Victorian voters should be demanding better leadership on health spending

Victorians will be voting on Saturday.

It’s well past time for some serious conversations about how health spending is being divvied up, suggests Trevor Carr, chief executive officer of The Victorian Healthcare Association (which represents the state’s public health sector).

Trevor Carr writes:

Public healthcare in Victoria consumes some 27 per cent of the entire state budget – for the 2010-11 financial period this amounts to $12.4 billion.

A significant proportion (68 per cent) of this budget goes to public hospital services, with mental health and aged care programs receiving eight per cent each and a range of primary care, small rural, drug and ambulance services consuming the balance.

On top of this, Victorians also use federally funded primary healthcare programs – the most significant of those being Medicare benefits for general and specialist practitioner appointments and the pharmaceutical benefits scheme for prescription medications.

Victorians also benefit from Commonwealth expenditure on residential aged care, dental and mental health.

With the large sums of taxpayers’ money going to fund public healthcare, policy observers are continually frustrated by governments that resist pressure for a clear plan to address the healthcare needs of future populations.

Recent federal reforms have thus far failed to inspire a sense of true reform and carry the risk of further reinforcing our fractured system of healthcare delivery.

The Commonwealth Government is currently calling for expressions of interest to establish the first Medicare local organisations (MLO’s) while the form (geographical spread, governance arrangements) and function (what they are responsible for) of MLO’s are not yet clearly defined.

At the state level, primary care is all but missing as a theme of any policy announcement in the current election. It is not unreasonable to presume that this is a direct consequence of the preferred outcome of the Commonwealth reform agenda, whereby the Federal Government assumes 100 per cent funding responsibility for primary care.

This creates a significant policy disconnect. Over 10 per cent of all admissions to Victorian public hospitals in 2006-07 were identified as being ambulatory care sensitive – in other words, they were avoidable admissions that could have been cared for in a non-bed based setting.

This is a staggering figure, representing 229,000 admissions and more than one million bed days. The cost of providing this care is conservatively estimated at $500 million.

To split the responsibility for determining the acute and primary care priorities of a significant but limited health budget runs the risk of reinforcing the heavy reliance on bed-based care solutions that continue to challenge the Australian healthcare landscape.

The catchcry ‘cost shifting’ – used by both federal and state governments – will sadly continue under the current shape of reform. Both state and Commonwealth governments are guilty of creating this outcome.

An analysis of the past seven Victorian state budgets shows the apportionment of the total health budget throughout this period has remained static. That is, the share of the health budget allocated to eight service areas (acute health, ambulance services, mental health, aged care, primary health, small rural health, public health, and drug services) has barely changed from 2004-05 to the current 2010-11 budget.

The Victorian Government could have taken the initiative during the past seven years to deliberately ‘tilt’ funding towards ambulatory care services to reduce the unnecessary reliance on bed-based care. Unfortunately, there is no evidence in the budget for this approach and no publicly available healthcare plan for a measured redirection of effort to achieve such an outcome.

There is a responsibility on all state governments to be accountable to their constituency for the public healthcare they provide and/or influence.

By 2021, Victoria’s population will grow to more than six million – almost 20 per cent more than in 2008. Almost 1.1 million, or 17.5 per cent of the population, will be over 65 – a 50 per cent increase on 2008.

With people aged over 65 three-and-a-half times more likely to seek a health service (including hospital admission), the combined impact of population growth and ageing will create a public healthcare crisis by 2021, unless a service and capacity strategy is articulated.

The early signs of this crisis are evident in the failure of the current Victorian healthcare system to achieve a variety of performance measures, in particular waiting times in accident and emergency departments and for category 2 elective surgery.

The Victorian Liberal/National Coalition has committed to a process of engagement with industry leaders to develop a 10-year healthcare plan. While we cannot know the outcome of this process, the Coalition is to be commended for at least committing to this engagement.

Those with influence within the Victorian Labor Party are encouraged to ensure a similar outcome should Labor once again form government following Saturday’s state election.