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John Menadue’s advice for Rudd and Roxon on health reform

John Menadue was not overly optimistic about the National Health and Hospitals Reform Commission report before its release, as he wrote in Crikey last week. Now that he’s had a chance to read the report, here is his assessment:

“The Government would be wise to take six months to digest the National Health and Hospitals Reform Commission report and summon up the political will for some major decisions in health. The emphasis on indigenous and mental health is to be welcomed.

The report is strong on specifics and incremental change, but does not espouse a clear health strategy based on a consensus of public values. The Canadians have been much more successful than we have in establishing this consensus based on universality and equity.

The Government will need to examine further the following key issues:

Greater federal responsibility
If the Commonwealth Government proceeds to fund and take over all services outside hospitals, there will continue to be a division between hospital and non-hospital care. A seamless system would be difficult to achieve unless there is a single public funder for the whole health system.

The report says that we must address the ‘fragmentation in the health system’. We all agree, but its proposals don’t go far enough. The Commonwealth Government should seek the agreement of the Australian people for it to take financial and political responsibility for all health care and not just hospitals. I think the government would be surprised at how tired the public is of the blame-game and how they would respond to national leadership.

In providing such leadership, the government must acknowledge that Canberra cannot run 750 hospitals, or a health service from Burnie to Broome. Wherever possible health delivery should be devolved to the most local level possible consistent with national policy, national guidelines and national standards.

If the government believes that a national referendum is a bridge too far, it could offer to establish a Joint Commonwealth/State Health Commission in any state that would agree. The commission would have pooled funding from the Commonwealth and the State, agreed governance and a plan to deliver all statewide health services.

Action on private health insurance subsidies
The report unfortunately provides a platform for the expansion of government subsidised private health insurance which presently costs the taxpayer about $5 b p.a. Private health insurance is insinuated throughout the report.

The first recommendation of the report proposes the value of universal entitlement … together with ‘choice and access through PHI’. The dental proposal is a means to churn further taxpayers’ money through PHI. Every country that has significant PHI has major problems with escalating health costs. Just ask Barack Obama.

It can hardly be said that this report is independent when it takes such a partisan view on PHI. The lobby groups supporting PHI deliberately confuse funding arrangements and delivery of health care. PHI is not necessary to support individual choice and treatment of patients either in the public or the private sector. The Department of Veterans’ Affairs is a single funder for veterans but the funds follow the veteran whether he or she decides to go to a public or a private hospital.

Business journals parade their ideology in continually attacking the $6 b p.a. subsidy over four years for the auto industry, but turn a blind eye to the $5 b p.a. in corporate subsidy for PHI. Recent data shows that the operating, management and profit margin of PHI is 15% of revenue.  For Medicare, including the taxation cost, the margin is 4%.

Manage demand for health services
There is no serious attempt in the report to face the issue of burgeoning demand for health services and how we can manage it. We all expect too much of our health services. No government will tell us publicly that we can’t have all we want.

There are perverse incentives such as fee-for-service which escalate the demand. In 1984-85, Australians had just over seven Medicare services per head.  In 2007-08, those services had increased to just over 13 services – a doubling in 13 years.

The problem is not ageing. Most Australians ask their doctor to do too much. The report fails to outline how as individuals and as a community we can manage the demand for health services. Unless we can, the health system will be unsustainable.

Improve accountablity
The report highlights the importance of transparency throughout the health system, but nowhere does it attempt to propose measures to make health providers more accountable for what they do.

Almost all sectors have to be accountable for the services they provide. But this does not occur in health, despite taxpayers paying over 79% of doctors’ incomes. Once again, the Canadians are showing us the way in addressing this problem of lack of accountability.

Control costs
Health costs are rising at about 5% p.a. in real terms. This report proposes an additional $5.5 b p.a. or between 5% and 6% more.

The Government has said that it will need to bring the growth of government spending back to 2% p.a. once the present recession is over. The health sector will have to vastly improve its management of demand and the inefficiencies in the supply of services.

Workforce reform
The report is timid on the question of workforce reform. There are several examples such as nurse practitioners and midwives where greater productivity and professional satisfaction is possible.

Unfortunately demarcations and restrictive practices are rife in our health services. Substantial increases in productivity are possible through across-the-board workforce reforms. Nurses hold the ‘system’ together, but they are denied career opportunities and professional satisfaction.

Powerful vested interests – state governments and the health bureaucracies, the AMA, the PHI, and the Pharmacy Guild will now gear up to protect their interests during the six months’ consultation period that the government has announced.

These special interests will be doing this in addition to the tens of millions of dollars they spend on lobbyists to advance and protect their interests. Most public debate about health is between ministers and special interests.

I wonder if Kevin Rudd and Nicola Roxon can effectively engage with the community.

In the end, it is only a persuaded community that will assist and encourage the government to show the political will to achieve sustainable long-term improvements.

Health reform is about tilting the power balance in favour of the community at the expense of special interests.”

• John Menadue was formerly Secretary of the department of Prime Minister and Cabinet, Ambassador to Japan, and CEO of Qantas. He chaired the NSW Health Council in 2000 and the SA Generational Health Review in 2003.

Comments 2

  1. john2066 says:

    Totally correct. To reform health we have to take on the AMA and the pharmacists. These bodies – by far the most powerful trade unions in the country, restrict what people can do and through ridiculous practices – like forcing people to go through doctors for every single transaction, even when the GP has no idea about what they are doing, costs us millions.

    And lets not forget the ludicrous closed shop the surgeons and specialists run, keeping the numbers down and their bloated incomes stratospherically high while keeping the waiting lists long.

    For meaningful reform, these lobbies must be taken on. Hard.

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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
#CRANAplus15
#HSR15
#NRHC15
#OTCC15
Population Health Congress 2015
2016 conferences
#AHHAsim16
#AHMRC16
#ANROWS2016
#ATSISPEP
#AusCanIndigenousWellness
#cphce2016
#CPHCEforum16
#CRANAplus2016
#IAMRA2016
#LowitjaConf2016
#PreventObesity16
#TowardsRecovery
#VMIAC16
#WearablesCEH
#WICC2016
2017 conferences
#17APCC
#ACEM17
#AIDAconf2017
#BTH20
#CATSINaM17
#ClimateHealthStrategy