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14 Mar 2018


The AMA expected negotiations on the 2020 health care agreement would be hard fought but hoped the agreement would include increased Federal funding to redress the funding crisis facing public hospitals. 

Instead, at the recent Council of Australian Governments (COAG) meeting on February 9, the Federal Health Minister tabled a 2020 public hospital funding offer that gives States no additional long-term hospital funding and yet requires them to do more with it.

State Governments that sign up will commit to a formalised obligation from 2020 to provide integrated care – particularly for patients with complex and chronic disease, and undertake initiatives to reduce potentially avoidable admissions.  These activities are a continuation of the trials that four jurisdictions signed up to in late 2017 under Schedule 1 of the existing National Health Reform Agreement.

The financial penalties for safety and quality have been maintained in the 2020 agreement (hospital acquired conditions, sentinel events, avoidable readmissions) but expanded to potentially penalise public hospitals that provide ‘low value care’.

As HFEC has contended before, there is no evidence that funding penalties lead to improved health care safety and quality. The argument that a pre-determined definition of ‘low value treatments’ should be added to the list of public hospital events that incur financial penalties is not a fit for purpose solution to improve public patient outcomes.   

The longer term system-wide reforms in the new agreement are even more ambitious:  a shift to paying for value and outcomes; development of quality indicators; joint planning and funding at a local level; prevention and wellbeing; enhanced health data including a new data set for community care.

HFEC supports the concept of reforms that encourage an efficient health care system that collects and leverages evidence based data to improve treatment efficacy, patient outcomes and health care affordability.  But the analysis must be sophisticated and accommodate the unique morbidities and circumstances of each patient. It must be led by the team of practitioners involved in the patient’s treatment. Patients respond differently to treatments so a procedure that is objectively ‘low value’ for one patient will not necessarily be ‘low value care’ for a different patient. 

The offer in the 2020 funding agreement appears divorced from the current situation our public hospitals are in. The bleak picture portrayed by the data summarised in the 2018 AMA Public Hospital Report Card shows our public hospitals are increasingly required to meet the needs of more and more Australians. Between 2011-12 and 2015-16 the number of separations rose by 3.3 per cent on average each year, more than double the average population growth of 1.6 per cent over the same period.  Pressure on public hospitals will only intensify if insured Australians continue to drop or downgrade their policies due to a perceived lack of ‘value for money’.

Waiting times for public hospital emergency treatment has worsened.  Nationally, one third of the 2.8 million patients who presented to public emergency departments in 2016-17 and needed urgent treatment were not seen within the recommended 30 minutes.  It is concerning the patients least likely to leave emergency within four hours are the sickest.  It is even more concerning these patients remain in emergency because there are insufficient specialist ward beds to transfer them to.  The longer these patients wait in abeyance the more likely they are to incur complications. 

Elective surgery performance in 2016-17 was mixed.  The majority of jurisdictions still failed to treat all urgent elective surgery patients within the 90-day clinically indicated timeframe.  This statistic hides the many more Australians on the ‘hidden elective surgery wait list’ who sometimes wait years for an outpatient specialist appointment prior to going on an official wait list.

The 2020 Agreement only worsens this situation.  It includes an obligation on State Government signatories to ensure access to public hospital services is on the basis of clinical need.  On face value this may appear to address allegations of privately insured patients moving up the elective surgery queue ahead of their public patient counter-parts. But this provision might instead mean all elective surgery patients – insured and public – simply wait longer. 

The Commonwealth Government had an important opportunity in 2018 to offer an increased level of ongoing hospital funding in the 2020 funding agreement.  While some State Governments share the responsibility for under-funding their public hospitals, the Commonwealth offer merely to maintain their existing contribution to 45 per cent of the cost for every additional hospital episode up to 6.5 per cent growth year on year will not drive an increase in public hospital episodes.  Unless State Governments can pay the remaining 55 per cent of each additional public hospital episode, the 2020 Agreement will do nothing to help boost public hospital throughput to clear the backlog of unmet demand. 

Furthermore, it is hard to see how this new agreement does anything to equip State Governments and public hospitals with the resources needed to build the organisational capacity to collect and leverage evidence based data to improve treatment efficacy, patient outcomes and health care affordability. 


Published: 14 Mar 2018