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Amid competing agendas and priorities, some suggestions for ways forward for meaningful health reform

Introduction by Croakey: Diverse views and agendas on health reform priorities are hitting the headlines and causing Twitter storms, sometimes generating more heat than light.

Below Croakey editor Jennifer Doggett and contributor Associate Professor Lesley Russell, with input from Charles Maskell-Knight and Dr Ruth Armstrong, discuss some of the key health reform challenges facing the Federal Government’s Strengthening Medicare Taskforce, and Dr Tim Senior provides insights from his perspective as a GP.

They offer some ways forward, based on appreciation of the importance of addressing health inequities, the needs of patients, and strengthening critical relationships.


Jennifer Doggett and Lesley Russell write:

Health and Aged Care Minister Mark Butler told a webinar hosted by the Consumers Health Forum on 5 August that the key focus of the Strengthening Medicare Taskforce is to “strengthen the relationship between doctors and people with chronic needs.”

This makes a lot of sense. Our ageing population has increasing rates of chronic disease, and improving this area of care, in particular among currently under-served populations, provides the best opportunity for us to achieve better health outcomes and reduce demand for hospital care.

However, achieving this goal will be a challenge. Medicare was not designed to support the type of care required by people with chronic conditions and it will be difficult, both practically and politically, to make the structural changes needed to deliver on the Minister’s goal.

Medicare was set up at a time when the burden of chronic disease in the Australian community was much lower and our greatest need was for the treatment of self-limiting acute problems, such as infectious diseases.

A funding system like Medicare, which ties remuneration to episodic care provided by a single health professional, can work well to provide this type of care.

But chronic disease prevention and management requires a different type of healthcare, typically involving multiple health professionals, coordination over a longer period of time and including a more active role for consumers (and their families and carers).  Additionally, there is often a need for the involvement of social welfare services.

Medicare was not designed to support this type of care and is one reason why our system of primary care is failing many Australians with chronic conditions (there are others, such as fragmentation of services across federal and state/territory areas of responsibility and a lack of integration between the health and social care sectors).

The result of this failure is not just poorer health outcomes for people whose care needs are not being met, but broader societal impacts such as increased downstream health costs and productivity losses. This failure also contributes to the burden of work confronting general practitioners and subsequent burnout.

Medicare’s “design faults”

Some of the specific “design faults” that make it difficult for Medicare to provide effective chronic disease care, include:

  • A doctor-centric funding system which does not (except in very limited situations) fund services provided by other primary healthcare providers such as nurses and allied health professionals.
  • A failure to fund and integrate access to culturally safe social welfare and support services which are crucial for many populations currently under-served by our health system and vital for both prevention and management of chronic disease.
  • An inability to control doctors’ fees which leads to  an uncoordinated and inequitable approach to out-of-pocket costs
  • A lack of integration between health services and public health policies and programs which address the drivers of chronic disease
  • An inability to direct resources and funding to geographic (and other) areas of need, leading to inequities in access for general practice and in particular for specialist care
  • A focus on activity (rather than quality) which incentivises doctors for the number of services provided rather than the outcomes achieved and encourages more shorter consultations over longer services
  • Insufficient recognition of the time needed for planning, coordination and consultation with specialists and non-health services such as Centrelink
  • A time-based remuneration system which correlates complexity with the time taken in a consultation, rather than other aspects of complexity such as cognitive load or time requires outside of the consultation for the coordination and management of care
  • A lack of support for generalists in acute care (where they can provide important benefits) and relevant specialists, such as geriatricians in primary care.
  • A complex billing system and inadequate compliance processes, leading to rorting and wastage.

Other systemic issues

These structural problems are not the only reason that our health system is failing to meet the needs of many Australians.

A major barrier to the provision of more comprehensive and integrated care is the division of responsibilities between federal and state/territory governments and acute care, community care, aged care and mental health services, and a siloed approach to heath funding within those jurisdictions and sectors, leading to fragmentation, gaps and poor coordination. This particularly affects people with chronic conditions who often require continuity of care as they move between sectors.

Also important is the overall under-resourcing of primary healthcare relative to other areas of the health system, despite the evidence that investments in this sector deliver better health outcomes for a lower cost.  This  under-resourcing is partly due to the failure of successive governments to increase rebates in line with the rising costs of medical care and its impact on access to care has been compounded by workforce shortages and maldistribution particularly impacting outer urban, rural, regional and remote areas of Australia.

It may be too late to reverse some of the adverse impacts of under-resourcing, according to GP Dr Tim Senior.

“The bulk billing genie is out of the bottle now. So many general practices have dropped bulk billing, I don’t see them taking it up again. The problem is that general practice is unsustainable in communities where people can’t afford a co-payment, which is exactly the communities where GPs/primary care are needed most.”

Combined, these factors combine to deliver a health system that is “universal” in name only, where those with resources can buy access to the care they need (through both direct payments and indirect costs such as travel and time) but where too many of those who need it most miss out.

Many of these “design faults” have a compounding impact on population groups who already experience the most disadvantage such as Aboriginal and Torres Strait Islander people, and people with disabilities, living in rural and remote areas and with low incomes.

The resulting situation is a clear example of the “inverse care law”: the principle that the availability of good medical or social care tends to vary inversely with the need of the population served.

Reversing this situation will only be possible if at least some of these structural problems are addressed, in addition to increasing overall resourcing for primary healthcare and addressing workforce shortages.

Moving away from fee-for-service

The most challenging aspect of any Medicare reform is making changes to the way in which health services are funded, in particular any move away from the current doctor-centric, fee-for-service payment system.

There is good evidence that a fee-for-service funding system is not optimum to support the prevention and management of chronic disease (also recognised by the MBS Review Taskforce) but medical peak bodies have always resisted any move away from fee-for-service in favour of an exclusive focus on increasing rebates.

This resistance has created political barriers to reform, although it is not clear to what extent these groups represent the views of doctors at the coal face who may be more open to new models of care and remuneration. Indeed salaried GPs are the norm in some areas of the health system, such as the ACCHO sector.

Capitation-based funding systems

Alternative funding options, such as a capitation based approach were providers or services are paid a fixed amount to manage the care of a population, are common in many health systems overseas and have been tried in a limited way previously in Australia (for example, through the coordinated care trials). In its final report the Aged Care Royal Commission recommended a capitation-based payment system to support the care of older people by GPs.

One common benefit claimed for capitation-based payment systems is that they incentivise outcomes rather than services, as GPs (or fundholders) are rewarded for achieving outcomes, such as keeping people out of hospital, rather than for providing a certain number of services.

Potential risks

In principle this approach is appealing but GP Dr Tim Senior warns that that unless done very carefully a funding system rewarding outcomes can have the unintended effect of worsening health inequalities.

This is because so many of the potential outcomes have a social gradient, so services in well off areas get rewarded for “achieving” better outcomes, such as improved blood sugar levels or smoking cessation rates, and those in less affluent areas miss out.

“Pay for performance” systems which focus on a small number of easily measured metrics can result in poorer outcomes overall by reducing the emphasis on those aspects of primary care which are harder to define but which may be where its value lies, such as the whole-of-person focus and contextualisation of care within a relationship and community context.

One example he cites is the UK’s Quality and Outcomes Framework which achieved a short term improvement in the measures reported on, but no improvement (and possible worsening) of the conditions which weren’t (such as epilepsy). It also resulted in an overall worsening of patient-centred care, because services based their care on checklists to ensure practice income.

Senior also notes the need for a balance between providing accountability to government and taking resources away from patient care, using the example of reporting requirements for the ACCHOs against nKPIs, which he says creates a significant addition workload.

Other controversial reforms

Also controversial would be any attempt to address some clear areas of failure in the current system, such as the Government’s inability to direct Medicare services to areas of need or to stop doctors who charge excessive fees for their services from accessing rebates.

Both of these issues are challenging and require significant actions which governments have not to date been prepared to take (in the case of geographical concerns, it may need a constitutional change).

However, if not addressed they could undermine the ability of the Taskforce to make progress in improving the access and affordability of Medicare-funded services.

Integration matters

Another challenge for the Taskforce is how to integrate with other Federal Government initiatives in the community-based health and aged care sectors.

These include the implementation of the urgent care clinics, the review of the Better Access program, aged care reforms, the Health Care Homes trial, and the First Secretaries review.

The Minister has not clarified how he sees the Taskforce fitting in with these programs and processes despite the fact that there is a clear overlap between them and the focus areas identified for the Taskforce.

It’s also not clear what role Primary Health Networks (PHNs) will play in the Taskforce’s agenda, although with a representative on the Taskforce they will have the opportunity to influence its work. PHNs fill some of the gaps in Medicare-funded primary healthcare, such as through commissioning after-hours and mental health services, although the specific services they provide are not always well documented and vary across the country (see here for more detail).

It is clear that the main focus for doctors’ groups represented on the Taskforce is for more MBS items that are better remunerated. While this approach may be part of the solution, if it is done at the expense of the needed structural reforms, the benefits will be fleeting and poorly aligned with populat