Dr Kerryn Phelps, AMA President to the Clinical Staff Breakfast - The Alfred Hospital, Melbourne

Thank you all for giving your time to be here at this early hour.

I'd like to talk to you today about the changing medical environment. Our profession is facing some of its greatest challenges for some time. Things ain't what they used to be.

Medical indemnity, a decaying Medicare, doctor shortages, low professional morale, and underfunding of our public hospitals are just some of the issues.

It is how we meet and respond to those challenges that will define how we in this room see out our medical careers.

It will also set the course for those who have just started out in medicine and determine life choices for the smart young people who would usually automatically see medicine as the career for them. The choice today is not so clear cut.

More importantly, how we respond to and overcome these challenges will dictate the shape of the Australian health system for this generation and the next.

There is no denying that our profession is under pressure.

And there is no doubt that the existing health system is at breaking point.

It is the job of the AMA, the Colleges, and the other medical groups to continue to take our case to Government.

Strong advocacy is needed.

Today I will talk mainly about medical indemnity, the medical workforce outlook, the industrial situation that prevails in hospitals like yours, and the upcoming Australian Health Care Agreements.

No doubt there are countless other topics you wish to canvass. We will deal with those in the question and answer session following my speech.

Before going into detail about the problems besetting us, I'd like to share with you two health stories I witnessed during a visit to the Northern Territory last week.

First, indigenous health.

Aboriginal and Torres Strait Islander people continue to suffer from the poorest health outcomes in the Australia community.

It's not getting any better.

But not from lack of trying from the doctors and other health professionals who care for the people in the outlying communities of the Territory.

I travelled to a small community called Minyerri, a collection of buildings housing 400 people, an hour's flight east of Katherine in the middle of nowhere. It was around 45 degrees, the dirt was red, and the flies had an appetite.

Minyerri, surprisingly, is on the improve - thanks to some better targetted and funded health and social policies.

They have a baby clinic. The locals tell me that the babies these days have a bit of fat on them. The mothers are receiving good instruction on feeding.

They have a good school with devoted teachers. The principal is a former Geelong footballer and the Cats now have a fan base in a remote part of the Top End.

Like a good full-forward, the principal is kicking lots of goals in Minyerri. Their enrolment has increased from 82 to 146 in the past year. Their attendance rate is around 90 per cent.

We know that improved education can lead to better health through better self care.

In Minyerri, I met a very rare creature indeed - an 82-year-old Aboriginal man. It is a national tragedy that our Indigenous people, especially the men, die so young.

The Minyerri community is working to turn that around.

In a few weeks, the wet season begins. The locals know that the rain will wash the rubbish out from under their houses. The local tip will overflow. Their billabong will be polluted. Germs, sickness and disease will surely follow.

In a meeting with NT Chief Minister, Clare Martin, I raised the concerns of the Minyerri community and their calls for better coordinated delivery of public services.

Better health in these remote communities depends on health and medical services being complemented by education, clean water, sanitation, proper housing and recreation.

Coordination is the key - along with a big increase in funding. We'll watch progress with interest.

Coordination, courage and sheer professionalism were on display at the Royal Darwin Hospital following the Bali bombing last month.

Last week I visited the hospital and had the pleasure of meeting many of the doctors who put together one of the most outstanding medical responses to a disaster in our history.

It was described as a war zone…and it was.

The tales of bravery from patients and doctors alike were inspirational. I could have listened for hours.

These people - the victims, their families, the doctors, the nurses, the cleaners, all the hospital staff - are heroes.

Every aspect of that hospital was put to the test and they passed with flying colours…under the spotlight of the world's media.

Out of the tragedy of the Bali bombing has come a medical team - a hospital team - that has rediscovered teamwork, trust and respect that will endure.

They all know why they chose medicine as a career. I salute them all.

I must turn now to the issues that are chipping away at our profession.

Medical Indemnity

As you know, on 23 October the Prime Minister released the Government's new medical indemnity insurance framework.

The AMA welcomed it with reservations. The Government had travelled quite a way down the tracks to a workable solution but pulled up a few stops short of our required destination.

Let me summarise the key pros and cons of the Government's package and some of its likely consequences, intended and unintended.

The decision to subsidise premiums for some high risk groups is a good move, albeit not a comprehensive one. Some groups missed out.

As requested by the AMA, the Government will assist some high risk groups - obstetricians, neurosurgeons and procedural GPs.

It has been clearly demonstrated that these groups face unaffordable premiums and are being forced to withdraw services.

The financial commitment by the Federal Government will put pressure on the Commonwealth to implement long term reforms.

However, some other relatively high risk groups may consider that they should also receive the subsidy.

There is also a fear that the subsidy may reduce pressure on the state governments to fast track tort law reform.

We welcome the high claim subsidy for all incidents notified after 1 January 2003.

This will reduce the reinsurance cost of the MDOs and should put downward pressure on premiums.

Importantly, it will reduce the IBNR of UMP and, possibly, other MDOs and hopefully reduce the levy payable by doctors.

Again, the Federal Government's financial commitment obliges them to proceed with long term reforms.

On the downside, this measure may have an inflationary impact on settlements or judgements, and could reduce pressure on the States for tort law reform.

And it only applies to the limit of indemnity insurance cover - which for UMP, for example, is $15 million.

Depending on whether the NSW Government agrees to it, the package also signals the removal of cross subsidisation in NSW.

On the positive side, this would mean that premiums would be more accurately risk rated.

But it would also mean that some premiums for high risk groups may increase substantially.

The package's IBNR Scheme allows the Government to assume full responsibility for all unfunded IBNR claims that occurred under a claims incurred policy up to 30 June 2002.

This will provide guaranteed tail cover for possibly 30,000 or more doctors - over half the medical workforce.

Without the Scheme, UMP would have gone into liquidation, leaving thousands of doctors without tail cover or ongoing medical indemnity insurance.

The sting is that the levy will add significantly to medical indemnity costs for some doctors.

Doctors who have retired, scaled down their practice to lower risk and/or moved from UMP to another MDO will be particularly disadvantaged and the AMA is taking this up with the Government.

The Government has tightened APRA Regulation of MDOs.

There is now greater security that the MDO will provide medical indemnity cover during a doctor's working life and through retirement.

Insurance contracts are more secure than discretionary cover.

The opportunity for outside insurers to enter the market, "cherry pick" and leave is reduced considerably.

Fortunately, we now have a greatly reduced likelihood of unexpected "calls" on members.

Most, if not all, MDOs will remain in the ownership of the medical profession, and reinsurance will be easier to obtain.

Depending on whichever way you look at it, it could be a bonus or a detriment that the MDO board of directors must now have a majority of non-doctors.

Doctors will have to live with higher premiums until sufficient capital can be accumulated.

Insurance contracts have an upper limit - UMP's is $15 million - and doctors will be liable for settlements/judgements over this amount.

It is still unclear how cover will be provided for DDR - the estate of doctors who have died, disabled or retired doctors - and how doctors can transfer tail cover if they change MDOs.

Some of the smallest MDOs that have been providing relatively low cost cover may have to either amalgamate with a larger MDO, substantially increase their premiums, or go into runoff.

However, a mid sized MDO such as MDA(SA) with just under 5,000 members has advised the AMA that, quote, "MDA(SA) is well equipped to deal with issues developing in medical indemnity and to deal with the transition to an insurance product within the required timeframe".

The AMA is continuing to negotiate on these issues.

We have been calling long and loud for a Scheme for the Long Term Care and Rehabilitation of Severely Injured Patients.

This is not effectively addressed in the Government's package, so we will continue to push that agenda.

We welcome the news that the Government guarantees that it will cover any claims made against UMP members in 2003.

This enables UMP to obtain reinsurance and should provide sufficient breathing space for the company to be able to trade viably in the future.

Better still, it is unlikely to cost anything…directly.

The Government will, of course, pass any costs on to doctors - and ultimately to patients - by way of a levy.

In the vital area of tort law reform, the Federal Government must keep the heat on the States and Territories. Otherwise the whole reform package will fall flat.

They must not allow the States to see the Commonwealth package as a way to escape their reform responsibilities.

In summary, the package provides long term security over the unfunded IBNR, relief for some premiums and high cost claims, and a framework for a much more secure doctor-owned MDO structure.

It does not effectively address the causes of increasing numbers and costs of claims.

It will, in most cases, cost doctors more and some doctors, such as recent retirees from the higher risk groups, will be significantly disadvantaged.

There is also likely to be some restructuring in the MDO sector.

The AMA will lobby hard on the key pressure points for doctors, negotiate the detail of the legislation and proposed levies, and maintain the campaign for long term reform.

Another area where the AMA will be making noise is with the negotiation of the Australian Health Care Agreements (AHCAs).

As a society, we need to develop and implement strategies to improve the continuity of care across programs and to address any cost-shifting measures that impede quality care.

The role of doctors in the health and aged care environments, and specifically the aged care/acute care/health care interface, is integral.

The current situation of ineffective integration leaves patients at a loss in moving through the system and results in unnecessary duplication, and piecemeal health and aged care.

Basically it means thousands of older patients lingering in acute care facilities when more appropriate care should be available.

The current re-negotiation of the Australian Health Care Agreements provides an ideal opportunity whereby all Australian governments can work cooperatively with each other, and with stakeholders, to develop a better framework in which health and aged care services can be funded and delivered to all Australians.

This involves breaking down the established ineffective processes at the political, professional and institutional levels.

For example, the December 2000 report on public hospital funding by the Senate Community Affairs References Committee, Healing Our Hospitals, put forward a number of new options for reform of the current funding arrangements of public hospitals.

These options should be borne in mind as the finalisation of the Australian Health Care Agreements proceeds.

The AMA welcomes the direction of the health policy reform agenda endorsed by the September 2002 meeting of the Australian Health Ministers' Conference (AHMC).

In fact, they have declared they want to put better health outcomes ahead of funding feuds.

The communique arising from that meeting announced agreement to negotiate a health policy reform agenda as part of the process of negotiating new Australian Health Care Agreements from 1 July 2003.

In particular, they want to tackle the issues of:

Improving the interface between hospitals and primary and aged care services

Achieving continuity between primary, community, acute, sub-acute, transition and aged care, while promoting consumer choice and improved responsiveness. Initial priorities for a stronger continuum of care approach will be cancer care and mental health services, and

Establishing a single national system for pharmaceuticals.

The Australian Health Ministers' Advisory Council has been asked to prepare an implementation strategy for the next Ministerial conference to be held in Brisbane on 29 November.

I have written to all Commonwealth and State Health Ministers, offering the services of the AMA, as the peak national body representing the medical profession in Australia, to provide whatever assistance we can to advance this important process.

The AMA has already met with advisers to the Federal Health Minister, the Shadow Health Minister, and with Commonwealth and State to put some flesh to this offer.

And the AMA is submitting some proposals for consideration, including:

A National Demonstration Project for Public Hospital Emergency Departments.

There is a high level of demand, some of it inappropriate, for public hospital emergency departments.

This may be related to shortages of GPs in some parts of Australia. Workforce shortage is another issue crying out for examination.

We don't know with sufficient clarity what are the causes of the crisis in Emergency departments, so we need first to take a good look at it. Then we need to run some big trials aimed at improving the situation quickly.

The AMA suggests that, at their November meeting, the Health Ministers agree to research the issue of blockages in Emergency Departments and establish a number of Demonstration Projects to trial and 'model' solutions.

We will cooperate with governments and other stakeholders to develop an implementation strategy for such trials.

This can help us develop a plan to tackle the approaching crisis in emergency departments of public hospitals with an appropriate timetable, before it becomes a national crisis.

Governments should also be required under the next agreements to report planned expenditure and to acquit that expenditure.

Data should be readily available to make national and international comparisons on issues of access, quality, equity and efficiency of the public hospital system, and embrace waiting times, access, quality, and availability of services and health professionals.

The benchmark standards should be taken into account when governments determine health funding allocations.

A commitment to such a report card should form part of the terms of the Agreements and be reported by a relatively independent body, such as the Australian Institute of Health and Welfare.

There is also the opportunity to support the development of the systems and infrastructure necessary to achieve a continuum of care for older Australians between aged care (including residential, respite, and community-based care), health care (including acute, preventative, and primary care), and rehabilitative care (including 'step-down' or transitional and convalescent care).

The AMA supports a model of "transitional" or "sub-acute" or "interim" or "convalescent" care that lies between current hospital and residential care provision.

The current innovative pool trial is a positive step in this direction, and should be expanded.

The AMA has prepared a discussion paper, GP Services in Residential Aged Care Facilities, which canvasses the option of appointing GP Facility Advisers for residential aged care facilities.

This would be one way of tackling the issue of disincentives confronting doctors in providing medical services in residential aged care facilities.

We support this in principle, and urge broad consultation on the pilot programs currently underway, with a view to identifying any problems and enabling the introduction of an effective program.

You never know, but the current political make-up of our Federal and State Governments may provide a potent recipe for action, especially on the public hospital front.

We will have a better idea after the Health Ministers meeting later this month.

I'd like to turn now to industrial matters that directly affect the workings of The Alfred by reporting on the AMA Victoria's 2002 Remuneration Review Campaign.

I am told that, initially, little progress was made after four months of negotiations.

The Government did not seem to be hearing doctors' concerns, instead pushing its own agenda of tradeoffs in work practices, such as:

 Spreading annualised salaries for junior doctors

 Creating widespread part-time employment of senior specialists rather than as Visiting Medical Officers

 Making working five days per week the norm for all full time specialists, and

 Needing the written permission of the hospital before doctors could work at another hospital.

Negotiations broke down in September but the AMA Victoria organised a rally to get things moving again.

I had the good fortune to attend the rally and stopwork meeting on 20 September.

What a show of strength that was.

Around 150 doctors were expected to attend, and the optimistic attendance estimates were put at around 200 if lucky.

But more than 300 doctors came out to send the Government a message, and all the major hospitals were represented.

The media coverage was excellent and I'm sure the public was on side. People want their public hospitals looked after and they want a doctor around when they need one.

The meeting expressed dismay at the negative responses by hospitals and the state government and voted unanimously to support professional action in pursuit of better working conditions.

Medical staff in key hospitals - Ballarat, Goulburn Valley, Geelong, and Box Hill - voted to focus on patient care rather than the red tape foisted on doctors.

The AMA and the Committee of Chairmen of Senior Medical Staff Associations met with the Minister. The Minister was informed that the hold-up in breaking the deadlock lay with the hospitals and the Department.

The high profile action by the doctors forced the government back to the table.

Following two weeks of intense negotiations before the Australian Industrial Relations Commission, a Heads of Agreement was proposed in settlement of the claim.

Critically, the issues identified included:

 Changes to conditions that promote greater focus on training for Doctors In Training (DITs)

 The increase to the safety net pay rate for full time specialists with payments in lieu of private practice changing from 10% to 20%

 A new classification structure which recognises experience and skills and provides a new definition of Executive specialist

 Guaranteed remuneration increases based on current hospital salary of 3% backdated to 1 July 2002 then 6 months later a second 3% from 1 January 2003, followed by 3% from 1 January 2004 and three per cent from 1 January 2005.

The agreement would expire on 31 December 2005.

All changes are in addition to current conditions, and would be retained and protected.

The in-principle agreement was endorsed following a meeting of delegates from each of the major hospitals on October 25th.

With a State election in the offing, things had to happen fast. And they did.

Once an election was announced, it was possible that all the leverage from the meetings and professional action could be lost.

There was no certainty the Bracks Government would be returned to power and no commitment that the negotiating position would stand post-election.

The next government would have years to consider the AMA claim.

But elections do funny things to people - especially Governments seeking re-election.

Suddenly, the final agreement was signed off on the morning of the 4 November - and an election was announced that afternoon.

The agreement is for 3.5 years and matures on 1 January 2006.

Unless an exceptional circumstance exists, the next election will take place from around 1 March 2006 and 28 Feb 2007.

For Victorian doctors, the timings were perfect.

The campaign ended with a package that contains a comprehensive set of changes, which go some way in making work in public hospitals more attractive.

The changes are fully funded by the state.

Approximately 40 out of 53 claims were met in full or in part.

AND all the claims put up by the hospitals and DHS were resoundingly and successfully opposed.

AMA Victoria will provide you with a comprehensive detail on the outcomes in the next edition of Vic Doc, which is currently being distributed.

These gains will be consolidated into certified agreements to ensure that they are not lost.

The profession must be vigilant in these times of shortages to ensure that hospitals and the AMA abide by their commitments.

With this agreement, no longer is it acceptable to say:

 Claiming your rightful due is unprofessional

 Teaching, training and research activities are luxuries

 Or that hospitals cannot afford to pay.

We must ensure that the health care system has a vibrant medical workforce with good morale and working conditions and remuneration.

It is government's responsibility to ensure the right level of funding.

I'd like to personally congratulate the AMA Victoria and its industrial team for outstanding advocacy on behalf of the doctors of Victoria. Well done. Excellent use of an election.

My time is running low so let me briefly touch on some other relevant issues.

The Federal Government and its various agencies are finally coming to the realisation that there is a genuine doctor shortage in Australia.

So much so they are talking of changing their methodology to reflect the findings of the AMA/Access Economics GP Workforce Survey earlier this year.

Our findings were reflected in the latest report on rural doctors from the Australian Bureau of Statistics - they are fewer doctors in regional, rural and remote Australia, those still there are getting older, and there are no incentives to get younger doctors to move to the country and stay there for the medium to long term.

Many areas of Australia are experiencing doctor shortages, and not just GPs…and not just in country areas. The outer suburbs of our big cities are feeling the pinch, too.

And I can tell you from personal experience it's not easy to attract doctors to inner city practices, either.

The workforce remedies are complex and will take time.

But there should be no delay. Training, recruitment and retention of doctors for areas of need must start now. Otherwise we are looking at generational change. You simply can't replace a medical workforce overnight.

Just briefly, that other impediment to quality health care, the ACCC, has been at it again.

The injustice of the prosecution by the ACCC of the Rockhampton obstetricians has been excused by the Wilkinson Report, released on the weekend by the Prime Minister.

Wilkinson acknowledges that the Trade Practices Act causes problems for rural doctors but fails to provide substantive or practical solutions.

The AMA will continue to speak out on the negative effect of the ACCC and the TPA on good medicine and we are hopeful that the Dawson Review will show greater understanding of the problems.

There are too many pressures on doctors to cover in one speech. It is a changing profession…for all the wrong reasons.

Our brighter students who once flocked to medicine are now thinking twice, and who can blame them.

This is not good for the Australian community.

We must stand united as a profession to convince our governments to get it right.

I'm happy to take questions.

Thank you.

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

Judith Tokley (02) 6270 5471 / (0408) 824 306