John Menadue, a prominent advocate for health reform, is scheduled to address a Queensland Nurses’ Union conference today, on health reform. You can read his speech in full below. (It is quite a bit longer than the normal Croakey post, but I thought it worth allowing readers the opportunity to see it in full).
In a nutshell, he gives an overview of the health reform journey to date, including some of the wrong turns that have been taken, and he highlights some of the wins and losses along the way. It could have been worse, he says – but it also could have been much, much better. And the journey has only just begun…
“Kevin Rudd said that the COAG reforms in health in April were the greatest since Medicare. That remains to be seen. At the very least, years of hard grind remain to make them work.
I am even more doubtful about what the Coalition has to say about health reform So far it comes to two main features – protecting private health insurance and establishing local hospital boards. Tony Abbott has also quite rightly proposed additional funding for mental health, but it will be at the expense of two programs that are very important for mental health – e-health and GP super clinics.
In considering what happened at COAG and preparing this address, I felt like the traveller who asked the way to Dublin. The Irishman told him, that if he were going to Dublin, he wouldn’t start from here. If I could continue the metaphor, I wouldn’t launch health reform with hospitals and premiers.
But the problem really began much earlier than COAG when Kevin Rudd said that he would consider a referendum to take over state hospitals. He would have been much better advised to propose a referendum on a takeover of all state health functions and so address the basic cause of much fragmentation, the split between hospital and non-hospital care.
An indication of the commonwealth government’s misunderstanding was obvious when it named the National Health and Hospitals Reform Commission. Surely health includes hospitals. Almost every photo opportunity of Kevin Rudd in his 103 reform consultations was in a hospital. I didn’t see any in primary care. So the hospital DNA was there from the beginning. The hospital obsession continued.
The outcomes from COAG are very complicated and hard to unpick. It will probably be several years before we fully understand them and see how they play out.
John Brumby had reason to be pleased with the COAG outcome. That fact remains obscured because of a lot of money outlaid and the spin which accompanied it. There is certainly more money, but its likely that there will be continuing fragmentation. The opportunity for a comprehensive health reform plan has been missed. I fear that we will continue to muddle through.
A change from 40/60 commonwealth/state funding to 60/40 funding for hospitals, doesn’t change the division of responsibility and the blame game. Most importantly of all John Brumby won the case for continuing state government ownership and control of state hospitals through the local hospital networks. Whilst these new networks will hopefully see improved cooperation and involvement of local communities and clinicians, the fact is that state governments will ‘remain the managers for public hospitals’. Oops. What was that about a commonwealth takeover!
I propose to outline some important issues and where we are headed in health reform.
First, I am relieved that the crippling of Medicare has not occurred.
Second, what are the major health reforms that the commonwealth should have introduced in parallel with COAG?
Third, what are the plusses and achievements?
Fourthly, what can we build on?
Fifthly, how can we overcome the glaring problems of health governance? Who will run the show? Despite all the talk about ending the blame game and providing a seamless service, major governance problems remain.
Medicare was saved
My earlier concern following the report of the NHHRC was that the private health insurance industry might be on the way to crippling Medicare. My concern was based on three factors.
- The secret undertaking which Kevin Rudd gave to PHI before the last election that a Labor government would retain the taxpayer subsidy of $5 b pa for PHI.
- The appointment of a senior executive of one of our major PHI companies as Chair of the NHHRC.
- The proposals of NHHRC for Medicare Select and Denticare to extend the role of PHI at the expense of Medicare.
So, I applaud the government for not going down this path although I do have a lingering concern. A Coalition government in league with PHI funds may yet resurrect Medicare Select and Denticare. How ironic it would then be that a Labor government, the proud creator of Medicare by Whitlam in 1974 would have eased the path for the crippling of Medicare. But so far that prospect has been avoided.
What was left out that should be part of any comprehensive health reform?
It could be said that some of the following had little to do with COAG. But they have everything to do with real health reform. The Prime Minister was responding not only to premiers but also to three major health studies that the commonwealth government had commissioned.
- There was no attempt to enunciate values and principles. I thought that governments, or at least reform governments, believed in certain things, but values seem to have given way to pragmatism in health as in other areas. The government should have always been clear about the values and principles to guide health reform, such as – equity, universality, efficiency (both technical and allocative), social solidarity and risk sharing, subsidiarity, pooled funding, accountability of providers, community participation and personal responsibility. Without such guiding principles health policy will be subject to managerialism and special interest pleading. That is what has happened. The Canadians through their Romanov Royal Commission extensively consulted the community to determine what it valued in a health system. It found that the community valued universality and equity above all else. Romanov then recommended a revised system accordingly. We never attempted it.
- Community involvement and participation in new healthcare arrangements will remain token and minimal.
- There was no attempt to manage the escalating costs (5% real per annum) and demands for health services. There is no review of fee for service. Chronic diseases are responsible for 80% of the burden of disease and injury in Australia. Fee for service is quite inappropriate in treating most chronic diseases. Unless demand is curbed, the health sector will continue to be overwhelmed despite any worthwhile improvements in delivery. The increased demand is occurring not just for the aged and for chronic diseases, but across all age groups. In the 13 years between 1984/5 and 2007/08, Medicare-funded services per head almost doubled from 7.1 services to 13.1 services per annum. We need to face up to the fact that doctors do too much, refer too much and prescribe too much. Most of us want to see them too often. The government’s package does not mention or even contemplate the reform of the dog’s breakfast of co-payments and safety nets that have little equity, efficiency or logic. The co-payments vary enormously, from 2% in public hospitals and 12% for medical services, to 65% for dental care and 92% for non-prescription pharmaceuticals. The safety net for medical and pharmaceutical services is family and calendar year based. The 20% rebate for expenses greater than $1500 pa is on an individual and financial year basis. I believe that most of us can afford to pay more for our health services. Subject to means testing, we all need to be more personally responsible for the demands we make on health services. We can’t have all we want. At CPD, Jennifer Doggett has proposed a more equitable and efficient co-payment arrangement through a health credit card and a single safety net.
- There is certainly more money in the COAG package for workforce training, but it is largely to do the same things, the same way we have done them for decades. Some breakthroughs have been made in nurse practitioner prescribing and accessing MBS and $18.7 m over 4 years provided in the budget for the evaluation of the role of nurse practitioners in aged care. There is also $390 m in the budget over 4 years to assist in the employment of practice nurses. There are vast areas where we need to restructure work practices. We have tens of thousands of health professionals whose skills are under-utilised or undeveloped – nurses, allied health, pharmacists and ambulance officers. The monopolistic practices of doctors and pharmacists are virtually left untouched. The rent-seekers, the AMA and the Australian Pharmacy Guild are still very much in place. We don’t have so much a shortage of doctors as a misallocation. We have twice more GPs per head than New Zealand and the UK. We have problems because doctors refuse to share territory with other clinicians, all in the name of ‘safety’. If auctioning provider numbers by postcode is not possible, perhaps we could start by capping the number of new provider numbers in areas already in over-supply.
- Medicare may be safe for the moment, but there was no attempt to change it from a passive funder of services to being a proactive public insurer as its name suggests it was intended – the Health Insurance Commission. Medicare should offer a default option for all Australians, but provide other add-ons which would allow us to choose between alternate policies that suit our age and health profile. Let Medicare compete with private health insurance. Further, Medicare is flush with information which it never publishes which should, for example, expose the large variations in clinical practice across the country, eg cataracts, caesarean section and joint replacements, variations which have little or no therapeutic merit. Medicare should be facilitating public discussion about health priorities and allow us to get away from the self-interested debate in health which is overwhelmingly between ministers and providers. Generally the consumer voice is weak, because unlike in education, our interests in health are usually short-term and occasional.
- There is no attempt to integrate public and private hospital delivery. It would be desirable for at least part of the $5 b PHI annual subsidy to be paid direct to private hospitals as a means to promote integration.
- In over 10 years involved in discussions about health, I have come to the very clear view that the areas of greatest need in health in Australia are indigenous health and mental health. Neither feature in the COAG package, although more has been done in indigenous health in different arrangements. Our failures in indigenous health and in mental health reflect an important feature of health politics – health resources go where provider interests are strong and able to manipulate governments and where there is a media savvy constituency. Resources do not go where the needs of the disadvantaged and the unorganised are most apparent. In mental health more money is necessary, just as with indigenous health, but there is conflict and confusion in diverse funding arrangements. Funds for early intervention in psychosis, as proposed by Tony Abbott, sounds sensible but reflect premature conclusions being drawn from research in this area. Hopefully the next COAG which will consider mental health will help overcome this confusion as well as increase funding. In any event, improvements in mental health will occur overwhelmingly in primary care and not in hospitals.
- Dental health was not mentioned, although we might hear more about it in the imminent election campaign, hopefully funded through Medicare. But are there sufficient dentists? A phase-in will be necessary.
The good news, the plusses
- Clearly there is more money. The COAG communiqué says that over the next four years there will be a package of $5.4 b of commonwealth funding for reform and investment. I have not yet been able to distinguish between normal growth and new initiatives, whilst subtracting 30% of GST payments. Increased funding will help especially in emergency departments where the failures in the rest of the health sector invariably show up. I have pointed previously to major inefficiencies and waste – perhaps $10 b pa – in our health sector that should be addressed, together with additional funds to relieve major problem areas like mental health.
- The commitment to e-health is very welcome despite the glacial progress in recent years.
- The focus on prevention is a great relief – $643 m. over six years directed to such areas as smoking, nutrition, alcohol and physical activity. Prevention is a hard-grind with the benefits becoming visible only many years into the future. The government decision, although not part of COAG, to substantially increase the tax on tobacco is probably the most effective thing it has done to reduce sickness and lower costs.
- The National Access Guarantee for elective surgery should hopefully reduce the attractiveness of PHI that enables the wealthy to jump the public hospital queue by using a taxpayer subsidy to go to a private hospital. The problem will remain however of how to assess waiting lists. They are usually more rubbery than Goodyear tyres
- There will be improved performance reporting with the establishment of a National Performance Authority to report on ED and elective surgery waiting times, adverse events, patient satisfaction and financial management. Will it focus on accountability in general practice?
- There will be a permanent Australian Commission on Safety and Quality in Healthcare. Together with the NPA, this commission could be effective, like the National Institute for Clinical Excellence in the UK in improving both quality and lowering the costs of services through improved work practices. Since 1995 when a definitive study was undertaken on adverse events in NSW and SA hospitals, there have been a lot of committees, studies and money spent on quality and safety, but little improvement as far as I can see. Bundaberg is only the tip of the iceberg. Where were the doctors when all this was going on?
- If the Independent Hospital Pricing Authority is really independent and professional it could be very influential in forcing changes in practices, covering LHNs and public and private hospitals. It will be under persistent attack by special interests in health. I hope it can resist.
- The great redeeming feature in all the COAG deliberations is that, with the exception of WA, all states and the commonwealth agreed ‘that the commonwealth will have full funding and policy responsibility for general practice and primary health care .. including community health centres … and aged care’. In the communiqué, this statement about primary care seemed almost a footnote compared with the obsession with hospitals. The evidence worldwide is that healthcare grounded in primary care is the most effective, equitable and efficient. Our Kiwi cousins are showing us a clean pair of heels on this one. With the establishment of Medicare Locals with commonwealth government funding of $417 m over four years, we have the potential for long-term transformation of health services. The Australian Institute of Health and Welfare estimates that over 9% of hospital admissions can be prevented with appropriate services in primary care. It is not yet clear how Medicare Locals will operate, except that they will give priority to accessing after-hours GP services, which will be linked to the National Health Call Centre Network. How will Medicare Locals relate to their namesake, Medicare? How will they link to the primary health care clinics that both the commonwealth and the states are developing. Medicare Locals must be well funded and well supported by the commonwealth. If they are just another name for current divisions of general practice, they will fail.
Who is running the show?
But the real elephant in the room is governance. Who will be in charge and how can we ensure a joined-up and cohesive health sector? I have never called it a health ‘system’. There are a whole range of different players – the commonwealth, the states, providers, ministers, officials, clinicians and the community, at least by proxy. How will clear authority and responsibility be established with goals and priorities to ensure appropriate delivery of health care where it is needed?
The COAG communiqué said, with the exception of WA,
‘The establishment of a National Health and Hospitals Network … will deliver better health and hospitals by helping patients receive more seamless care across sectors of the health system.’
I have tried putting the National Health and Hospitals Network as described on its head, on its feet and on its side, but I am not at all sure how it really works and how it will integrate commonwealth and state roles, hospitals both public and private and fragmented primary care and aged care across the country. ‘Networks’ are about a process of consultation, not governance. There is a lot more work to be done. But the problems are many
- When we really need local health networks, we are instead given hospital networks which will be creatures of state governments. The COAG communiqué says ‘the commonwealth government will play no role in the negotiation or implementation of Local Hospital Network agreements. Will the community and clinicians really be involved? Who will the CEO of each LHN report to? Will it be the state Director-General of Health or the Chair of the LHN? Will there be real and independent governance of LHNs or in effect will LHNs be advisory bodies to the state Director General of Health. Who will appoint them and fire them? What will the CEO’s employment contract really say? The Director-General of Health in NSW is quoted as saying ‘little will change under the reforms’. I hope that nurses, perhaps ahead of other clinicians, can use their influence in each state to ensure effective local governance of LHN boards, with the boards including elective representatives of nurses, doctors, allied health and the community, and not tame appointments of state health departments. The CEO of these LHNs must both in theory and in practice be accountable to the board and not to the state Director General of Health.
- A change from 40/60 to 60/40 in commonwealth/state funding of hospitals doesn’t change divided responsibility.
- The commonwealth will provide capital funds for research and training undertaken in public hospitals, but presumably not outside public hospitals.
- Medicare Locals will be independent legal entities. How will they effectively relate to LHNs and other continuing areas of state responsibility in health? In addition to what the states spend on hospitals, they spent for example $8 b in 2007/08 on recurrent non-hospital services. That included $1.3 b on patient transport, $580 m on dental services, $4.2 b on community health (HACC), $758 m on public health, $292 m on administration and $387 m in research. The commonwealth will put up 60% of the cost of some, but not all of these state programs. How these expenditures are to be included in a seamless service with the commonwealth is not clear. I understand that HACC be split between aged and other community services. Victoria will not be part of the new HACC arrangement at all.
There are a lot of opportunities where the commonwealth can apply pressure and leverage – activity funding, the National Access Guarantee, the National Performance Authority and the Independent Hospital Pricing Authority – but they don’t amount to the coherent governance of healthcare in Australia.
How will the Commonwealth Transition Office reconfigure very complex arrangements? That office, based in the Department of Health and Ageing, will have a Herculean task. Stakeholders will need to better understand how and when they will be involved. It will require an almost superhuman bureaucratic effort. We will need something like a Department of Post-War Reconstruction.
Whilst the Australian public clearly looks to the commonwealth government to take greater responsibility for funding and delivering healthcare and is increasingly sceptical about the role of the states, there is little evidence in health that the commonwealth is able to step up to the job. The commonwealth doesn’t even effectively co-ordinate two of its most important health programs – MBS and PBS.
In the lead-up to COAG, the commonwealth government seemed to be challenging, quite correctly, the special interests of state governments and their health bureaucracies. In addition to these special interests, there are even stronger special interests among providers – the AMA, the Australian Pharmacy Guild, pharmaceutical companies and private health insurance funds. They all have legions of lobbyists who dominate the public debate at the expense of the community which is excluded and disenfranchised. A recent survey of ten metropolitan newspapers in Australia by the Australian Centre for Journalism at UTS revealed that 52 per cent of health stories were ‘PR driven’. In 23% of stories, no significant journalism work was done. Journalists are just too under-resourced to combat the spin of special interests. There are 34 full time lobbyists in Canberra for every Cabinet minister. The government is facing special interest groups in health just as it has in emissions trading and mineral resources. It is a ‘diabolical problem’ as Ross Garnaut has said. He called for a revival of the capacity of the Australian polity to take a position in the national interests, independently of sectional pressure. It is just as true in health as in emissions trading and mineral resource.
That is why I have suggested that at a national level the commonwealth government should establish a permanent, independent, professional and community-based statutory authority, an Australian health commission, similar to the Reserve Bank in the monetary policy field. The Reserve Bank’s governance structure has made it almost impervious to lobbying and generally, it has been independent. Such an independent commission with health expertise and strong economic capabilities is necessary to counter the power of special interests, determine programs, distribute commonwealth health funds across the country and importantly facilitate an informed public discussion. Health is of course more complex and diverse than monetary enterprises, but with appropriate expertise and resources an appropriate new structures could be built. Last year the Business Council of Australia called for a single ‘independent body that can lead and be accountable to the Australian community’ for health services. The traditional ministerial/departmental model is proving just too susceptible to special interests in health as elsewhere. Such an independent and professional health commission might also encourage at least some of the states to surrender more of their powers to the commonwealth.
The commonwealth government should not and could not opt out of policy responsibility, but issue principles, as it does through the Reserve Bank, to provide policy and implementation for the health commission. I have referred earlier to these principles, eg, equity, universality, efficiency and pooled funding.
This proposal may be a bridge too far at the moment, but we do need to move to such an independent authority to implement health programs based on clear policy guidelines. We would then see a more professional and transparent implementation of policy and free ourselves from the special interests that blight our health sector.
Bedding down the COAG outcomes for hospitals will be arduous. The best way forward is to commit energy and resources to the building of a strong primary health care sector. In the hospital arena, with divided responsibility between the commonwealth and states, it is hard to treat old dogs new tricks. But without the baggage of the past, and with increased resources and a new design in primary care, we could transform health delivery in Australia and overcome a great deal of the fragmentation, inefficiency and inequity which abounds across the health sector in Australia. It would also take pressure off our hospitals.
The Hawke/Keating/Howard Governments successfully undertook significant reform in many areas. It required leadership and persuasion. Reform in such as areas as automobiles and textiles occurred in contracting industries. Reform in health should be much easier. Health is the fastest growing sector in Australia and the pain of adjustment should be much easier to manage. What is most lacking is political courage to confront special interests. Ask Ross Garnaut and Ken Henry.
I cannot see a health strategy. I can see more muddling through.”
• 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. He was founding Chair of the Centre for Policy Development.