The cost of healthcare in Australia and remuneration of doctors. Guest blogger: Professor Kerry Goulston

Dec 2, 2013

The cost of healthcare is unsustainable here and in many other countries.  In Australia it is 9.5% of GDP, estimated to rise to 16-25% by 2025.  There are obvious reasons for this—population ageing, end of life heroics, increased technology and increased use of procedures.  A rapidly increasing contributor to the cost of healthcare in Australia comes from “out-of-pocket expenses”-estimated by Yusef and Leeder in a seminal paper –Oct 2013-in the Medical Journal of Australia to be $28 billion per annum.  For older households this represents an annual cost of $3,585.  Yusef and Leeder point out that the decline in adequacy of coverage of Medicare rebates for medical services has increased the need for co-payments .  This means that some people in lower socio-economic groups are not seeking medical care and are not getting their prescriptions filled. This needs review.

Whilst there is considerable distress and indeed anger expressed anecdotally by patients at the increasing ‘gap’, it is remarkable that the Australian media has barely featured this.  Out-of pocket expenses now account for almost a quarter of the total healthcare costs in Australia.

An excellent book Making Medicare: the politics of universal health care in Australia (2003) pointed out that the Medicare system was not designed to support integrated care and management; that fee-for-service fragmented patient care and increased doctors’ incomes.  The authors, Anne-Marie Boxall and James Gillespie from the University of Sydney called for genuine policy innovation.  This is echoed by The Commonwealth Funds “International Profiles of Health Care Systems “released in Nov 2013 which shows that 75% of Australians said they wanted fundamental change or a complete rebuilding of the health system—more than any other country surveyed.

In the USA the Society of General Internal Medicine published a report on their national Commission on Physician Payment Reform in May 2013 with 12 recommendations.  These were aimed at containing costs, improving patient care and reducing expenditures on unnecessary care.  They suggested a “blended” system over a 5 year transition period with some payments based on the fee-for-service model and other payments based on capitation or salary.

In October 2013 two US senators (a Democrat and a Republican) proposed a gradual change to a new system with incentives for doctors to forgo fee-for-service billing.  However a 2013 survey by the AMA of US doctors showed that while 85% agreed that trying to contain costs is the responsibility of every doctor, 70% were not enthusiastic about eliminating fee-for-service re-imbursement.

In New Zealand, a blended system (universal capitated funding, patient co-payments and targeted fee-for-service) has an emphasis on an inter-disciplinary approach particularly for patients with chronic and complex problems.  From this side of the Tasman it appears to be working well.  It shows that remuneration change can be achieved over time.  We should learn from our New Zealand colleagues.

Fee-for-service does not provide encouragement for preventive health and wellness care. It is not appropriate in addressing new or undiagnosed problems or managing chronic illness.  In fact there are dis-incentives embedded in fee-for-service which is skewed to episodic patient care and does not encourage doctors to spend time with patients who have chronic and complex conditions.

A significant minority of recent medical graduates want a better work–life balance and many, not only women, are opting for non-fee-for-service employment.

A move away from fee-for-service will improve the quality of care and reduce our steadily rising total healthcare costs, including the increasing out of pocket costs.  Such a change would need to be gradual, made optional-and introduced over a number of years.  It would require the support of leaders of all healthcare professionals, politicians and the community.  As yet Australian political parties lack any real vision for meaningful health reform and a serious commitment to reduce the rising costs without compromising quality.

Professor Kerry Goulston, Emeritus Professor of Medicine, University of Sydney


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