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Misdiagnosis of the system

By Des Moore - posted Monday, 9 January 2006

Commissioner Geoff Davies’ report on Queensland’s health system criticised Queensland’s method of funding public hospitals, implying it was a major contributor to the system’s problems.

Surprisingly, the commissioner apparently accepted critiques by health officials who may be part of those problems. This is unfortunate as it provided a one-sided perspective and contributed to analytical errors.

Most important, the report asserted that “the plight of public hospitals was worsened by a philosophy of economic rationalism rather than of patient care and safety”. As an economic rationalist I can safely say that the two are not alternatives.


Economic rationalists expect funds allocated for health (or other) services to be used efficiently and with proper attention to safety and care. Their difference of view rests on the belief that the best way of ensuring this is to have most health services delivered (as distinct from funded) by competing private sector agencies.

The idea that patient care comes second reflects a misunderstanding of how state budget allocations are determined. Echoing official submissions, Davies criticises a process that starts with last year’s total budget allocation and then increases it in line with a range of criteria, including numbers of elective patients to be treated.

He then accepts assertions by health officials that the outcome means giving primacy to keeping within the financial allocations and patient treatment targets, with patient care coming second.

But two important facts are missing from this picture.

First, the government (not the treasury or some outside devil) determines the budget allocations for Queensland public hospitals and it must accept responsibility for them.

Premier Beattie’s persistent claim for more federal health grants conveniently overlooks that his government in 2003 signed agreements providing increases in such grants averaging nearly 4 per cent per annum in real terms. Also, other states already say Queensland receives more than its fair share of federal funding.


Second, the public hospital systems of every other state face similar budgetary decision-making processes, with health departments responsible for living within their budget allocations and meeting performance targets. The Queensland health minister and health department knew its allocation and, if the targeted quantity of services could not have been delivered safely and with care, the minister should have sought additional funding or a reduction in the targets. Lower targets for treating electives, increased waiting lists or additional contracting out could have reduced systemic pressures.

Accordingly, Davies should have reported on whether claims by Queensland health officials that their allocations and targets provided unsafe and or uncaring bases were conveyed to the minister and, if so, what his (and the government’s response) was.

Regrettably, it appears he did not directly address the responsibility of the government for mal-performance within the health system.

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First published in The Courier-Mail on December 16, 2005.

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About the Author

Des Moore is Director, Institute for Private Enterprise and a former Deputy Secretary, Treasury. He authored Schooling Victorians, 1992, Institute of Public Affairs as part of the Project Victoria series which contributed to the educational and other reforms instituted by the Kennett Government. The views are his own.

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