Speech to the National Health Summit

I will be speaking today about some specific health issues, namely the future of Medicare, public hospitals, private health insurance and managed care, and the future of general practice in a rapidly changing landscape.

But before I do that, I'd like to make a few points about some recent developments in the health care debate.

You will be aware that the AMA this year has been strongly advocating the full implementation of the so-called "RVS".

The Relative Value Study has been an exhaustive seven-year study started under the Labor Government and continued under the present Coalition Government.

It is the first comprehensive review of the Medicare Benefits Schedule of fees since its inception nearly thirty years ago.

The AMA has been saying for some time now that the Medicare benefits schedule is grossly outdated. Because the entire system of health funding, both private and public in this country is based on the numbers in the schedule, then you can see how important it is to get it right.

The RVS is about long term solutions, not short term fixes.

The AMA sees implementing the RVS as fundamental to the survival of the Australian health care system for at least the next 20 years or so.

The RVS should be about unity between all doctors, all patients, all governments.

You would have thought that all involved - from the Ministers to the Associations, the Colleges, the specialists, the GPs, the students, the researchers - and the patients - would want to see some certainty and some security in the system that underpins them all.

Doctors, like any workers, want adequate remuneration for their efforts. In fact 'adequate' is just not good enough.

For a GP or other specialist to reach the stage in their career where they can practice independently, it takes six to eight years of university study, at least two years basic hospital training, and then four or five years of advanced training.

Throughout their postgraduate training, the hours are long, the work emotionally and physically tough and the responsibility for human life immense.

Doctors want to be able to continue to afford to serve their communities.

After six years and $10 million, you would have thought that the RVS would earn universal support from the profession.

While the vast majority of the profession has indicated support, at least in-principle, for the RVS, the frustration at the apparent lack of government initiative to implement it is leading to a number of groups thinking they can "go it alone" for their craft group or interest group.

This cannot and will not work because the RVS is not a pile of small modules that can be picked off to suit a particular funding agenda.

It must be seen as a whole because it is, as its name suggests, a study of RELATIVE value of providing medical services.

Deep down, the profession knows that, and there is that support, but it is in danger of being eroded by a lack of political goodwill.

Instead of getting behind a plan to give Australia a world's best practice health system well into the future, the Health Minister, Dr Wooldridge, seems to be choosing instead to create divisions in the profession, particularly among the GP groups.

There is a very clear distinction between the way the Minister handles the groups which rely on government funding and have been prepared to be involved in the BIG fundholding exercise called the MoU, and the GP representative group which is not reliant on Government funding…the AMA.

There seems to be a concerted effort to fragment support among the GP groups to justify dumping the RVS in favour of some other plan which no doubt will involve a series of flaming hoops which GPs will be expected to jump through in the name of the government's definition of "quality".

The AMA does not rely on Government funding.

The AMA will continue to advocate what is best for our members and their patients.

The AMA will push for what is best for GPs and their practices - and that is implementation of the RVS.

Any Minister would be foolish to take counsel from those who are not prepared or able to tell it how it is warts and all.

Doctors and their patients are the best source of information on what is best for the health system now and in the long term, and that is who the AMA is listening to and responding to with our RVS campaign.

Australian doctors - especially GPs - and their patients need advocacy, not sycophancy.

R - V - S spells Medicare. The Australian public - Australian voters - support Medicare. It is a simple message that the Minister needs to take on board.

And that is only one area of concern to the AMA. There are many more.

Public Hospitals

Take public hospitals, for instance.

If you wanted to design a sillier, less efficient, less accountable public hospital financing system, you would be flat out coming up with something sillier than the one we have got now.

It represents an accretion of blunders, compromises and deals, some more egregious than others, over many years of Australian political life.

It is politically, according to the Prime Minister, one of the most difficult public policy issues he has confronted.

We don't really have a national policy on public hospitals in Australia. There is no national set of standards for our public hospitals.

Each state funds its hospitals differently. Each state funds its hospitals at different levels. They are organised differently. They count things differently. They report differently, they give access differently, and they cost shift and blame shift differently.

They have different beds per population ratios, different waiting times and numbers, and different admissions per population.

Money passes from the Federal government to the States through what are called tied grants, but the ties are non-existent.

The States would say that the only good tied grant is the one with no ties.

The States are only required to spend a minimum amount on the public hospitals equal to the level of the Federal grant. Since this is 50% of what is spent, it is not a tie at all.

The public would not describe this as a good grant. The medical profession would have to agree.

The Senate Community Affairs References Committee looked at this issue. It recommended that governments tackle these difficult issues and come to some resolution.

Several of their recommendations suggest that the Australian healthcare agreements should be broadened out to cover other health programs and that representatives of health professionals, for example, should be included in the discussions. How sensible.

It also recommended that an extra $450 million a year be injected into the public hospital system to offset the serious underfunding which they observed - half the cost to be borne by the States and half by the Commonwealth.

The ALP's joint account approach and the commitment by their leaders to at least tackle the issue is a good start.

We need national standards against which the performance of the public hospital system can be judged.

We need better ways to integrate the private hospital system into the overall health picture.

Unfortunately there is no measure for morale, and morale in our public hospitals is at a low ebb. There is now a brain drain from the public to the private sector.

Why is this happening? Where once it was considered high prestige for a senior physician or surgeon to hold a public hospital appointment, it is now starting to be seen as a pain in the neck.

Struggling with inadequate budgets. Trying to manage with too few staff. Equipment that desperately needs updating. Mounting medical indemnity costs that the Medicare Schedule fails to keep account of.

All these things add up to a decision for doctors at the peak of their careers to consider giving the public system a miss and concentrating their efforts in the private sector.

This is a potential tragedy for the public hospital system, for research and for education.

The AMA will be lobbying all the political parties to ensure public hospitals are at the top of the list of their policy announcements for the next federal election.

That is well on the way with health near the top of concerns in just about any voter survey you care to name.

We remain hopeful, too, of some positive outcomes from the May Budget. The Senate is aware of and concerned about the public hospital crisis, but we are yet to see a response from Government.

The "too-hard basket" is not the place to file this problem.

I'd like to talk now about some other emerging and disturbing issues.

Medical indemnity

Most doctors are suffering under the weight of medical indemnity insurance premiums.

This is not a problem - this is a crisis, particularly for specialists such as obstetricians and neurosurgeons.

Very few, if any, rural doctors - specialist obstetricians and gynaecologists or GP/obstetricians - can afford the premium required if they are to continue to deliver babies.

We are not escaping from cases of genuine malpractice. These cases will continue to be pursued, and rightly so.

The blowout in premiums is being driven by relatively few but an increasing number of very high cost awards - some over $10 million - which the system just cannot afford.

However, often plaintiffs get nothing or very little, and legal costs absorb over half most awards.

Only one-third of doctor indemnity premiums go to compensation awards to patients injured by negligence. The rest goes to lawyers and administration.

The system is slow, costly, unpredictable and frequently unfair to the patient, the doctor, or both.

Because of this situation, some areas of Australia are seeing not just services disappear, but doctors too.

I am pleased that after almost a decade of AMA work and lobbying, the NSW Government recently made some moves in the right direction in tort law reform.

The AMA is hopeful that other states will follow suit and that the NSW initiatives lead to further reform.

At a Federal level, we are pushing for a system of structured settlements for indemnity cases to allow periodic payments to replace lump sum awards.

This involves relatively easy change to the taxation system and I am pleased to report that our leadership in this area is gaining support.

Managed care

The concept of managed care is of great concern to the AMA.

In the prestigious New England Journal of Medicine in an article by John K Iglehart on 3 September 1993, he describes managed care as:

"…a system that integrates the financing and delivery of appropriate medical care by means of the following features: contracts with selected physicians and hospitals that furnish a comprehensive set of health care services to enrolled members, usually for a predetermined monthly premium; utilisation and quality controls that contracting providers agree to accept; financial incentives for patients to use the providers associated with the plan; and the assumption of some financial risk by doctors…"

Not quite the personal touch. No good bedside manner in that lot.

Sadly, the recent behaviour of the Australian private health funds resembles the features of this definition.

Protections against US managed care in Australia - such as a universal and accessible Medicare - are being worn down.

The MBS is increasingly capped and more and more restrictions, hurdles and bureaucratic obstacles are put in the way of patients receiving the care they need.

In the US, six giant health insurance companies now dominate the health insurance marketplace. If a doctor doesn't have a contract with one of these companies, he or she is out of business.

These organisations could not even be described as health insurance companies. They dictate the level of care a patient can receive based on cost.

Doctors and patients are in a take it or leave it situation. The company's imperative is to cut costs and boost profits. The doctor's is to deliver high quality care. It is an inevitable collision course.

Restrictions on care are not transparent to the patient and the doctor is in breach of the plan requirements if he or she advises the patient of these restrictions.

All the talk in the US is about a patient Bill of Rights to counteract this.

Surely it is not necessary for us in Australia to go down that path before we realise it is too late to turn back.

The fundamental transaction in the health system is the relationship between the doctor and the patient.

The more we interpose payers, Governments, bureaucrats, red tape and restrictions on the relationship, the more we diminish it with inevitable consequences.

The AMA believes in the fundamental doctor-patient relationship. It is worth fighting for. We have and will continue to fight to defend it.

The future for general practice in Australia

And what of the future for general practice? What does the future hold for the GP - the face of medicine for many Australians?

Well, we know that managed care is not the way forward.

So, rather than set a blueprint for the life of a GP in the future - because implementation of the RVS findings would resolve most GP insecurities - I'll highlight a couple of the major threats to GPs' peace of mind.

Like many things in the Australian community, the provision of medical services is fast becoming a market-driven commodity. This, to the AMA, is not always a good thing.

At the same time, some of our political and industry leaders are looking at borrowing and adopting some of the worst ideas from overseas in our health care system. This trend, to the AMA, is definitely a bad thing.

A prime example is fundholding and how it impinges on primary health care.

The unique clinical skills of GPs in providing holistic/medical care, and the pivotal role of general practice in the management of integrated and continuous care, must continue to be the foundation stone of our health system.

The AMA warns against primary health care being the vehicle for the introduction of budget holding or capitation, where a fixed budget is administered by a doctor.

Integrated care is defined as the coordination of services across different providers. Seamless integration of services is the key to successful primary health care.

Many of the models for integrated care originate from managed care models in the USA where the motivation was to contain health costs.

In Australia, the primary goal for integrated care must be facilitation of closer cooperation and coordination in the delivery of health services across different sectors, agencies and providers in order to optimise care for individual patients.

The AMA would not support models of integrated care that transferred the political and fiscal risk to providers.

The AMA believes there is too much potential for 'moral' hazard, where regional governing or purchasing authorities could be coerced by local political pressures to pursue their own sectional interests at the expense of the whole community.

Too often this results in budgets that are poorly matched to needs. Choices for patients then become even further limited.

And governments can dodge ultimate responsibility for inadequate funding. Which provides the perfect link to another escalating development - corporatisation of medical practices.

Corporatisation

The pace of corporatisation is now extremely rapid.

The uptake of corporate offers is increasing so that currently between 5 and 11 per cent of all GPs in Australia - depending on your sources - now work for a corporate. This number will grow, and grow quickly.

It is, therefore, of little value to enter into debate as to whether we support corporatisation or not. The fact is an environment conducive to corporatisation exists:

GP morale is at an all time low

The value of goodwill has virtually disappeared from well-established practices

Medical indemnity costs have gone through the roof

There are greater risks of litigation

And the GST has been the final straw for many GPs.

So, general practice corporatisation is here to stay - and it will change the face of general practice into the future.

This is not to say, however, that we simply sit back and watch the process of GP corporatisation proceed without comment or intervention.

The AMA and the profession do have numerous concerns about the manner in which some corporate practices operate.

These concerns are related to features not previously associated with traditional general practice corporatisation.

These new corporates are listed companies with access to capital markets - markets that favour vertically integrated models. A feature of these new models is the increasing integration of specialists in corporate centres and cross ownership of diagnostic imaging business.

As a consequence there exists a potential to harness and direct the significant market referring power of general practitioners.

The success of corporate recruitment of GPs also arises from the increasing dissatisfaction of GPs with their work, and particularly with the time and effort needed to manage their practices.

Recent surveys have shown that around one-third of GPs would leave and do something else if they could.

A key factor is the very parlous state of general practice remuneration, but it's much more than that. The demands and expectations being placed on GPs by both the community and government are great.

GPs are working harder for less. They are trapped by bulk billing. A deficient schedule sees them with a consultation fee of $22.95. Other professions and trades would consider that fee an insult.

For GPs, the income simply cannot keep pace with the expenses of running a practice.

The community demands greater accessibility to quality health care through such things as longer hours, modern equipment and a higher standard of premises.

The Federal government continues to impose more and more bureaucratic processes and red tape on general practice that are increasingly complex and costly.

The community wants to keep traditional GP practices. Slowing the pace of corporatisation would allow the medical profession to strike a balance between the old and the new.

GP remuneration can be fixed, in the most part, by adopting the RVS. Appropriate rebates for after hours, and a sensible balance between fee for service and blended payments would, we believe, have an impact on the pace of take up of corporate offers.

Who can blame a poor GP, struggling to keep his or her practice's head above water, for considering a corporate offer?

Why should they have to forego a personal and family life to meet the demands of 24-hour cover, trying to deal with government bureaucracy and pedalling faster and faster to maintain their incomes in the face of Governments eroding real rebates.

But we have to give them an alternative. We have to fix the system.

In the absence of appropriate or consistent regulation on "medical" corporates, however, there are costs associated with GP corporatisation.

One of the costs can, in some corporates, be compromise of professional independence.

This has been reflected in incidents where undue pressure has been placed on doctors in terms of the way they practice and refer.

There are reports of "unethical" inducements being offered to corporate GPs to alter referral habits.

And there is anecdotal evidence of the establishment of "improper" relationships under contracts between the corporate body and the general practitioner.

There is also the real danger that the power of corporations could potentially influence and alter government health policy.

Given the priorities of the corporates are with their shareholders, this may involve policy decisions that are not related to the public interest or the best interests of the medical profession.

Let me be clear - corporatisation itself is not bad.

There is no doubt corporatisation will be a significant feature of general practice in the future.

While some State governments have or are attempting to bring in some level of regulation to protect professional independence, it is not enough

At the Federal level, there is little action.

I think it would be wise for the Government - and the Opposition for that matter - to come up with policies that address this issue.

Voters have spoken out about the loss of personal local services like banks and Telstra.

They won't like to see the loss of their doctors - the doctors that looked after Mum and Dad and the kids - the doctor just down the road.

Economic rationalisation of general practice is not good policy.

Last year the AMA produced a paper on GP corporatisation to inform the debate.

We are currently developing the means to ensure that GPs considering corporate offers make their decisions in an informed way.

The AMA is also developing a charter for GP corporations and proposes to enter into discussions with the key GP corporates and other relevant market entities, including investment fund managers, in the near future.

Any corporate model that is structured or which operates in a manner inconsistent with the standards, quality, ethics and professional independence of general practice will not have the support of the AMA.

Competition policy

Talking about corporates gives me a chance to talk very briefly about one of my favourite topics - the ACCC and the Trade Practices Act.

Given the ACCC's attitude to the medical profession - especially rural doctors - the AMA is of the opinion that the competition watchdog needs a vet. It has distemper.

Professor Fels has accused the AMA of running a scare campaign of misinformation to rural doctors.

The only people scared are the doctors who have to become trade practices experts if they are to work cooperatively with colleagues on rosters, work sharing, negotiating with hospitals or determining which patients to bulk-bill.

The ACCC does not understand how medical practice works. Even a draft report for comment they circulated recently is full of potential nightmares.

This report has been added to the AMA's body of evidence to use against the ACCC and its attempts to apply the Trade Practices Act unfairly to the work of doctors.

While on the ACCC and corporates, why is that corporate practices can vertically integrate and set their own fees, but a group of doctors working as associates in the same practice are not allowed to discuss their fees, and a group of doctors in a country town can't get together to discuss rosters?

The ACCC is another unnecessary burden on GPs.

New Technology

I was going to spend some time today talking about new technology and how it is of great benefit to GPs, but I would need a whole speech to do this subject justice.

Let me just say here today that the AMA is pushing for national privacy legislation to deal with the privacy issues that come hand-in-hand with new technology.

Conclusion

Health policy in Australia is at the crossroads. The road to health policy is indeed paved with good intentions - but very few have been delivered.

We have entered a new century with a world-weary health system.

The AMA has a plan to revive Medicare. We will spend the rest of this year looking for a Government willing to implement it. Only then will the future of our health system and general practice take a turn for the better.

_____________________________________________________________________________________________

19 March 2001

CONTACT: John Flannery (02) 6270 5477 / (0419) 494 761