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Health reform: will patients notice?

By Tim Woodruff - posted Friday, 22 July 2011

Health reform was flagged as a major part of the election commitment of Federal Labor when it came to power in 2007. After input from a range of inquiries the Federal Government finally made some proposals which faced substantial resistance particularly from state governments. Following Council of Australian Government (COAG) meeting earlier this year substantial agreement has been reached on what is proposed. It is now being implemented gradually.

There are two distinct parts to what the Federal Government has done and is doing. Firstly there are funding commitments to various parts of the health system. Much of this should not really be regarded as reform as it is simply a recognition of the need for more funding. Substantial increases in workforce have been funded but this is just recognition that there is a shortage. It is not reform. The federal share of public hospital funding had fallen from about 50% to 39% since 1996 as states had increased funding in response to need and the Howard Government had not matched the increase. The proposed increased funding for hospitals will lead to a 44/56 Federal/States split by 2030. This is not even a return to previous funding levels. It is definitely not reform.



There are reforms however and reform is desperately needed to address both the inefficiencies and the inequities of the so called health 'system'. There is no system. Patients are faced with the nightmare of negotiating the public hospital system, the publicly subsidised private hospital system, the GP system, the community care system, the publicly funded private allied health system, the mental health system, the publicly subsidised private dental system, the public dental system, the Aged Care system, private specialist system, the public specialist outpatient system, and a myriad of other poorly connected pieces. Structural reform to integrate these systems is required but is not suggested. Instead, relatively powerless regional organisations called Medicare Locals (MLs) will be charged with co-ordinating the maze of primary care services. The new plan abandons proposals for the Commonwealth to take over all primary care funding so the added barrier to co-ordination will be a continuation of different sources of funding from federal, state, and local governments and other sources. In addition another entity, hospital centric Local Hospital Networks (LHN) will address just the public hospital side of hospital care. The two entities are expected to work together to integrate services despite their completely different interests and funding streams. The funding silos for the myriad separate systems the patient encounters will remain intact and ignored by a Government intent on avoiding any significant structural reform of the primary care sector (GPs, nurses, allied health, dental), or the private hospital sector. This approach could be likened to applying a bandaid to a bleeding fractured leg. Will patients notice?

Hospital Funding Mechanisms/Performance Indicators

There are also reforms to how public hospitals are funded. Firstly, the amount of federal funding will be dependent on how many patient s with particular conditions are treated. This is already the basis for funding in Victoria. Implementation nationally will be challenging and the net result may be improved efficiency but there are potential problems paying for throughput rather than outcomes, as there is a perverse incentive to do more rather than do better. National standards are proposed however, and this can go some way to mitigate this problem. The concern regarding standards and targets is that there is no evidence of a commitment to useful targets and the intention is to use these targets or standards to 'punish' hospitals financially. One such target is waiting times for surgery. It ignores waiting times to get to see the surgeon and be on a waiting list. My patient needing spinal surgery has already waited a year just for an outpatient appointment. That time, which may end up being 2 years, is ignored when measuring waiting times for surgery. She is almost housebound. Once seen she may only wait 6 months for surgery, but her real waiting time will be ignored because the Commonwealth Government refuses to acknowledge the reality. Waiting times are a joke. Another proposed standard is access time to be seen in Emergency. But for years hospitals have been 'gaming' such standards for State Governments and will continue to do so when faced with financial penalties for failing to achieve unrealistic targets using inadequate resources.

Barriers To Access

In addition to the challenges of negotiating the health system, patients are also faced with financial and geographical barriers to access. Medicare ensures universal entitlement but not universal access. The most obvious shortage of health professionals is in poorer urban areas and rural areas. Whilst governments of all persuasions have developed programs and projects to address these issues, the approach is always to avoid the underlying structural problems in our health system which guarantee that patients can't find a doctor. These reforms hardly mention ensuring equity or a fair go. Instead, the approach is to address gaps in services. Under the new plan the Medicare Locals will more quickly address the issue of after hours access than was previously planned. They are charged with filling the gaps which a flawed system reveals. More importantly little is suggested for the 32% of sick Australians who, according to the Commonwealth Fund, fail to see a GP or get tests or fill out prescriptions because of costs. This is despite the fact that those facing financial barriers tend also to be those with the worst health outcomes. Financial barriers to access are almost totally ignored by these proposals. Indeed, the Commonwealth Government imposes such barriers for prescriptions. Meanwhile, financial support for those who can afford private health insurance premiums continues to increase, enabling those lucky people to quickly access private hospital care, dental care, and allied health care in the community. The rest wait or go without.

Geographical barriers to access are recognised in the proposals and in previous policies, with many programs to increase workforce and to encourage workforce to areas of shortage. But these efforts ignore the dominant funding mechanism in our health system which is to direct Medicare rebates through providers for services rendered (ie fee for service), irrespective of whether those providers are in areas of need. This funding structure imposed by government attracts providers to rich urban areas where copayments can be afforded and health need is least. Thus, well intentioned programs to attract providers to areas of greatest need work in direct opposition to this basic fee for service funding structure, but the Government's plan ignores this strikingly inefficient and inequitable situation.


Mental Health

In this year's budget significant new funding for mental health was promised. This was belated recognition of the parlous state of funding for this sector. In addition however, there was recognition that fee for service funding of psychologists introduced several years ago was very popular but was not as well directed as it could be. In other words, it wasn't getting to many of the most needy who faced unaffordable copayments or lived in areas where there were inadequate numbers of psychologists. The reform was to change the funding mechanism. If only there was recognition of this problem across the whole fee for service Medicare rebate system, we could begin to move towards an equitable health system.


The Health and Hospitals Reform Commission in its interim report suggested three possible structural changes to the funding of our health system. The Federal Government initially chose the least radical ie taking over all responsibility for primary care. It reneged on that at COAG this year so we are left with a reform plan with minimal structural changes to the system despite system wide inefficiencies and inequities. Whilst some patients will most probably notice some benefits from welcome initiatives like electronic health records, the most needy will continue to face financial and geographical barriers to access and few will notice the hoped for integration of services. The obsession with efficiency appears to be more about throughput rather than health outcomes and there is no vision for an equitable system.

In five years time I suspect I will see my patients facing exactly the same problems as they do now, unable to find a doctor they can afford, negotiating the maze of professional services, or waiting at home in pain on narcotic pain killers, trying to get onto a public hospital waiting list because they weren't smart or rich enough to get publicly subsidised private health insurance.

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About the Author

Dr Tim Woodruff is Vice-President of the Doctors Reform Society.

Other articles by this Author

All articles by Tim Woodruff

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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