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The devil will be in the detail: Professor Philip Davies

Professor Philip Davies, a former senior federal health bureaucrat and now Professor in Health Systems and Policy at the University of Queensland, writes:

“Many, including Croakey it would appear, will be frustrated that the Rudd health plan seems to focus so strongly on hospitals.  It’s certainly disappointing that the Government has not yet revealed the full picture, including possible changes to funding and governance in primary care and details of vital investment in e-health.

But the reality is hospitals are the area where promises of positive change will best resonate with the public consciousness.  I doubt many voters would be gripped by the prospect of capitation funding for GPs or establishing Primary Health Care Organisations.  And spending billions on electronic health records when the common perception is that our hospitals are in crisis might well have been seen as a sign of confused priorities.  Political reality generally trumps the sensitivities of the policy wonk at times like this.

We’ve been promised more to come on those, and other, important issues and it’s only fair that we accept that promise in good faith.

While we wait, it seems that the plans for hospital reform (for that is largely what we have so far) are gaining cautious and qualified support among the commentariat.  Certainly the proposals to consolidate funding and to move towards activity-based payment for hospital services are appealing.  They should do much to improve incentives for better performance and eliminate many, if not all, of the current frustrations and frictions at the Commonwealth/State interface.

The concept of establishing Local Health Networks will also generate enthusiasm.  It’s not clear, however, how much real power those bodies will have.  State Governments will still need to play a key role in ensuring all their citizens have access to public hospital care.  They will need to oversee the coherence and consistency of services, especially those that cannot be provided in smaller, remote locations.  They may need to put a brake on the aspirations of Networks that are in danger of over-reaching and jeopardising patient safety by seeking to offer services that are beyond their capability.

State Governments will also be paying around 40% of the cost of each hospital service (it may be more or less depending on how actual costs compare with the deemed ‘efficient’ cost) and will still need to impose an overall budgetary cap on their total spend.

So, Local Hospital Networks will face constraints on both the volume and mix of services they can deliver.  Add to that the fact that States will continue to manage industrial relations and set conditions of employment and the real decision-making powers of Local Hospital Networks start to look pretty limited.  Proponents of local autonomy may well be disappointed.

The important and significant ongoing role of State Governments in service planning and coordination also calls into question the assertion that Local Hospital Networks can operate within current State health department staffing levels.

Indeed the Government’s plan is silent on another related issue and that is how, and by whom, the Commonwealth’s activity-based payments to public hospitals will be made.  That won’t be a trivial task and it will require considerable resources.  Arguably it’s a role that might be fulfilled by Medicare Australia but whereas payments of Medicare and Pharmaceutical Benefits are essentially insurance-like financial transactions, activity-based funding of hospitals will be an essential tool for performance management within the system.

There will need to be a tight and efficient feedback loop between the Commonwealth’s payment and policy functions.  Perhaps the time has come to consider returning Medicare Australia to the Health & Ageing Portfolio?

The early signs are promising but, as the examples above illustrate, the devil of the Rudd plan is in the detail.   And, yes … it would be good to see what’s proposed for the rest of the health sector.”

Comments 1

  1. primary prevention ninja says:

    The focus of the Rudd Plan for health is treatment based and hospital centric. Local Health Networks through regionalisation would hand the budgets to the medical fraternity who have demonstrated a consistent ability to blow health budgets whenever they act in health management or bureaucratic roles. Prevention remains the unspoken word although loose references to ‘community health’ (or services that are fertility and gender based), implies the area is covered and consequently extension into this realm will be a low priority tack on or after thought. Instead of operating on young obese people by finding interesting ways to insert gastro balloons into their stomachs why isn’t health (as opposed to ill-health) taken in the broadest philosophical context of ‘working to keep well people well’.

    The aged, sick and infirm undoubtedly need medicines, treament, surgery, beds, support and rehabilitation but the primary focus of a Publicly funded health system in the first instance should be to reduce the reasons why people access treatment services. Will activity based payments apply to the preventative sector and would an increase in funding from about the current 2.5% of the total health budget to 5% be contemplated as part of this brave new world for health?

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