legislation to allow LHNs to fund GPs directly, once again in concert with the PHNs
  • Expanding the Commonwealth trial of Health Care Homes to include the full involvement of the relevant LHNs and to provide funding directed at treating people at clear risk of multiple chronic conditions who have not yet acquired the conditions and giving greater flexibility for LHNs and PHNs to design the appropriate form of integrated care.
  • Putting in place a mechanism for private health insurers to fund prevention with the benefits either quarantined from equalisation amongst the insurers or encouraging a coordinated and cooperative approach by private health insurers.

Improved Quality of Care

At present hospitals are funded on an activity basis and that can include funding hospital acquired complications and procedures which have little or no clinical benefits. In the UK there is a mechanism in place to not fund hospital acquired conditions which exceed a reasonable level and an active program of assessing medical interventions for effectiveness associated with establishing clinical standards that must be adhered to and “do not do “lists of procedures which are not to be undertaken as they are assessed as ineffective .

The Commission recommends adopting a similar approach to that employed in the UK and in addition recommends removing the tax rebate for private health insurance coverage of ancillary services on the basis that they have no proven health efficacy.

Patient Centred Approach

The Commission recommends the explicit commitment to a patient centred approach which requires not just paying lip service to the principle but giving emphasis to the needs of patients and giving patients the information and power to be a “co-contributor” to treatments and disease management.

The Commission identifies a number of steps that could assist in putting this approach into place, these being:

  • Putting in place measures that capture the patient’s assessment of the health episode. There have been developed in various countries and there are now international standards for such measures for each category of clinical intervention. These are called Patient Reported Outcome Measures (PROM) and Patient Reported Experience Measures (PREM), which are integrated into the relevant disease registers, used actively as measures to assess clinical interventions and provide feedback to clinicians and hospitals. NSW is developing such measures to trial them in the public hospital system.
  • Actively seeking to improve health literacy of the population in order to assist people to self-manage chronic conditions through such actions as improved diet and physical activity.
  • Building into the education and training of health professionals the philosophy and practical approach of patient centred care.
  • Identifying and giving greater focus to high users of the health system, seeking to address the underlying causal problem if possible rather than treating each intervention independently.

Improved Use of Information and Technology

The Commission has recently undertaken a major review of access and use of data and noted that the OECD assesses Australia as relatively poor in collecting and particularly linking administrative data. In the health area there is a poor linkage of different data sets and there is a poor flow of information from hospitals to the treating GPs.

The Commission proposes the adoption of its recommendation from the report on data of the establishment of an Office of National Data Custodian which would develop in concert with the health sector   a system for comprehensively identifying and integrating data in both the primary and secondary health areas and the adoption of an e Health information system. The report also suggests s that the My Health Record initiative of the Commonwealth could be extended to not just be a record of patient treatment but also a means of providing in a highly convenient way advice to patients such as reminders about vaccinations, taking medications and tests as well as checking on progress on care plans.

In the area of technology the report has suggested courageous action by the Commonwealth in the area of pharmaceutical dispensing. Pharmacies are well protected legislatively in terms of their role and from competition despite the fact that most of their activities and revenue relate to a more general retail function and that technology is available to transform the prescription dispensing function. The report proposes changes in regulation to allow for machine dispensing of prescriptions under suitable supervision. It notes that such an approach would have a substantial impact on the employment of pharmacists and hence on the level of training of pharmacists in the future., given that the supervisors of dispensing machines would not need to be pharmacists. The role of pharmacists would be transformed into being a part of the community health team and not part of a retail function. It would be significantly more rewarding in an intrinsic sense and be more effective for population health but would involve a large reduction in the level of employment of pharmacists.

The report assesses the total social and economic benefits if the health reforms proposed in the report were adopted and assesses it as having an annual benefit by year 20 of $38billion and a net present value benefit of $140billion. This does not reflect simply savings on health expenditure but more importantly improved health outcomes and the prevention over time of chronic diseases.

The Commission is to be commended on its strategic approach to improving productivity in the Australian economy and improving the quality of life and productivity of the community. The identification of the deficiencies in the health sector and the reform proposals appear correct, though   there would be benefit in a more fundamental reform of the Commonwealth and State roles in the health sector involving joint funding by the Commonwealth and the States of both primary and secondary care and thus a clear alignment of roles and responsibilities of both levels of government. This would be a challenging reform as it would require a major revamp of funding powers between the two levels of government.

It is also suggested that while the matters are covered in part in the report, it would be helpful to explicitly add two further reform themes, these being:

  • Enhanced accountability for improved health outcomes
  • Coordinated and effective prevention of chronic diseases

By having an explicit theme covering these two areas, a more coordinated approach to achieving these objectives will be encouraged.

With respect to accountability, there are various dimensions of accountability including financial, legal, compliance, regulatory and to owners, be they governments or private sector shareholders. However, the one dimension of accountability that needs more focus in the health sector is accountability for improved health outcomes. This form of accountability is in place to some extent in the public hospital system but it is not in place in the private hospital area, the primary health sector or with private health insurance.

The second theme of prevention of chronic diseases needs a mindset, incentives and funding that extends the health system beyond that of treatment of chronic conditions to the prevention of such conditions and involves a whole of government approach including town planning, education, housing and education. This requires a national commitment by both the Commonwealth and the States and Territories, a set of targets to be achieved over time, a series of interventions and monitoring of performance against the targets and ongoing research on the most effective interventions.

Michael Lambert is a former Secretary of NSW Treasury and a director and senior adviser on health economics at the Sax Institute, a not for profit organisation that seeks to connect health research with health policy and programs to enhance population health.


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4 Responses to MICHAEL LAMBERT. The Productivity Commission on Improving Productivity and Health Reform PART 2 OF 2.

  1. Oh dear! Why do economists and their money-oriented ilk on the Productivity Commission keep on theorising about how to improve medical practice?
    Are they completely out of touch with the changed nature of Australian urban general practice (ie the general practice experienced by the vast majority of Australians)? Do they still think of it as a sole or small group ‘horse and buggy’ profession; do they not appreciate that it has been well and truly corporatised by profit-seeking venture capitalists intent on maximally milking Medicare?
    To talk of ‘integration of care’, without recognising that urban general practice has become an office-hours business, is ‘pie in the sky’. Illnesses do not stop conveniently at 5 or 6 pm, Monday to Friday. Which urban GPs are available to their patients nights and weekends? (I have been told that there is one in Sydney. I have checked. His surgery phone has a message giving his mobile phone number).
    For all the data-driven comparisons about doctor numbers and doctor-to-population ratios, what is overlooked by the ‘numbers and dollars’ decision-makers and commentators is that, while it might appear that we have an adequate supply of medical practitioners, we actually have a shortage of medical services. That is what matters.
    ‘Integrated care’, if it is to mean anything at all, must start with each patient having ‘their own GP’, knowing that, other than in an emergency, they are able to see, within a reasonable time-frame of, say, one or two days, that specific GP who knows them and their problems. This aspect of patient care has been overlooked in the misleading Patient Experience Survey July 2016 to June 2017, published by the Commonwealth of Australia.
    The brutal truths are that (i) some 60% of our graduates are female (resulting largely from the much reliance for admission to medical school on the high academic achievements of the more mature female 18-year olds) and (ii) women doctors work, on average over a lifetime, 40% fewer hours than their male colleagues. It is not surprising that we have a shortage of reasonably available pairs of hands.
    Surpluses and shortages of any service reveal themselves quite openly through, respectively, competition or lack of it. If, indeed, urban Australia had the much-proclaimed ‘surplus’ of GPs, GPs would offer better services than their competition. They don’t. They have no need to bother.
    In a true surplus, there would be no space for those practices which charge fees far exceeding the Medicare rebates. Yet such practices thrive in the suburbs of the capital cities, proof of a shortage of quality GP services.
    Were there a true surplus of specialists, waiting times for appointments, procedures and operations would be minimal. Any of us who have been ill know about these delays. Once again, while there might not be a surplus of specialists by comparison with some countries, there is, in urban specialist practice too, a shortage of services.
    Yes, hospitals could communicate better with the patient’s GP. This has probably always been the case. And GPs could communicate better with specialists and hospitals. But the foundation stone and focus for all this theorising about ‘integration’ is that the patient actually attends a doctor whom they can refer to as “my GP”.
    I am not advocating the British system of allocation of patients to a specific GP and payment by ‘capitation’, ie an annual payment for each patient on the books (though this has been modified over the decades).
    If ‘integration’ is to be accomplished, rather than be simply a semi-religious mantra put about by economists and bureaucrats, then it must be based on the doctor-patient relationship, an old-fashioned humanist and realistic ideal for which there is no substitute.
    This means a radical re-thinking about the incentives (yes, doctors are human and do respond to incentives) which will persuade GPs to really take back their ‘primary care’ role, where specialists and hospitals acknowledge that anything they might think or do, with or to a particular patient, is done in tandem with that patient’s own GP.
    Yes, “prevention is better than cure” and probably a lot cheaper. Some practical prevention is in the hands of GPs – immunisation. But much immunisation is not in the hands of the GP – patient consent is needed.
    But most prevention is in the hands of the patient – quitting smoking, restricting alcohol, eating certain foods in moderation, avoiding habit-forming drugs. To talk of prevention as if it is something which can be done by GPs is farcical. The most that a GP can do is to advise.
    All this idealistic mouthing by the Productivity Commission and the economic commentators is sound and fury, signifying nothing other than “we must appear to be doing (or saying) something”.
    Any re-structuring of our health care systems (not ‘system’, by the way), if it is to achieve ‘integration’, must re-think what it is that we expect of our GPs. Unless we can make each GP the central focus for his or her patients, there is nothing with which to ‘integrate’ any other healthcare services.

  2. Dennis says:

    Well we will all be hoping that the recommendations of the Productivity Commission do not end up stuffing up the health system anything like what happened to the TAFE system when its recommendation on Vocational Education & Training were implemented.

    Lets face the fact that if survival depended upon outcomes this mob would have been shut down long ago,

  3. David Brown says:

    first paragraph should have been…..

    funding of private health insurers profits, their clients and privately run public hospitals continues to drain our taxes that should be directed to health care

  4. David Brown says:

    hospitals continues to drain our taxes that should be directed to health care

    while we have neoliberal driven governments (LNP sadly even more extreme currently, hopefully Labor less so from now on) it is dangerous to give them excuses for changing things as they will always find ways to degrade community services

    so my advice is continue planning but delay implementation until more people-friendly governments are elected with strong enough mandate

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