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The great health divide

By John Dwyer - posted Friday, 10 March 2006

Australians are only too well aware that their health care system is increasingly unreliable, indeed dysfunctional. Surely this is an intolerable situation for a wealthy country with a huge budget surplus.

Public hospitals have major problems because of ever-increasing demand, under-funding, and shortages of appropriately skilled health professionals. The essential continuum of care that should link primary, community, and hospital services is made all but impossible because of the jurisdictional inefficiencies associated with the great divide between Canberra and the states.

Planned surgery is rationed, general practitioners must raise their fees to survive, and specialists’ fees make it increasingly difficult for a large number of Australians to benefit from their care. Personal finances are increasingly a major determinant of health outcomes. This is not good enough for a wealthy country like Australia, particularly when the major barrier to progress is political intransigence, rather than lack of policies to address these issues.


What follows is a discussion of four major areas of reform required to facilitate improvements in all problematic areas of our health system. They are the problems created by the federal-state divide, a failure to address workforce issues and the related restructuring of primary care and hospital reforms.

Bridging the federal-state divide

Australian consumers, of course, are only too well aware of the constant bickering between the state and federal governments over who is responsible for the problems in the health care system. Under the Australian Constitution, the federal government can purchase health care for its citizens, but not provide it directly. This they do through a variety of arrangements, such as the Medical Benefits and Pharmaceutical Benefits schemes. The federal government contributes tax dollars to the states to help them with their health care responsibility, namely the running of public hospitals.

The Prime Minister has acknowledged that, if policy makers were to start from scratch to design a new Australian health care system, they would not do it this way again. The federal Health Minister, Tony Abbott, has described the current arrangements as a “dog’s breakfast of a system”.

No individual reform is more important than developing a mechanism by which the country can have a single source of funding for the planning and implementation of the health care system needed by contemporary Australia. Fundamentally, such reforms are crucial and will require considerable political leadership to achieve them. They must involve the pooling of all federal and state funds for redistribution by one planning authority that acts in a patient-focused manner to ensure that health care is targeted, integrated, fair, and cost-effective.

The pooling mechanisms could be played out in a number of scenarios but only one seems viable.

This scenario would see pooled funds made available to a third party: for example, an Australian Health Care Corporation that would be owned by Australians, but not by either state or federal governments. The Corporation would have a board with very heavy consumer involvement and report to a governing body of state and federal political leaders.


This model has many attractions, including the abolition of current inefficiencies associated with health care provision across state borders. In reality, current political tensions make it necessary for those who advocate such a model to accept that Australia must immediately embark on a journey toward a single source of funding, starting with individual states and the Commonwealth agreeing to pool funds used for programs for which they share responsibilities. Such trials could be regarded as experiments, with lessons learnt continuously improving the model and perhaps attracting other states to embrace a similar approach. Australians must not let this essential reform remain in the political “too hard basket”.

Addressing workforce shortages

The nation has a major shortfall in the number of skilled health professionals needed to prevent illness and deliver health care to Australia’s communities. So often now, governments find themselves in the media spotlight, as headlines detail the lack of beds available in public hospitals. Governments typically react by providing additional monies to correct the situation, only to find there are no nurses available to open hospital beds. The average nurse in Australia is 47-years-old. Remunerations and conditions must be made attractive to those who are drawn to this vocation, and Australia needs at least 1,800 more places for nurses in the country’s universities.

There are insufficient numbers of doctors due to the increasingly casual nature of the medical workforce; misdistribution of the workforce; and increasing reports of professional dissatisfaction, which might deter young people from a medical career. Allied health professionals are also in short supply and this is particularly true in the public sector because remuneration for such professionals is now very much more attractive in the private sector.

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About the Author

Professor John Dwyer is Founder of the Australian Healthcare Reform Alliance and Emeritus Professor of Medicine at the University of NSW. He is co-founder of the "Friends of Science in Medicine".

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All articles by John Dwyer

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

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