National health reform: will it work

While more details are needed, overall those in the health sector have welcomed the federal government’s new deal for national health reform. Julian Drape reports.

Prime Minister Julia Gillard unveiled the latest incarnation of Labor’s plan to shake up the health system this week and there’s near universal agreement it is better than Kevin Rudd’s deal.

But will it actually improve patient care?

The short answer is yes, if and when it’s fully implemented.

Nevertheless, the reforms left on the table after almost four years of negotiations are far from the “historic” overhaul Labor initially promised.

The holy grail of the commonwealth one day assuming full funding control of health services - both in and out of hospitals – looks as unattainable as ever.

But key players believe the more modest reforms remaining in play are worthwhile.

A national funding pool should increase transparency so neither the commonwealth nor the states can easily squib on their responsibility to contribute to growing health costs.

A shift to paying hospitals a set amount for each service they provide – much like Medicare currently funds trips to the doctor - will drive efficiency because there’ll be no blank cheques.
And new primary healthcare organisations, called Medicare Locals, have the potential to boost access to GPs after hours and fix so-called “service gaps” mainly in the regions.

But the nation’s peak doctors’ group argues the fact that neither the commonwealth nor the states will assume complete responsibility means there’s a risk we could end up back where we started in a decade’s time.

It’s a bleak prognosis, but the COAG draft agreement, signed by the states and territories on February 13, leaves plenty of scope for ongoing bickering.

A confident Gillard is sure her plan can end the blame-game.

The PM promises her national funding pool, which replaces Rudd’s doomed GST clawback, will be transparent even though funds flow “via state-based accounts”.

The nitty-gritty is yet to be finalised but will rely on complex commonwealth and state legislation along with regular audits and monthly reports.

Health policy expert Robert Wells is, like Gillard, unfazed.

The Australian National University academic believes a proposed national funding body will be able to sort out the inevitable squabbling.

Similarly, a new pricing authority “will know what’s a fair dinkum argument and what’s not” when it comes to setting fair fees for hospital procedures.

The COAG agreement implicitly acknowledges there’ll be argy bargy.

It states the pricing authority “will take into account a small number of loadings to reflect legitimate and unavoidable variations in the costs of service delivery including those driven by hospital location”.

But even if it all goes to plan there’s still the possibility of cost-shifting, because the commonwealth will only pay 45 per cent of total hospital costs by 2030.

By contrast, the federal government pays for almost all care provided in the community. That means there remains a perverse incentive for the commonwealth to encourage hospitalisation.
That’s another factor behind the continued push for a single funder. Then, the only driving force would be to see people treated in the most efficient setting.

Gillard has vowed to roll out more Medicare Locals more quickly. Patients see real potential for improved care in this area.

The Consumers Health Forum of Australia argues the organisations will be more responsive to local needs.

That should result in greater access to dieticians, physiotherapists, podiatrists and counsellors across the country.

“The Gillard deal much better reflects consumers’ needs,” forum chief executive Carol Bennett says.

“I really like the focus on performance and tying funding to performance.
“If we can have health services competing that will drive improvements.”

Wells is also a fan of the fact the prime minister has picked up and run with Rudd’s proposal to boost accountability.

The My Hospitals website still needs a lot of work, he argues, but it will make each hospital accountable on key indicators.

“You’ll know what services your local hospital provides, and you’ll have some idea how they perform in terms of national standards,” he says.

Moreover, hospitals will compare themselves with their peers, generating “a self-improvement model”.

Of course, the whole deal depends on the premiers and chief ministers signing a final agreement in the middle of this year.

Under the deal
* The federal government will pay 50 per cent of the growth in hospital costs.
* This will be done in two stages, increasing to 45 per cent in 2014-15 and to 50 per cent in 2017-18.
* Once this kicks in, the states and the Commonwealth will share future funding growth in a 50/50 partnership.
* The states and territories will receive $16.4 billion in extra hospital funding between 2014-15 and 2019-20 under the new structural funding arrangements and $3.4 billion for extra emergency departments, elective surgery and 1300 sub acute hospital beds in the next four years.
* There will be a single national funding pool.

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