The productivity gains you’d get from migrating the management of GPs from the Commonwealth to the states goes way beyond the money the country could save into a transformation of clinician efficacy and job satisfaction, and, most importantly, patient outcomes.
The idea that you could somehow migrate the management of the GP sector from a largely commonwealth responsibility, to a state one, is generally dismissed as a fever dream of those who have no idea of how our healthcare system really works.
This week Dr Norman Swan joined the fever dream club.
He told a packed gathering of the Australian Institute of Digital Health’s HIC 2025 conference that it was an idea that was the plainly obvious way to go if we want to make any sort of meaningful dint in our impending fiscal, workforce and structural healthcare system crisis (the transition from acute to chronic care focus).
In an interview with HSD about his keynote Dr Swan put the “fever dream” argument succinctly as follows:
“We …need to shed the commonwealth as the provider of primary care in this country, and turn it over to the states with the commonwealth being the standard setter and the ultimate funder.
“There is very little economic incentive for the commonwealth in providing better primary care, whereas there are huge incentives for the state systems to provide better primary care.
“The role of the federal government could be to protect primary care to make sure it isn’t raided, but nonetheless the people who’ve got a horse in the race are the state governments.”
It sounds all too blindingly obvious. But if anyone actually says it most healthcare system people in a room will roll their eyes like you’re suggesting we simply get rid of federation and that will fix healthcare. That of course probably is a fever dream.
First rule of Fever Dream Club: it’s got nothing to do with us being federated.
You can transfer responsibility of GPs to the states within our federated model and you aren’t going to come up against any real issues other than the politics and the fear of change among those whose jobs might be endangered by the idea. There’s quite a few in the latter category and this would need to be handled very carefully.
Until now the second rule of Fever Dream Club has been “don’t talk about Fever Dream Club”. You won’t make any friends and often you’ll get treated like you’re a member of Q Anon.
But governments might be surprised at how many members Fever Dream Club has, how influential some of the members are, and how fast membership is growing.
Why would that be happening?
Because demographers are telling us that we have only about 10 years before things really start going off the rails in terms of system efficacy. And it would probably take about 10 years to pull off a complex structural transition like migrating GP responsibility to the states.
The time is now.
The Medical Republic/Health Services Daily held a summit in Canberra a few weeks ago with leading industry thinkers and government (not that they aren’t leading thinkers as well) called the Towards One Healthcare System summit.
The idea of One Health System in a country like Australia, with about eight different and largely unconnected systems, is to build out policies, technology, processes and laws which will help Australia’s significantly fragmented system of many different systems, most obviously federal vs state, but also public versus private in that mix, to act as one system.
Why?
Efficiency from alignment and connectedness of services and resources, continuity of care, health worker job satisfaction and efficacy (which comes from being part of a properly connected care ecosystem), money (you save a lot, or make a lot), and from all of this, a transformed patient experience.
Even if you think migrating GPs to state control is madness, the concept of One Health System isn’t. It’s a great way to frame policy and system planning thinking and it does within many government policy units and system think tanks, often even in a subconscious manner.
A paradox facing our system planners and thinkers – of which I’d suggest, Dr Swan isn’t such a bad one – is that on the one hand many wave away the idea of GPs being run by the states as “just unthinkable”, but on the other, the most obvious thing we could do to make the biggest and most impactful jump in One System thinking is, move GPs under state control.
What Dr Swan tried to stimulate this week is more serious conversations around thinking through the “unthinkable”.
The thing is, when you’ve had what is a pretty good system working for so long, there’s a completely naturally tendency to be “captured” by that system.
Many of us are inside a federated healthcare system bubble we believe is largely here forever and immovable. We’re fearful of perturbing it too hard and losing it altogether.
At several points of the Towards One Healthcare System summit, the same “captured by our current system” dynamic made a few appearances, in particular during a “strawman” session where we asked a panel to consider the idea of a joint Commonwealth-state pilot in which a region defined by its PHN and LHD or equivalent, reporting to its relevant state, vertically integrated all its regional health services top (hospitals) to bottom (GP, community and allied services) in one management line.
The core of idea is, give GPs to the states to make a massive jump in alignment and connectivity of service provision, save yourself a lot money along the way, and give ourselves our best chance of actually transforming patient care, like we all desperately want to do.
How much money?
In 2023-24 we spent $252 billion on healthcare. Governments spent 70% of that and the rest was private, including the not insignificant contribution of us punters (individuals) of 15%.
Accenture or KPMG would be able to quickly do the sums, but once such a change was bedded down – it might take 10 years – the hard savings in getting rid of system redundancy, streamlining regional community care via connecting GPs to the hospital sector far more effectively, and so on, you’re going to be somewhere near or over a 10% system saving (fever dream math here everyone which I doubt is that far off consultant math in the end).
That’s $25 billion or so per year, and over a budget cycle, $100 billion, hence my tabloid heading, a pretty lame attempt to get a Jim Chalmers minder to read this.
But this would just be at the start of everything being bedded down.
Now do the math on having a massively more functional healthcare system in which hospitals are in a line with GPs and because of that, so is allied health and other community services, in particular mental health and aged care.
The ROI here over the following 20 years for the country would be eye-wateringly high both in dollar terms and in the overall wellbeing of the population.
Okay, sounds tempting.
But people don’t think the idea is “unthinkable” for no reason.
Following is a very quick list of typical objections you’ll get, if you ever are able to talk to a “captured” healthcare system personality. I’m sure readers will have more.
1. The constitution wouldn’t allow it
You don’t often get this one but to be clear, it’s all entirely doable within the terms of the Health Insurance Act and the constitution.
2. You couldn’t transition GPs from individual businesses to employees
You wouldn’t have to. And you probably wouldn’t want to either, at least to start with. That would be fairly disruptive in the short term. Most GPs are individual businesses who are either tenants or contractors to medical centres or medical practices. You can simply transfer how GPs are being paid from the federal government to the states, at least to start. More and more GPs are employees, so in time, that might work out as a better model, or we might end up with a mixed model. That might mean GPs would end up having a lot more choice in how they make their money – tenant doctor, contractor, or employee (of the state or the growing non-Medicare ecosytem).
3. What about fee-for-service vs block funding and plans for a 60/40 funding split ?
It wouldn’t need to change, at least in the short term. In the longer term if the states get on with their new health worker bees, they may start offering a range of more innovative options to suit how GPs work within the state system better. There’s a lot of innovative possibilities once you insert GPs as the key healthcare transactional hub in a connected community care system.
4. GPs wouldn’t go for it in a year of Sundays
This came as a bit of surprise to me because GPs are generally seen to be a cantankerous lot who aren’t fans of change. But it’s potentially the opposite. Very senior GPs in positions of leadership and of influence see the potential. They’d just want to be brought into the tent early and properly in the developing how it all rolled out and the transition would have to be over many years so as to not create any fear about continuity of income et al. Most of what the leadership of general practice sees in this fever dream, by the way, is the opportunity for far better care for their patients. Not actually surprising at the end of the day.
5. Hospital network management wouldn’t go for it
Yes, they would. It’s a very big and therefore very scary management jump, but the upside is obvious for nearly everyone. It’s also going to mostly be all upside for PHNs. It would be a great career challenge replete with opportunity for everyone to build out a regional group with the ability to align all your providers for better population outcomes.
6. There’s no good precedent for it we can look too
There’s plenty overseas and even in Australia we can look at the relative success of Aboriginal Community Controlled Health Organisations. In Canada, in the HMO system in the US, and in parts of the UK and Europe we see how vertical integration works a treat.
Denmark is a pretty interesting integrated system these days that went through a not entirely dissimilar change about 10 years ago. People argue it’s a much smaller than Australia and isn’t a federated government system, but its GP and community care were separated a lot from its hospital care once. It’s not now and the savings and ROI in patient wellbeing have been huge. They have less big hospitals too. Notably, good digital infrastructure underpinned the transition. Our Commonwealth government is right on to that aspect of the Australian system.
A quick shout out here also to an organisation both highly admired and maligned at the same time, Kaiser Permanente (KP).
This organisation might be the most efficient closed healthcare ecosystem in the world.
It is a near fully vertically integrated system. Hospitals at the top, talking to GPs, who are connected to specialists and a range of allied healthcare professionals, including pharmacies and pharmacists.
The system is so efficient they are regularly retiring old larger acute care-focused hospitals from more and more regions in which they operate.
Unsurprisingly, the emphasis of the ecosystem is prevention and chronic care management in the community, mostly via GPs but also with sophisticated and well-integrated networks of allied health professionals.
KP’s first priority is profit, not patients, really. But it turns out that keeping their members really well is highly strategic because the ROI of keeping them away from acute care and hospitals is great.
Many of the “captured” would shiver in horror at the mention of an HMO as some sort of shining example of what we could do. They do questionable things like direct what clinician you can use and then override clinician autonomy, and, of course, they are the insurer, which is conflict.
Related
They’re bad and good. But as Dr Swan suggests, the Commonwealth would need to keep an arbiter role in this whole set-up, just in case any of the states went off reservation in any way like the downsides of HMOs.
7. What would happen to PHNs?
PHNs are regional population health intelligence units that are vital to the running not just of general practice and community health, but hospitals. But in their current reporting line, they’re distracted, lack focus, and as a result, most don’t influence hospital networks much, and as a result some are somewhat demoralised. Their masters – DoHDA – don’t use them as they’re designed to be used because it’s too tempting to use them as tactical deployment units for their, often fragmented, tactical project ideas. They have virtually no voice, and certainly not a budget to match a regional hospital network or LHD.
Notably, there are exceptional examples of PHNs and hospital networks working synergistically, especially in rural and remote areas, but these are the exception not the rule.
If we integrate the skills, people, experience and management of PHNs and LHDs or their equivalents into a single regional health management network, which has hospital and community goals management in a line, and we do it the right way, PHN productivity would go through the roof.
They would be where they belong, where they could operate at top of scope, and where they can obviously have the most effect. GPs would start engaging with them a lot more if they were really between them and the local hospital. If they could all do this, their workforce would feel a lot more accomplished and a lot more self-fulfilled. They also would obviously have a significantly improved career pathway.
8. Other service providers wouldn’t play nice
Someone argued this to me the other day but I’m not sure I understood their point. The argument went along the lines of, “hhrumph…that (GPs going to states) will never happen obviously. If you do GPs what are you going to do with specialists and allied health … put them under the states as well? Specialists just wouldn’t go for something like that”.
Sounded very “Hardy Har Har” – from Lippy the Lion, if you’re a Boomer, if not, then think “someone captured by the federated system dynamic who isn’t fond of change”.
Specialists get paid something by Medicare but mostly by individuals and the states via their integration with the public hospital system. They are in a way already significantly integrated into the state system.
Allied health is a vital future component to connected care and team-based care. But if you want to have allied health, you first have to have GPs … and then good digital infrastructure so they can connect, which hopefully is coming.
9. The states would mismanage the whole thing and wreck the system
Now we’re approaching the bottom of the barrel arguments. The states screw things up all the time. But the states do service delivery and do a lot more of it than the Commonwealth. And, as Dr Swan suggests, the Commonwealth would still have a big role in governance as some sort of protection against the possibility of a state going rogue on GPs. Lastly, every state has a looming fiscal disaster in their hospital system. This initiative managed correctly gives them a long-term shot at damping down the problem significantly.
10. The politics is just too hard
It sure is.
But for everyone in this system, and I hardly meet anyone who doesn’t want to make it much better and isn’t very committed in some way to improving the lot of patients, especially the ones who have poor system access, isn’t it worth starting to think more carefully about the unthinkable?
And talking to your local member and health minister about this particular fever dream to let them know what you, as a core system participant thinks, and see where they stand?