Rudd’s health reforms: heading in the wrong direction and for a brick wall?

Are the Rudd Government’s plans for health reform heading for a brick wall? And in the wrong direction?

That’s the suggestion from two pieces below. The first is a summary of a Radio National interview this morning with Ken Baxter, a former head of the premiers departments of NSW and Victoria, which is well worth a listen.

And the second is an article by longstanding health reform advocate Fiona Armstrong, who argues that Rudd’s plans are nowhere near providing the solutions that are needed to not only reform the system but to improve the population’s health.

In a nutshell, Baxter said:

• Victorian Premier John Brumby’s health plan (which you can download in full here) raises valid concerns about the Rudd Governent’s plans, around accountability, governance and funding. The Rudd plan will not solve the blame game, and risks only adding to it

• The upcoming COAG meeting is unlikely to produce anything more concrete than the “mother of all motherhood statements”, in-principle agreements, and working parties because Rudd will face determined opposition.

• The fact that Labor Premiers are willing to seriously put at risk the main plank of the Rudd re-election strategy “says something” and reflects, amongst other things, concerns about the enormous transition costs of his plan.

• The states have deep, justifiable concerns about the Federal Government’s capacity to run services and programs. If Rudd is serious about achieving health reform, he “should eat a bit of humble pie”, agree with Brumby and move most of DOHA to Melbourne to sit alongside the  Victorian Department and learn how to run something. (!)

• It would be helpful to have the report, that was undertaken by Andrew Podger for the former PM, publicly released.

• …and his killer punch line: “I suspect the Australian electorate is sensible enough to understand that a small increase in GST, which, hypothicated to health, would be a better step than a whole lot of highly costly other arrangements.”

Meanwhile, Fiona Armstrong writes:

Both Tony Abbott and Kevin Rudd recognise the political currency of a call for “fixing our hospitals”, especially prior to an election campaign. Given the emphasis on waiting lists and hospitals in the media, most politicians realise that, despite the community’s understanding that health care is much more than hospitals, an emphasis on addressing what are generally considered to be serious and intransigent problems in hospitals is guaranteed to elicit a strong (and positive) public response.

This is no doubt why Abbott chose to make his recent (short on detail but politically crafty) bid for the establishment of local hospital boards.

It is unfortunate, however, that Rudd has also chosen this catchphrase to underpin much of the so called ‘health reform’ plans. This health reform plan is really largely about hospitals, and is really a plan for reforming hospital funding – both the quantum of funding and the mechanism for its distribution. Given the dramatic underfunding of the nation’s hospitals under the previous government, additional funding is certainly needed.

But the pressure on hospitals in this country comes from many sources in addition to chronic underfunding – it has much to do with the ageing of the population, the overworked and disgruntled workforce, the inadequacy of aged care, and poorly managed chronic illness. It also has much to do with our inadequate system of primary health care that relies on its’ too-small workforce of GPs and ignores the potential benefits of mobilising a  much wider workforce of primary health care professionals to keep people well and out of hospital.

So while fixing hospital funding is one aspect of necessary reform, it overlooks the problems we have in terms of a poorly integrated system – the current separation of the health system into fragmented parts (and not addressed by the Rudd reform plan, despite the assertions to the contrary) – means that many people seeking care do not experience it as a connected and integrated system.

Continuing the split between hospital care (whether they are managed by networks or otherwise) and primary health care will not solve many of the health system’s problems.

This problem has been the emphasis of much of the advocacy around health reform over the last decade – and while the prime minister is picking up on the language of ‘reducing cost and blame-shifting’, and ‘eliminating duplication and waste’, there is little likelihood that altering the method through which hospitals receive their funds will do anything to achieve an integrated system.

Another issue with the proposed reforms (scheduled to go to COAG this month), is that they do not offer much in terms of responsible fiscal management – they continue the current practice of funding services based on throughput and services delivered irrespective of the quality of those services and whether or not the services were actually needed.

The suggestion regarding the removal of a cap on services risks budget blow outs and creates the potential for bringing to the public sector the problem of over-servicing that exists in the private sector.

The development of national standards is welcome and advice regarding the “efficient” cost   of services will provide useful guidance, but unless service delivery is based on data related to demonstrable health care need, there is a risk that funds are not being used as efficiently and effectively (i.e. producing the best possible health outcome) as they could be. And given the necessity always and everywhere for fiscal restraint, using funds wisely and well is very important.

Distribution of funding according to health care need is the most efficient and effective method of ensuring health care dollars go where they are needed most, and where they will do the most good. While Rudd has signalled some role for needs based funding, it is likely that this will be relatively blunt, and limited to groups for whom gross inequities exist, such as many Indigenous people and those living in poorly serviced rural and remote areas.

Unfortunately this is missing from the government’s reform plans, and there is little sign of a committment to addressing the fundamental issues that prevent the delivery of more effective and more equitable health care.

While the focus on ‘local’ that is common to both Rudd and Abbott’s sound bites is consistent with much advocacy for stronger regional governance of health care, it is far from clear that the structure of local hospital networks (as envisaged by Rudd) or individual local hospital boards (Abbott) will provide this.

Getting hospitals to collaborate is important and useful but even more important is integrating all parts of the health system with each other, including hospitals.

This is where a regional health authority could provide the all-important nucleus of the health system – close to home, community governed, and charged with coordinating the care of the entire population within a region.

Such a model is the basis on the paper published by the Centre for Policy Development last year – a model which, if implemented, and funded as proposed from a pooled resource of all health care funding, not just that for hospitals, could really overcome some of the cost and blame shifting, duplication, and fragmentation in the current system. With an emphasis on the allocation and distribution of funding according to health care need, it could also produce better health outcomes, not just happier bureaucrats.

Rudd’s plans for reforming hospital funding fall well short of the comprehensive reform of the entire health care system that is required to meet the current and future health needs of the population. It is not to say some of it is not welcome, but it is nowhere near enough.”

• Fiona Armstrong is a public policy analyst and a long standing advocate for comprehensive health reform. She is a co-author of the 2009 Centre for Policy Development Policy Paper Putting Health in Local Hands: Shifting Governance and Funding to Regional Health Organisations.