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Five years on and health reform remains a moot point

Five years on and health reform remains a moot point. As a matter of fact, what was originally Kevin Rudd’s challenge to State governments to smarten up the administration of public hospitals quickly morphed into a wide-ranging canvass of reform proposals that were eventually settled through a protracted and complex set of intergovernmental agreements on health care. They encompass far more than the funding of public hospitals. General practice, aged care, disability services and governance matters complement the new funding and performance mechanisms for public hospitals. In essence, they reflect the power balance between the Commonwealth, the States and Territories. Taxing powers, above all, skew this balance in the Commonwealth’s favour, but the agreements keep the management of hospitals with the States.

01 Jul 2012

Five years on and health reform remains a moot point. As a matter of fact, what was originally Kevin Rudd’s challenge to State governments to smarten up the administration of public hospitals quickly morphed into a wide-ranging canvass of reform proposals that were eventually settled through a protracted and complex set of intergovernmental agreements on health care.

They encompass far more than the funding of public hospitals. General practice, aged care, disability services and governance matters complement the new funding and performance mechanisms for public hospitals. In essence, they reflect the power balance between the Commonwealth, the States and Territories. Taxing powers, above all, skew this balance in the Commonwealth’s favour, but the agreements keep the management of hospitals with the States.

For some this seems a neat solution, but for others, including the COAG Reform Council, it is far from satisfactory.

Does this outcome come near to addressing Rudd’s challenge? Will this improve the administration of public hospitals? Will those States and Territories with declining revenue bases be able to adequately fund their hospitals and develop a sustainable workforce? Or did the country miss an opportunity to put the health system on better footing?

The COAG Reform Council’s first set of reports throws little light on these questions. The National Healthcare Agreement charges the Council to report on the performance of State and Territory governments in return for their Commonwealth funding. Despite the Council’s qualification that “the full benefits of health reforms for Australians will be reflected in future years”, their report presents a very underwhelming narrative of improvement.

The most glaring finding is that public hospitals are still too short of beds. With an ageing population, the option of hospitalisation is integral to the overall safety net for the elderly. Sub acute beds were earmarked for development, but precious few have emerged. Waiting times have blown out rather than decreased. Emergency department efficiencies still lag well below the targets set in the National Healthcare Agreement. Elective surgery wait times have worsened overall.

In general practice, the reported waiting times to see a GP improved in 2010-11. This is heartening. So too is the Council’s finding that GPs are affordable and accessible. Interestingly, these results indicate that major reforms to general practice are not warranted. Rather, they definitely indicate that a prudent primary care reform agenda would build on what works, not seek to substitute what is demonstrably a good, effective and affordable system.

The policy architecture of the health reforms was based on a shift in demand from hospitals to primary care services, the assumption being that public hospitals could cope with the demand for those services that genuinely belong in a hospital. Patients that go to emergency departments rather than GPs, and elderly patients that should be catered for in the community, need to be accommodated beyond the hospital walls. To that end casemix payments for hospitals and patient redirection through programs run by Medicare Locals are meant to achieve these changes.

But while the design may have merit, unfortunately the fundamental building blocks remain bedevilled by dual governmental responsibilities. The blame game remains alive and well. Even the Commonwealth’s desire to have Lead Clinician Groups involved in hospital management has been widely rejected or paid lip service to in most States.

So the path to substantial reform is hard. Little confidence can be drawn from the fact that despite a new hospital funding agreement being struck, it took little time for Tasmania to claim that they couldn’t meet the demand for services and in fact cut hospital funding to meet broader budgetary pressures. This is exactly the point made by Kevin Rudd when the first set of funding proposals were laid on the table. The Commonwealth needs to contribute more to the hospital funding pool, and the streamlining of funding responsibilities should be brought back on the table.

With the Hospital Pricing Authority and the Health Performance Authority commencing work, the focus of attention may well fall again on the capacity of hospitals and the inadequacy of funding. It will not be enough to dismiss these as either ‘teething problems’ or issues for another time. Despite the amount of funding that has been introduced in the healthcare agreement, the public hospitals are far from ‘fixed’ and Australians will continue to press for reforms that make a difference.


Published: 01 Jul 2012