Regional control and centralised funding make a better health system

Another example of how we currently waste money is the high level of hospital admissions we still have, despite more operations being done as day surgery. The problem is that many community services are significantly underfunded. Their unavailability causes people to be admitted to hospital, or kept in inappropriate and expensive high-care beds for too long – a totally inefficient use of public money.

People who are drug and/or alcohol dependent who are unable to find community-based services also end up in hospital. The same applies to the elderly because there are not enough hostel or nursing-home beds. Add those who have mental illnesses who yet again cannot find support in any community setting, and the result is a huge waste of resources as well as inappropriate treatment being delivered.

We currently spend 8.9 per cent of our GDP on health, which, compared to other OECD countries, is about average. In terms of health outcomes, Australia is above the OECD average. The indications are that we spend roughly enough money on health services, so the solution to our current problems is not just pouring more money in. I argue that we can be smarter in how we spend what we now allocate to health.

A system of RHBs would offer more flexibility, as it would allow each region to address its own specific needs. It would also allow communities to have more of a say in what services they want, thus reflecting the diverse needs of the Australian population.

Regions would need to manage their budgets in the most effective and efficient way and this would provide funding incentives for preventative care – basically incentives for keeping people out of hospital. It would also be an incentive for maximising health outcomes and offering the most effective treatment based on results.

It has been estimated that a change to a single level of funding would save at least $2 billion annually. Add that to the $2.5 billion that could be saved through the abolition of the private health insurance rebate, and we could have a handy start to tackling many of the problems plaguing the current health system, and provide extra support for the groups in our community (such as Indigenous Australians) whose health status is poor.