A Joint Commonwealth/State Health Commission could help address health failure.

Michael Stuckey in _The_ _Mandarin_ of 11 July described the problems.

Tasmania, Australia’s smallest state by population, is facing a growing convergence of systemic stresses. Its public finances are deteriorating rapidly, with net debt projected to rise from $7.36 billion to $10.79 billion within four years. Its public services — health, education, legal aid — are straining under demand and structural underfunding. Its integrity institutions are weakened, with an Integrity Commission that has never held a public hearing in its 13 years of operation. And its political system is paralysed, with a fragile hung parliament unable or unwilling to drive urgent reform.

In healthcare, the receivership of Healthscope threatens the viability of key private hospital services. At the same time, workforce shortages and the nation’s highest GP out-of-pocket costs put increasing pressure on public hospitals.

Martyn Goddard in _The Policy Post_ has also drawn attention to the budgetary and health crisis facing Tasmania. The cost of treating an average acute public health patient in Tasmania in 2022/3 was $7657. In Australia, it was $6006. The average cost of an emergency department presentation in 2022/3 in Tasmania was $1373. For Australia it was $980. Overall, the cost of healthcare in Tasmania is well above the national average.

Tasmania’s health problems go back many years. In 2007, John Howard offered to underwrite community organisations prepared to take over state hospitals. This was in response to the problems of the Mercy Hospital in Launceston. The problems continue with no remedy in sight.

Tony Abbott once described the divided responsibilities in health as a “dogs breakfast”. The Commonwealth largely funds care in the community and the states operate the hospitals, although with additional funding from the Commonwealth. General practice is in crisis. So, patients present in increasing numbers at emergency departments that are funded by the states.

A state handover of health services to the Commonwealth, as suggested by Tony Abbott many years ago, would be one way to overcome the waste and buck-passing between the Commonwealth and state governments in health. Kevin Rudd suggested that his government might take over state hospitals. Opinion polls suggested at the time that the public would support this approach. But Rudd backed away.

As a Commonwealth takeover is most unlikely, an alternative would be to establish a JHC in any state where the Commonwealth and a state government can agree – a coalition of the willing, a Commonwealth/state partnership on a state-by-state basis.

A Joint Health Committee (JHC) with shared Commonwealth/state governance would be responsible for funding, planning and integrating all health services in that state. Consistent with an agreed plan, the Commission would then buy health services from existing providers – Commonwealth, state, local, NGO and private.

A political agreement between the Commonwealth and any state is essential. If this political agreement is achieved, we would see a more cohesive and integrated health service, delivered much more efficiently. Once the benefit was clear in one state, hopefully other states would follow.

Integration of commonwealth and state health functions are essential. It is estimated that more than 700,000 state hospital admissions per year could be saved if there was more timely community intervention which is funded by the Commonwealth.

A solution requires a political agreement between the Commonwealth Government and at least one state. A bureaucratic or organisational response to a political problem will be unsatisfactory. The issue must be addressed politically. If there is political agreement, governance, financial, administrative and other issues could be successfully managed.

Such an approach would not produce a unified national health system, but six (excluding the territories for the moment) joint health systems which are state-based. Nonetheless, this would be superior to the present division and fragmentation.

A JHC would have the following characteristics.

1. Coverage of a JHC

The wider the coverage the better to ensure real and comprehensive resource allocation and integration of services across the full continuum of care. The following programs should be included as the planning responsibility of the JHC.

• State Health (including Health Care Agreement)
• High level residential aged care
• Department of Veterans’ Affairs (DVA)
• Home and Community Care (HACC)
• Commonwealth Regional Health Services in rural and remote areas.
• Medical Benefits Scheme (MBS)
• Pharmaceutical Benefit Scheme (PBS)
• Aboriginal health
• Local Government health
• NGOs (e.g. nursing services)
• Public health

State Health, HACC, etc. would tender for the provision of services to the JHC. Similarly, local government and NGOs would tender, although allocations to them would probably need to be made through the State Health department.

Private hospitals could probably be excluded from this coverage, as they depend on private contributions rather than direct government funding – except for occasional seed money. But provision should be made for private hospitals, along with local government and NGOs, to tender for supply of services to a JHC (see 3 below). The private delivery of health services should be encouraged where it is consistent with the state-wide plan and is delivered efficiently.

Importantly, existing providers would continue to operate and provide services, and where appropriate, ministers — both Commonwealth and state — would continue to be responsible for their own services. But those services would be purchased by the JHC as part of a state-wide plan, which I refer to under functions’ below.

2. Pooled funding of JHC

The JHC would receive a negotiated pooled allocation of funds from the Commonwealth and the state government which reflected the coverage of programs for which it would be responsible (see 1 above), with appropriate population growth and cost indexation add-ons. As a starting point, the shares of the two governments would reflect their current funding shares. Changes in the shares and total funding would be subject to the advice of the National Health Performance Authority. That Authority would provide public advice to the two governments. The two governments would need to agree on annual funding arrangements.

Whilst confidence in the funding formula is developed, it might be useful to consider shadow funding in the first 3 years and move to actual pooling of funds thereafter.

3. Functions of JHC

a) Shared resource allocation through the purchase of various services from providers – Commonwealth, state and local government, and NGOs as part of a joint strategic plan.

• In this case, shared resource allocation can be achieved through the establishment of a minimum set of Commonwealth and state programs.
• The major changes associated with the JHC would provide an opportunity to move from producer dominated health care delivery to an output/patient focused delivery system. So many of our health programs reflect provider interests; the MBS reflecting the interests of doctors and the AMA, the MBS reflecting the interests of the Pharmacy Guild and Big Pharma and public hospitals reflecting state government interests. Patients are a secondary concern. We need to shift to a patient focussed health system in such key areas as chronic, acute and occasional care.
• Funding would be allocated with agreed short- and long-term integrated outcomes, rather than siloed program outcomes, with specified standards and levels of performance.

b) Shared performance management

Oversee continuous improvement of the health system, monitor progress and establish reform targets and timelines:

• Development of standard measurement
• Benchmarking
• Patient-centred best practices

The NHPA provides an excellent opportunity for the establishment of a system that can meet the needs of consumers, community and health services. The NHPA can provide an approach that examines health status and outcomes, social determinants of health, and health system performance.

The NHPA should facilitate the mapping of progress for the population of a state, region or service. It could also be used to examine progress in tackling a particular health problem (e.g. aboriginal health), and to take a wider look at the interface between health and other government departments, the private sector and non-government organisations.

4. JHC governance

The following features could be included, and would ensure full Commonwealth and state government input into the state-wide plan:

• Membership of the board should be high level to enable strategic decision-making on broad and longer-term issues.
• Maximum transparency and disclosure of the JHC’s work and final recommendations to neutralise special pleading and vested interests and to ensure public understanding and support.
• The board of directors must have clear governance’ responsibility and not a junior role. They should reflect the broad interests of the whole community and not be seen as representative of the Commonwealth or State or insider interests’ that so dominate health systems in Australia.
• Independent chair appointed by the two ministers from a short list provided by the respective Commonwealth and state health CEOs. It might be useful to have the chair from another state.
• Apart from the chair, no jurisdiction to have more than 50% representation.
• Representation could include other Commonwealth and state jurisdictions (e.g. Indigenous Affaires) and people having experience in the private sector.
• The board would appoint the CEO who would be responsible to the board and not the two jurisdictions.
• The board would approve the strategic plan and budget.
• A constitution may be useful to provide more user-friendly objects, role, function and operating procedures, including engaging the private sector.
• Subsidiarity should be an important principle for governors in developing the state-wide plan. Management and service delivery should be driven down to the lowest and most local level possible, consistent with state and nation-wide standards.
• The Board should have a small secretariat, but rely on JHC for planning etc. It must avoid a new level of bureaucracy.
• Board costs would be shared by Commonwealth and State.
• Commonwealth and State ministers would be responsible for negotiating high-level policy principles, including overall funding on the advice of the board. This would help reduce the risk of the board dividing on Commonwealth/State lines. Ministers must reach broad agreement if the JHC is to work.
• The board should be responsible to the Commonwealth and state minister, with one financial report to both. If there is not agreement between the two ministers, there would be a public dispute resolution procedure which would encourage co-operation and dialogue between the two ministers. This would encourage public trust in the integrity of the process. I would expect that this would produce an agreement in almost all cases. If resolution is not possible, the Commonwealth minister would prevail, given the need for a stronger national role and that the Commonwealth Government provides 43 % of national health funds compared with 26 % by the states.

These governance arrangements could be reviewed in five years.

Summary

A JHC established upon agreement of any state with the Commonwealth would be a substantial improvement on the present arrangements. It would help break the impasse on federalism and better integrate health services. It requires a political decision between the prime minister and premier.

The public is tired of the blame shifting and fragmentation in health and would respond to a sea change such as this. Such a JHC in any state that agreed would help achieve – a better integrated health system and a favourable community response.

A committed Commonwealth Government could use its financial leverage to make such an offer attractive to the states.

A JHC in any one state could begin to address the big ticket’ problems in health delivery – the Commonwealth/state fragmentation, an eroding primary health care system, an antiquated workforce structure and system failures in safety and quality.

The fragmentation in health is not just caused only by Commonwealth-state fragmentation. The two big Commonwealth programs — MBS and PBS — are not effectively integrated.

All these big-ticket issues are lost sight of in the argy-bargy of Commonwealth/state blame and cost shifting.

Not only would a JHC in one state be a substantial improvement, but it would also be very symbolic, demonstrating that governments can address hard political issues in a co-operative way.

We must stop asking continually for more money or tweaking the health dollars, when many problems are structural. A lot of health spending is counter-productive – throwing money at problems to get them out of the media or for short-term political gain, rather than solving systemic problems. Any increase in health dollars must be accompanied by system change. A JHC starting in one state is a sound way to begin breaking the impasse.

The key is political will by ministers. If there is the political will, the governance problems can be resolved.

Many would argue that a JHC as proposed would be a bridge too far. A more modest start would be for the Commonwealth and a state to establish joint arrangements on a regional basis. In such a situation, Commonwealth and state funds would be pooled in that region and an agreement negotiated for a health plan for the delivery of all health services in that region.

Tasmania, a small state with major budgetary and health problems, would be a good start for a JHC.