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20 Jun 2016

I am pleased to report that the newly-named AMA Council of Public Hospital Doctors (CPHD) held its first meeting for 2016 in Canberra on Saturday 7 May. Most states and territories were represented, although I note that in future this method of representation may change. 

It was a very productive meeting, with a full agenda and much discussion. State and Territory reports were, as always, interesting and reflective of the enormous activity taking place around the country in the areas of interest to the CPHD. 

I reported on the March Federal Council meeting, which Prime Minister Malcolm Turnbull and Health Minister Sussan Ley both attended. It was a great opportunity for the AMA to bolster its advocacy at the highest levels.

The meeting included discussion of the 2016-17 Budget and the additional $2.9 billion funding for public hospitals recently agreed at COAG. This funding applies from 2017-18 to 2019-20. Separate to this, the Department of Health Budget Fact Sheet for Hospitals includes an additional $1 billion for hospitals over the Budget estimates.  

Under the new agreement, which will operate until June 2020, the Commonwealth will contribute 45 per cent, rather than 50 per cent, of growth funding, and it will be capped at 6.5 per cent of growth. If growth exceeds 6.5 per cent, the Commonwealth will adjust its contribution. Exactly how the growth cap will operate is yet to be determined.

While these figures appear generous, they are nowhere near enough to adequately fund public hospitals. 

The Independent Hospital Pricing Authority (IHPA) will continue to set the National Efficient Price and Cost (NEP and NEC) for use with Activity Based Funding (ABF). The continued use of ABF is clearly preferred to the Commonwealth’s original decision to switch to annual indexation by CPI and population growth. However, ABF and the NEP, as currently implemented, both have shortcomings.

The AMA has advocated that these shortcomings should be addressed, including the need to give appropriate regard to quality, performance and outcomes; a change in focus away from reducing costs to the lowest common denominator; and ensuring NEP methodology does not lock in the historically low costs of an underfunded and underperforming system, and provides for adequate indexation.

A longer-term public hospital funding agreement is expected to be developed to commence from 1 July 2020. This agreement will be developed by the Commonwealth and the states and territories, and will be considered by COAG before September 2018.

Let’s hope a more adequate arrangement is put in place at that time. 

The AMA Public Hospital Report Card released earlier this year showed recent improvements in performance are slipping.

The Government is looking for minor savings from anywhere it can find them to fund primary care of patients with chronic disease to keep them out of hospital. It is probable that this will only delay the inevitable presentation of patients at hospital.

The MBS Review continues, with conditional support from the AMA.  To date, a few items have been highlighted. 

The Private Health Insurance Report Card was launched at the Federal Council meeting in March and created some media traction.

Private health insurance remains an issue of affordability with knock-on effects for public hospitals as patients reduce or dump their cover as unaffordable or useless.

The AMA is highlighting the questionable policies that insurers are offering that are of little apparent value. The insurance industry’s focus on medical fees is misleading - they comprise just 15 per cent of fund payouts, while hospitals account for 70 per cent.

During the Federal election, the AMA will being advocating on a number of issues, including: 

the need for significant new investment in public hospitals, with reinstatement of reductions in National Health Reform Agreement funding as an upper benchmark;

the need for a plan to provides certainty of sufficient funding for at least a decade, including shielding hospital funding from the vagaries of the short-term political cycle; and

essential improvements to ABF and the NEP processes, as consistently identified and advocated by the AMA.

We hope for a reinvigorated CPHD in 2016, with more contact and a greater involvement in broader AMA advocacy. I hope to hear from many of you over the next year to keep issues of interest to the CPHD on our agenda. 


Published: 20 Jun 2016