Introduction by Croakey: It seems we’ve had two significant, related initiatives in national health reform that have operated in parallel universes and in remarkable isolation from each other.
The Mid Term Review of the National Health Reform Agreement Addendum 2020-2025 was released last week – just a few days after the long-awaited National Health and Climate Strategy (NHCS).
Given the many areas of overlap, you might have thought there would be some cross-pollination. But the NHRA review doesn’t address the implications of climate change for health reform, despite this being clearly laid out in the NHCS.
And while the NHCS, with its focus on Health in All Policies, clearly has a bigger remit than reform within the health portfolio, at least two of its objectives – to build a climate-resilient health system with enhanced capacity to protect health and wellbeing from climate impacts, and health system decarbonisation – have clear implications for the NHRA, especially as the review recommends a National Innovation and Reform Agency and an Innovation Fund be established.
As another example of overlap: the review says the role of Aboriginal Community Controlled Health Organisations (ACCHOs) is not articulated or embedded within local and broader governance arrangements within the NHRA, detracting from the ability of community-controlled organisations to participate in local commissioning and service design.
Meanwhile, the NHCS says the Australian Government will work in partnership with states, territories, Aboriginal Community-Controlled Health Services and other relevant stakeholders to enable state and territory health systems, local health systems, Aboriginal Community Controlled Health Services (ACCHS) and hospitals to undertake climate risk assessment and develop adaptation plans.
Perhaps there are efforts to connect and integrate the NHCS and the NHRA behind the scenes, but it seems beyond strange there is no front-facing effort to do this.
Meanwhile, health policy analyst Charles Maskell-Knight has been reviewing the review of the NHRA, and raises many other questions below.
Charles Maskell-Knight writes:
On 3 December Croakey published an article I had written the previous week about the mid-term review of the National Health Reform Agreement (NHRA), which sets out the Commonwealth-state public hospital funding deal.
While researching the article I asked the Department Health and Aged Care when the review report would be released. I was told on 24 November that “as the review was commissioned by all Health Ministers, this is a matter for their joint decision”.
At a press conference on 7 December Minister Mark Butler foreshadowed release “over the next little while, by which I mean day or two”. However, the report was posted on the Departmental website later that day, with no fanfare, and accompanying text implying the document had been released six weeks earlier (when it was finalised).
Anyway, it is good that the report is in now in the public domain.
Ten themes
The review makes 45 recommendations, with 64 sub-recommendations. Fortunately these are grouped into ten key themes, articulated in the executive summary.
The first theme sets the context for the rest of the report: the NHRA should not be a “technical hospital financing agreement”, but “a single collaborative health system Agreement that recognises that all elements of the health system need to work effectively together to improve patient outcomes, is performance-focused, predicts and prepares for future challenges and is clear on shared and individual accountabilities”.
The second theme is that the Agreement should establish “a platform for intersectoral collaboration” with mechanisms to make LHNs, PHNs and ACCHOs work together on joint planning and commissioning.
The review claims both that the NHRA has “tend[ed] to drive care towards inpatient settings”, and that activity based funding has responded to demand rather than shaped demand. The third theme is thus that the next Agreement should shape demand by establishing shared incentives and payment streams to fund early intervention outside hospitals.
The fourth theme “Financing reform” is not so much a theme as a miscellany of recommendations about the trajectory and calculation of Commonwealth payments. Some of these issues were apparently addressed at the National Cabinet meeting of 6 December – although the detail of what was actually agreed remains unclear.
The 2020 Agreement identified half a dozen “long term reform priorities”, but progress on them so far has been limited. The fifth theme is that these should be pursued, supported by a “National Innovation and Reform Agency” with the keys to an Innovation Fund.
The sixth theme addresses rural and remote service delivery by proposing that the Agreement should “establish a coordinated national approach to address health disparities in rural and remote communities, that encompass models of care able to function where workforce and infrastructure is limited, with health providers operating at a full scope of practice and greater integration across sectors to get the most from available resources”.
The seventh theme relates to Closing the Gap, with a recommendation that a new Agreement should “enunciate the shared commitment of the parties to improve the health of First Nations’ people through specific actions and accountabilities”.
The eighth theme covers workforce and digital health, and recommends that these should be dealt with in schedules to the new Agreement “reflecting shared commitments and actions, accountabilities and performance milestones”.
The review notes that while the 2020 Agreement includes an Australian Health Performance Framework, it has “not enabled reflection on system pressures nor development of shared solutions”. The ninth theme is an improved performance framework to measure the success of the Agreement, and to track the progress of the parties against their accountabilities.
Finally, the review notes that the COVID-19 pandemic has highlighted the need for a future Agreement to include a framework for responding to national emergencies, and concludes that governments should agree a recovery plan to address the ongoing impact of COVID-19 on “workforce availability, cost escalation, increased disease burden and the backlog of delayed care”.
The summary concludes that:
“The next stage of reform requires a single collaborative whole of health system Agreement, that incorporates a National Health Funding and Payments Framework that can deliver optimal models of care and increase the Commonwealth funding share over time.
“Critical system priorities and enablers need to be embedded into the Agreement, not just as aspirational statements, but with clear accountabilities and programs of action. A focus on innovation and reform and measurement of performance can better map and enable the system to respond to future pressures”.
Even a semi-detailed review of the recommendations would take far more space than the most generous Croakey editor would allow, so here are some overarching observations and comments.
One agreement to bind them all
The view that “everything should be in one agreement” pervades the review’s recommendations.
There should be an audit of all existing agreements to find out what could be incorporated (Recommendation 3), and the Agreement should reaffirm the commitments in the National Mental Health and Suicide Prevention Agreement (Recommendation 4), include a schedule reflecting the “critical importance” of the National Agreement on Closing the Gap (Recommendation 38), and include a schedule on progressing digital health that “reflects” the current IGA on National Digital Health (Recommendation 40).
The new Agreement should inter alia contain: detailed requirements for local joint planning and commissioning (Recommendation 7); mechanisms to develop optimal models of care (Recommendation 11); a structured program of work to develop bundled payments (Recommendation 13); a focus on prevention complementing the National Preventive Health Strategy 2021-30; a schedule on improving access to health in rural and remote areas (Recommendation 36); and a schedule recognising the role of the health workforce (Recommendation 39).
Wading through all this gives the sense of an “every child deserves a prize” approach to consideration of ideas put forward in submissions and consultations.
Somebody must have suggested that the Agreement should “include a commitment to the continued development of the national regulation scheme through AHPRA” (Recommendation 39(d)), but is it really necessary?
A more important concern is that the envisaged Agreement would be incredibly unwieldy. I spent a number of years working under the short-lived 2010 version and then the 2011 version, and they were difficult to navigate.
The 2010 and 2011 versions were also very difficult to negotiate, as many of my former colleagues who worked in PMC at the time will attest, yet the scope of those agreements was far narrower than what the review proposes.
With only 18 months to go before a new Agreement is required, work on negotiating it should have started three years ago if it is to include everything proposed in the review.
We are committed, you are responsible, they are accountable
The notions of commitment, responsibility, and accountability are used a great deal throughout the review report. For governments, commitment comes cheap, responsibility is a bit more serious, but only accountability is potentially onerous, depending on the mechanism used to enforce it.
At a Commonwealth level the Auditor-General, the Ombudsman, and even Senate estimates (on a good day) are powerful accountability mechanisms. Maladministration can be exposed, and those responsible exposed to public embarrassment and humiliation.
However, it is not clear how accountability would work in the context of a new Agreement.
For example, recommendation 35(b) is that the Agreement should “establish clear accountability and escalation mechanisms to address market failures in rural and remote primary, aged and disability care”.
Given the Commonwealth’s responsibility for primary care, how will it be “accountable” if it can’t replace the one third of GPs in Armidale who are leaving practice? Or provide enough doctors in Sorrell so that patients don’t have to wait a month for an appointment? And to whom will it be “accountable”?
Can care optimisation integrate across funding sources?
The review makes a series of recommendations about optimal models of care, including: developing “innovative financing mechanisms”; extending the Agreement to cover services outside hospital if they reduce demand on acute care; and implementing bundled payments covering end-to-end episodes of care, such as maternity services.
The difficulty with all of these initiatives is that they involve (at least) three funding streams: the Commonwealth’s contribution to public hospitals; the states’ contribution to public hospitals; MBS funding; and potentially PBS and patient out-of-pocket costs.
Any system of bundled payments will need to combine funds from these funding streams and provide them to a fundholder who will disburse them to providers as elements of the bundle are delivered.
But who will the fundholder be? And what accountabilities (there’s that word again) will they have to the two levels of government providing the funds?
Yes Virginia, there is a Commonwealth Grants Commission
As Professor Stephen Duckett pointed out in a recent article in The Conversation, any state’s allocation under the NHRA is effectively offset against its GST entitlement calculated by the Commonwealth Grants Commission.
The fact the NHRA pays a much lower share of the cost of hospitals in the NT than other jurisdictions just means that the NT receives a larger slice of the GST pot than it otherwise would.
The review elides any discussion of the GST. Its call to increase the percentage NHRA share for those jurisdictions below the median through a once-off injection of funds would have no direct impact on the funding available to those states – although it would increase the size of the overall NHRA and GST pot.
Roadmap for the future? Or a maze?
At its meeting on 6 December, National Cabinet apparently adopted a version of several of the review’s short-term recommendations.
It agreed to an increase in the Commonwealth’s NHRA contributions “to 45 percent over a maximum of a 10-year glide path from 1 July 2025, with an achievement of 42.5 percent before 2030”, and to replacing the current 6.5 percent annual cap on increases in the Commonwealth contribution with “a more generous approach that applies a cumulative cap over the period 2025-2030 and includes a first year ‘catch up’ growth premium”.
As I and various other commentators have suggested, more detail on how this will work is needed before these changes can be properly evaluated.
Beyond the immediate changes, National Cabinet also agreed that:
“Health Ministers will commence the renegotiation of the National Health Reform Agreement (NHRA) Addendum to embed long-term, system-wide structural health reforms, including considering the NHRA Mid-Term Review findings.
These reforms will focus on the entire health system and move towards a more integrated, equitable, efficient and sustainable system. This will give Australians better access to health services they need, when they need them, and alleviate current pressures in public hospitals across the country.”
Well, they would say that, wouldn’t they?
My view is that the complexity of the Agreement envisaged by the review’s recommendations means that they will not be implemented, and that in 18 months’ time First Ministers will again ink a “technical hospital financing agreement”, with a few bells and whistles on the side.
A postscript on consultation
In my earlier article I said that the absence of a public consultation process and decision to invite submissions from a limited (and secret) group of organisations was a concern.
The review report includes a list of organisations consulted and submissions received. While the coverage is reasonably comprehensive, it is very government-focussed. There are also some odd omissions and inclusions.
Of the 65 submissions received, over a third were from governments, statutory authorities, or government committees.
The Flinders Medical Centre and Peter MacCallum Cancer Centre provided a submission – but not any other major hospital centres. The Australian Private Hospitals Association and Ramsay Health Care were consulted, but not Healthscope. Catholic Health Australia, whose members operate as many public hospitals as Tasmania, the ACT, and the Northern Territory combined, was invited to make a submission but was not consulted directly.
COTA was included, but not OPAN (the Older Persons Advocacy Network), even though OPAN’s advocacy work would give it many insights into the practical operation of the acute-age care interface. As well as Medicines Australia, Gilead Sciences made a submission – but not any other pharmaceutical company.
While a number of medical organisations were consulted or made submissions, the Australian Salaried Medical Officers’ Federation (ASMOF) was apparently ignored. So was the Australasian College of Paramedicine.
Now it may be that some of these omitted groups were invited to make a submission but chose not to – but we don’t know. An open call for submissions would have ensured that any organisation that thought it had a contribution to make could do so.
I am also aware that a former senior state and Commonwealth health bureaucrat and academic made a submission to the review which was not acknowledged in the report. Was it considered by the reviewers? We will likely never know.
• Charles Maskell-Knight PSM was a senior public servant in the Commonwealth Department of Health for over 25 years before retiring in 2021. Between 2003 and 2007, and 2012 and 2017, he was the senior executive with direct responsibility for Commonwealth dental health policy.
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