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Andrew Podger on making the best of “deeply disappointing” health reforms

Important opportunities have been lost in the current plans for health reform, says Andrew Podger, National President of the Institute of Public Administration Australia and a former Health Department Secretary and Public Service Commissioner.

But he has some suggestions for how to make the best of a bad job. He writes:

“While I know it is essential now to make the most of the many initiatives announced by the Government over the last 2 months, there is no avoiding the deep disappointment about the final deal negotiated with the Victorian Premier.

There will be (and had better be) substantial benefits from the injection of new money, some of which is well directed, but the extent of real reform in terms of sustained improvements in value for money falls well short of what seemed to be possible, and even likely a couple of months ago.

The main purpose of moving to a single government funder was the opportunity to achieve more patient-oriented care by breaking down the barriers between types of care and ensuring clearer accountability for health outcomes. This was not just about making the commonwealth take more financial responsibility for a truly national system (though this is important): it was about the ability to redirect funds between hospitals and primary care and aged care to achieve the best value for money, preferably through a coherent system of funder, purchasers and providers.

The deal brokered with Victoria not only leaves the States with substantial financial responsibilities, but with exclusive responsibility for managing the funding and oversight of the hospitals.

There is no mechanism for re-allocating funds at the local or regional level between the sectors, nor for shifting funds between regions on a national basis. As yet, there is also no sign of increased capacity at the national level to analyse variations in financial risk amongst groups of people with different health risks or to identify the most cost-effective balance of services for them that might provide guidance to health care providers and health service managers.

Nonetheless, the main focus now must be to get the most out of what has been agreed. This means more than just rolling out the new, notwithstanding the considerable work that will entail.

First and foremost, health ministers and their departments must take back the initiative from the central agencies and develop a coherent architecture of local and regional responsibilities which will facilitate better allocation of resources and improved accountability for results.

I suggest the States take the lead in proposing regional boundaries given their greater understanding of ‘place management’, but with the Commonwealth having final say, particularly around State and Territory boundaries (e.g. in South East NSW, along the Murray, around the Gold Coast).

This can then guide the States and Territories on the design of local hospital networks within these regions, and guide the Commonwealth on the design of its primary health organisations (‘Medicare Locals’ for goodness sake) and aged care regional planning arrangements.

Hopefully, it will also assist the Commonwealth and the States clarify how these regional arrangements might interact, with the ‘independent’ primary health organisations in particular working closely with the national department, building their capacity for reporting on overall health system performance and guiding any necessary re-allocation of resources between and within regions.

There are potential benefits also within each of these main sectors. The now national hospital pricing authority should not just determine the so-called ‘efficient price’ of hospital episodes, but be a centre of excellence guiding the States (and the joint Commonwealth-State ‘Boards’) on their policies for purchasing services from the local hospital networks.

The Commonwealth’s national responsibility for all primary care should also be used to explore more moves to blended payments and other innovative ways to encourage more comprehensive and efficient primary care (I remain sceptical about the likely success of the Government’s reliance on its ‘super clinics’ model).

The Commonwealth’s full responsibility for aged care needs to be exploited to develop a more coherent framework of community and residential care packages for people with different levels of care need. The successful ‘ageing in place’ approach could be made more cost-effective and responsive by relaxing some supply-side controls and increasing demand side controls (including the introduction of accommodation bonds for low-level residential care).

It will also be essential that both the Commonwealth and the States re-design their bureaucratic arrangements to clarify policy and administration responsibilities and avoid simply adding new overheads without rationalising existing structures.

Clearly, the important issue of rationalising co-payments has been put off indefinitely.

Sadly also, sorting out PHI policy seems simply too hard for this Government. I would love to think the Henry Report on tax might cause a rethink about the wisdom of the Medicare levy surcharge and about the best way to get value from the PHI rebate, but I am not holding my breath.

I have highlighted many times that the Government’s PHI proposals are just a silly way to raise the taxes of higher income people whether insured or not; they are equally just a silly way of replacing the subsidy for PHI for higher income earners by an even greater subsidy through the higher Medicare levy surcharge mechanism.

There really are better ways to save money which would yield real reform through genuine competition and greater accountability.”

• Andrew Podger’s e-book, The Role of Departmental Secretaries: Personal reflections on the breadth of responsibilities today is freely available here.

Comments 3

  1. Topender says:

    With an election looming, one wonders how confidently the bureaucrats will stride into implementation until it is clear that the direction taken so far will continue beyond the election cycle!
    Andrew mentions the imperative for health ministers and depts to take the initiative from central departments. Maybe it is not so in other jursidictions, but in the NT where social determinants of health are such major factors in health status (particularly in remote communities), this concept should be expanded to all relevant ministers!! Why not have a health outcomes collaborative that brings together the housing, education, infractructure players to the table with health so that targetted improvements can be made. For example, focus on housing overcrowding in one place whilst ensuring that all residents are employed in the process and the children get to school having slept and eaten well.
    True reform is still a way off…

  2. Dacq says:

    Andrew, I’d be interested in your spin on how the reforms will serve to further a greater emphasis on disease prevention. An article in the Health Promotion Assn of Australia’s current newsletter notes: “The so-called ‘activity’ based funding (which refers to making payments on the basis of ‘outputs’ delivered by health service providers) is based on the premise of rewarding hospitals and GPs for the provision of services, i.e. the more people they get through the door, the more dollars they get. So the question is, where are the incentives for health care systems to maximise prevention? After all, for prevention to be efficacious in the ‘activity’ based funding system, the need for health services would need to be increased not decreased. How then will state and territory governments be encouraged to increase their investment in prevention if there is absolutely no incentive for them to do so?” Is this a correct interpretation of how the reforms will work? Even if health care providers are ‘rewarded’ for preventive initiatives (such as screenings, advice, etc), is it realistic to expect that these will make a significant difference in the absence of structural/environmental changes which drive ‘lifestyle’ choices?

  3. andrew podger says:

    Dacq, It is true that strict activity based funding can provide incentives to do things whether useful or not, but equally capitation payments do not reward effort. What is needed is a mix or blend of payments and the flexibility to switch resources across the system. It is also true that health outcomes also rely on non-health investments including into environment and housing programs. I hope the new primary care organisations get some clout (including to report on regional health performance and needs) and some funding of their own to put towards preventive measures or to fill other gaps that might emerge, that the shift to blended payments to GPs continues and that these can complement activity based funding of hospitals and contribute to aged care planning etc. It is such a regional framework that was most missing in the NHHRC report and in the Government’s measures to date.

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Summer reading 2020-2021
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Testing Croakey News category 1
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Croakey Conference News Service 2013 – 2019
2013 conferences
Australian Centre for Health Services Innovation Forum 2013
Australian Health Promotion Association Conference 2013
Closing the Credibility Gap 2013
CRANAplus Conference 2013
FASD Conference 2013
Health Workforce Australia 2013
International Health Literacy Network Conference 2013
NACCHO Summit 2013
National Rural Health Conference 2013
Oceania EcoHealth Symposium 2013
PHAA conference 2013
2014 conferences
#IPCHIV14
AIDA Conference 2014
Congress Lowitja 2014
CRANAplus conference 2014
Cultural Solutions - Healing Foundation forum 2014
Lowitja Institute Continuous Quality Improvement conference 2014
National Suicide Prevention Conference 2014
Racism and children/youth health symposium 2014
Rural & Remote Health Scientific Symposium 2014
2015 conferences
#CPHCEforum
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#HSR15
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#OTCC15
Population Health Congress 2015
2016 conferences
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#ATSISPEP
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#cphce2016
#CPHCEforum16
#CRANAplus2016
#IAMRA2016
#LowitjaConf2016
#PreventObesity16
#TowardsRecovery
#VMIAC16
#WearablesCEH
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2017 conferences
#17APCC
#ACEM17
#AIDAconf2017
#BTH20
#CATSINaM17
#ClimateHealthStrategy
#IAHAConf17
#IDS17
#LBQWHC17
#LivingOurWay
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