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Public healthcare won’t get better by itself – we need innovation and efficiency

Toby Hall - An edited version of this piece appeared in the Sydney Morning Herald, 15/7/15
July 2015

This month’s COAG leaders’ retreat is crunch time for the nation’s public hospitals.

Our leaders must come to a satisfactory understanding about how to fund public health or our children will inherit a system unrecognisable to the one we know – and value – today.

And vulnerable and low income Australians – those who rely heaviest on public health care – stand to lose the most.

We know what brings us to this point.

The 2014 Federal Budget saw the Commonwealth reconsider its contribution to funding the costs of hospital growth from 2017-18.

While political argument rages about the decision’s impact, Treasury’s own analysis says it will remove a projected $57 billion from the public health system over 10 years.

The Commonwealth has argued it will continue to increase health funding in line with inflation and population growth. 

However, that doesn’t take into account the other factors that drive increases in the volume of health services such as consumer demand, our ageing population, the rising burden of chronic disease, and increasing complexity of care.

Growing funding only in terms of population and CPI won’t be enough to meet demand. On this all state governments agree.

The Victorian Government has announced, if things stand, the state’s public hospitals will receive $13.6 billion less than expected over the next 10 years.

NSW expects to miss out on $1.5bn in health funding over the two years to 2018-19.

So what does this mean in terms of patient care?

Public hospital budgets are under immense pressure. Even the slightest funding change carries serious implications.

For St Vincent’s Health’s two major public hospitals in Sydney and Melbourne, $1 million equates to around 1300 Emergency Department attendances, 200 palliative care treatments or close to 3300 MRI scans.

It equates to the annual cost of running six beds in a general ward or employing 11 nurses.

$1 million is 4,330 dialysis treatments or just over 900 chemotherapy treatments.

If we’re unable to meet demand, we – along with other public hospital providers – will be forced to ration staff, beds and procedures which means longer waiting times.

And vulnerable Australians will bear the brunt because of their greater reliance on public health care.

That’s a view supported by senior NSW public servants who, according to media reports, say the changes will “impact more heavily on patients from low socio-economic status backgrounds.”

By no longer sharing in hospital expenditure growth, the Commonwealth also no longer shares the financial incentives to reduce preventable hospital admissions – including through the mainly Commonwealth-funded primary care system.

This will only worsen the cost-shifting and fragmentation between levels of government that has plagued our health system for too long.

Quite plainly, the current situation is untenable. So what needs to be done?

Firstly, we need to be realistic.

Over the past 14 months, the Commonwealth has made it clear it won’t go back to the pre-2014 health funding agreement.

The Federal Opposition has also failed to give a similar guarantee should it win government.

We need achievable solutions. The states and territories will gain nothing by continuing to demand a return to the previous arrangements.

The best chance of an outcome is if our leaders leave their entrenched positions and put everything on the table.

Last week’s speech on overcoming Commonwealth-State blame-shifting by South Australia’s Premier is hopefully the first sign a change is taking place.

We need our leaders to agree to a long-term vision and goals for our health system, both of which are currently lacking.

We need them to agree in principle to a more cohesive and less fragmented governance and accountability framework by creating a ‘single tier of government’ funder for public health services.

We need them to start debating more cost-effective ways to improve community health outcomes, particularly for chronic health issues such as diabetes, obesity and cardiovascular disease.

We need them to support more innovative and efficient models of healthcare, including ambulatory – same day – care in our hospitals.

We also need them to put aside their politics and ask whether wealthier Australians should pay more for accessing the public health system.

I agree with John Menadue – one of Australia’s most highly regarded public servants: “A ‘universal’ service does not necessarily mean it should be free.”

Underpinning everything should be a commitment that low income and vulnerable Australians are not only protected but have their access to public healthcare improved.

It will be a tragedy if our leaders leave July’s retreat without consensus on a way forward.

The current path only offers more pain.