Our challenge isn’t in diagnosing the problems — it’s in implementing the reform.
The report The growth and drivers of Australian public hospital costs and prices, supported by special reviewer Professor Stephen Duckett and commissioned by the Australian Board of Treasurers — is an important read for anyone seeking to understand the funding crisis facing healthcare in Australia.
The findings and recommendations are consistent with advice provided to the Commonwealth and its agencies by health industry officers over recent years.
What makes this report valuable is that it lays out the issues simply and succinctly — a must-read for anyone wanting a clear view of where we currently stand in health funding, and hopefully will have the impact needed for the national discussions.
I’ve made a few comments below on Recommendations 7, 5 and 1 which will hopefully generate further thought on the issues raised.
Recommendation 7
“That the National Health Reform Agreement should incorporate the capital and operating cost of public hospital infrastructure and assets into the funding arrangements, phased in over a five-year period.”
This is a welcome and long-overdue proposal. I’ve discussed this in a previous paper, but I believe a three-year transition would be more appropriate — beginning with medical infrastructure and equipment in year one.
Recommendation 5
“That the Pricing Framework for Australian Public Hospital Services is modernised by improving the responsiveness of the National Efficient Price.”
Currently, the Independent Health and Aged Care Pricing Authority interprets the NHRA as requiring full patient-level costing for all public hospital patients.
In practice, this means every interaction with each patient must be recorded and costed — an enormous task that has become resource-heavy and administratively unsustainable.
One major jurisdiction attempted to address this recently by providing IHACPA with a sample of costed data across hospitals, sufficient for timely pricing analysis. IHACPA rejected this, insisting on full submissions even if it meant significant delays.
There’s no direct legislative requirement for a full patient-level costing submission, which in practice can offer only marginal benefit to pricing accuracy.
The NHRA and its Addendums at Schedule A – A46 b requires IHACPA to “consider the actual cost of delivery of public hospital services in as wide a range of hospitals as practicable” when determining the National Efficient Price. Schedule B – B67e requires the national bodies to “balance the national benefits of access to the requested data against the impact on jurisdictions providing that data” when determining data requirements.
If this recommendation is to be effective, IHACPA should reconsider its reliance on full patient-level costing and instead adopt a statistically significant sample methodology to achieve timely pricing determinations.
Perhaps it is an appropriate time to pivot from costing individual patients to costing the actual services consumed by those patients.
Related
Recommendation 1
“That states and territories work with the Commonwealth to establish a whole-of-health and social care system policy and pricing strategy that directs investment to where care is best delivered.”
This, in my view, is the most critical recommendation — because it carries the greatest operational and funding risk for state health systems.
The Special Commission of Inquiry into Health Care Funding led by the Honourable Justice Richard Beasley, devoted substantial attention to primary care and aged care.
Justice Beasley’s recommendations (4 and 5) made clear that states have a legislative responsibility to ensure access to these services — even if Commonwealth funding is inadequate. Where it isn’t, he is of the view that states may need to prioritise primary and aged care over some acute services.
Justice Beasley summed this up at paragraph 11.97:
“As a matter of practical reality, this means that NSW Health must significantly increase its involvement in the delivery of primary care and aged care.”
The Commission also called for greater investment in health promotion and prevention (recommendations 1 and 2), suggesting it become a whole-of-government priority — even if it means rebalancing resources away from traditional acute care.
Without this investment we will continue to funnel more funding disproportionately into acute care.
Learning from history
Chapter 8 of the NSW Special Commission of Inquiry’s report — “A short history of health reviews” — should also be compulsory reading.
It identifies health system reviews back to the late 1800s and reflects just how often similar themes recur. For example, the Garling Inquiry (2008) could almost be describing many of the same system challenges we face today.
Australia’s health system is world class. As far as I am aware, we do not have a lifetime membership of this status as yet, so staying that way requires continuous review, reform — and, when needed, rebuilding.
The recurring findings over more than a century suggest our challenge isn’t in diagnosing the problems — it’s in implementing the reform.
So, on the strength of history, and at the risk of sounding defeatist — I’m not sure how long I should hold my breath waiting for Recommendation 1 to begin generating a good outcome.
Luckily, I’m by nature an optimist.
Neville Onley is recently retired from his role as executive director activity-based management at NSW Health.
This article was first published on LinkedIn. Read the original here.