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Finding savings in healthcare: moving from theory to reality

With a tough federal Budget fast approaching, many in the health sector are offering up suggestions for where the Abbott Government might find savings. Some of these options were outlined in an article published in Croakey earlier this week.

They include:

  • cutting the price paid for generic drugs and encouraging substituting brand name drugs with generics,
  • expanding the range of tele-health services that can be funded under Medicare,
  • ensuring treatments listed on the Medical Benefits Schedule are effective and offer value for tax-payers, reducing use of those that are wasteful, and  
  • reducing the price paid for prosthesis, such as hip and knee replacements.

These options and more were discussed in detail at a roundtable, hosted by the Australian Healthcare and Hospitals Association (AHHA), on options for finding savings in health and improving quality in health care. Dr Anne-marie Boxall, Director, Deeble Institute for Health Policy Research at the AHHA and co-author of Making Medicare, provided the following report from the Roundtable. She writes:

What became clear from discussions among participants was that experts in the field have no trouble generating long lists of potential savings options that might cut billions off the bottom line. The tough part for Government is working out which of these options it should take up and doing so in a timely manner with broad stakeholder engagement.

Roundtable participants discussed some of the challenges governments face when trying to move debates about savings from theory to reality. The political fallout that results from cutting (or reducing) funding for programs, services or treatments that are currently available is the most obvious challenge, and the one at the forefront of most politicians’ minds. Participants at the roundtable had some suggestions on how to make this easier for politicians, and more likely to succeed.

One suggestion was to ensure there was a clear, well-thought through stakeholder engagement process and media strategy around the proposed change prior to announcing it. Participants recalled the previous government’s attempt to change the price paid for cataract surgery and how very quickly, those adversely affected by the change (ophthalmologists) managed to ‘capture’ the media story, and the hearts and mind of the public. Because the government of the day did not appear to have anticipated how the story would play out in the media, or the strategies the ophthalmologists might use to win over public support, it was on the back foot even despite having a strong economic rationale for making the proposed cuts.

Many participants at the roundtable were in favour of expanding the use of rigorous economic evaluations of services funded by government – for example, the processes used to inform decision-making on individual items on the Medical Benefits Scheme (MBS) or drugs on the Pharmaceutical Benefits Scheme (PBS). However, they recognised that a purely ‘technocratic’ approach to decision-making was not going to be enough in a highly political area like health. They also acknowledged the large volume of work required, and the apparently slow progress being made in reviewing items and acting on review findings.

One option canvassed by roundtable participants that might de-politicise decision-making to some degree was to establish an organisation external to government with the capacity to carry out both the technical (assessments of relative value) and consultative processes (bringing together academic experts, stakeholders and consumers) required to make rational – albeit difficult -decisions – in health care. The National Institute for Health and Care Excellence (NICE) in the United Kingdom is one international example of an organisation with the capacity to perform both these roles. Another is the Pharmaceutical Management Agency in New Zealand.  

A second, and possibly more feasible option, in a time when governments are seeking to reduce the number of health agencies, rather than grow more, is a program similar to the Choosing Wisely model which is in place in the United States. Extensive engagement amongst clinicians, academics, peak bodies and consumers, overseen by a coordinating committee, has resulted in the identification of many inappropriate and low-value health care practices. Such a movement adapted for Australian circumstances could help build a savings culture in health, with strong buy-in for the change process.

The most complex but rewarding suggestion roundtable participants canvassed for de-politicising decision-making about health funding concerned engaging clinicians. They pointed out that many of the decisions that affect the cost (and outcomes) of health care are made by individual clinicians at the point of care – while hovering over the patient’s hospital bed, talking to the patient in the GP surgery, or visiting the patient in their home or residential aged care facility.

Out of everyone in the health sector, clinicians have the greatest capacity to influence overall costs of care. For government to find and deliver savings in health care, they must find ways of engaging clinicians in the decision-making process about budgets and savings. Clinicians, however, are often the most difficult people to consult because they are working all over the country at all hours of the day and night treating patients. They also tend to be the most difficult people to convince that things should be done differently. While all workplace cultures and traditions can be hard to change, clinical cultures can be particularly rigid. They are, for example, fairly hierarchical, making it difficult for younger clinicians to make the case for change to their superiors. Because so much of clinical practice is art rather than science (take bedside manner, for example), it can be difficult to convince clinicians to change established practices that they think work well.

Finding ways to engage clinicians is not easy. However, roundtable participants pointed out one approach that should definitely be avoided. Foisting changes on clinicians from ‘on high’ (changes such as new rules about what drugs can be prescribed for whom and when, or targets for hospital length of stay) will nearly always cause resentment and often result in push-back from clinicians. Because clinicians have a lot of autonomy when making decisions about patient care, they are also easily able to thwart attempts from non-clinicians to exert control over them.

The challenge of engaging clinicians, however, is not insurmountable, as one roundtable speaker pointed out. He explained that with the growing complexity of clinical decision-making and information available to inform it, clinicians are having to rely more and more on automated tools and support systems to help them make decisions. This creates an important opportunity for governments to collect vital data about the process of clinical care. If these data were analysed and used to show clinicians how they could make changes that would improve patient care, there would be a strong motivator for change, and clinicians would be engaged because most constantly strive to deliver better quality patient care.  

Comments 3

  1. Treenan says:

    It seems that there are almost as many people with grand ideas on how to save money in the PBS as there are products listed on it. In the interests of transparency may we know who were the ‘experts’ present at the roundtable, and who sent the invitations? The reason I ask is that it seems to me that events like this rarely include people with direct experience working in the programmes.

    If they did then someone would have been able to point out that:

    a) generic prices at the level of those in NZ can only be achieved by removing any semblance of choice (which I personally don’t have a problem with but it’s politically difficult to sell)

    b) generic prices have already dropped massively with price disclosure (which doesn’t mean I think it’s a good idea – it’s clunky and labour intensive)

    c) this is the kicker, anyone who had even the most basic understanding of how the PBS works would realize that encouraging the use of generics instead of original brands doesn’t make a damn bit of difference when they are reference priced!

    So Croakey – how about telling us who was there and what qualifies them to air their views? Who are these self appointed ‘experts’?

    • Jennifer Doggett says:

      I wasn’t at the Roundtable so I can’t answer your questions but I have attended similar AHHA events and there have been speakers and participants with experience in a number of different areas of the health system, including the PBS. If you would like further details I suggest you contact the AHHA directly at http://ahha.asn.au/

  2. Len Moaven says:

    I think Treenan is touching on the crux of the matter….vested or conflicts of interest. I don’t think it is usually malicious……for example I am sure that many people have a pure belief in flu anti virals….and as long as it causes no harm I don’t have a particular problem with a belief system. But inevitably in medicine it costs money. I am not sure that a truly objective view can be found….we all have sublimable axes to grind…..doctors….healthcare workers….patients…politicians. I believe that the only pragmatic solution to keeping a lid on healthcare costs all is a user pays system…..with all the equitable access caveats. I believe that stuff that is ‘free’ is generally wasted. How many napkins do you use at McDonalds?

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