Category: Health

The worst possible outcome from the current review of Private Health Insurance would be changes that resulted in the best-resourced Primary Care being only available to those who have such insurance.

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Despite promising to keep Medicare Locals, the Abbott government abolished the fledgling organisations after it took office.

19 November 2015 

Hon Sussan Ley M.P.,
Minister for Health,
Parliament House,
ACT 2600

Dear Minister

(I have signed this letter on my behalf and also on behalf of the people listed below. I will be posting this ‘open letter’ on my blog early next week.)

We are pleased to see that you are canvassing community and expert views on private health insurance.

In discussing the community survey, recently on the ABC Breakfast Program, you said “We support the public system for those who can’t afford private health”.

That is a long way from the idea of universal mutual support that has underpinned Medicare and public hospital arrangements. It assumes, incorrectly, that private health insurance, and the associated subsidised access to private hospitals, is something Australians see as desirable if only they could afford it.

As you know, about half of Australians do not hold private health insurance. Many are driven to hold it by the Medicare Levy Surcharge – a coercive instrument that has little to do with choice. You would also be aware that 200 000 taxpayers pay the surcharge, rather than holding private insurance, even though almost all of them would be financially better off taking the cheapest hospital cover.

For many, the main attraction of public hospitals is not that they are “free”, but rather that they offer a high standard of care. Most importantly the funding system for public hospitals, unlike the funding for private hospitals, does not carry an incentive for over-servicing. There is growing community awareness of the risks of over-diagnosis and of over-servicing.

Some others, particularly older wealthy people whose income is below the MLS threshold, do the sums and work out that their best bet is to draw on their savings to finance any needed private hospitalisation, secure in the knowledge that if they need acute care they are served by public hospitals. In doing this they miss out on the subsidies, the benefits of which are go to pay for high administrative costs and the cross-subsidies associated with adverse selection. Thanks in part to superannuation, households with people in the 65-74 age range, have on average $500 000 in financial assets.

It is ironic that, in spite of your Party’s commitment to self-reliance, those who pay for their own private hospitalisation, or who pay their own dental bills, receive no support, while those who hand over responsibility to insurance corporations receive a 30 per cent subsidy or a generous tax incentive in the form of exemption from the MLS.

Then there are those community-minded people who value the idea of sharing their health care expenses with other Australians. They are morally repulsed by the idea of being corralled into the “gated community” of private health insurance. Also some people, aware of the way “charity” systems inevitably degenerate, see it as important that people with means who hold political influence have a stake in using and maintaining a high standard public hospital system.

You, and your fellow health ministers in the states and territories, fund and operate an excellent public hospital system. We hope you take pride in a public service that serves all Australians so well, and do not let it degenerate into a charity system.  A way to prevent such degeneration would be to remove private hospitals’ de facto dependence on private insurance, and to bring them into the same funding arrangements as public hospitals, thus allowing them to provide the same high-standard of integrated care as public hospitals, allowing for remuneration models other than individual fee-for-service, and abolishing any suggestion that Australia has two health care systems – one for the affluent and one for those who are less fortunate.

Yours sincerely,

John Menadue

Kerry Goulston, Emeritus Professor, Medicine, USyd
Ian McAuley, Adjunct Lecturer, Canberra University
Jennifer Doggett, Health Consultant,
Stephen Leeder, Emeritus Professor of Public Health and Community Medicine, USyd.
Karen Willis, Associate Dean, Learning & Teaching, Faculty of Health Sciences, ACU
Arthur Chesterfield-Evans, Medical Practitioner and anti-tobacco activist
Sebastian Rosenberg, Senior Lecturer, Brain and Mind Centre, USYD
Jill White, Professor of Nursing and Midwifery, USYD
John Dwyer, Emeritus Professor of Medicine, UNSW
Fiona Armstrong, Executive Director, Climate and Health Alliance
Tony McBride, President, Australian Health Care Reform Alliance
Tim Woodruff, Vice President, Doctors’ Reform Society

In today’s health care debates around the centrality of primary care, moving towards patient-centred medical homes, improving care coordination for people with chronic illnesses and whether private health insurance provides value for money, there is one element that is almost always missing – the role and the costs of specialist services.

In 2014 over 28 million specialist services were billed to Medicare and 21 million of these were for out-of-hospital services. Only 30% of these services were bulk billed, and the average out-of-pocket cost for the remaining 70% of services was $70.89. However gaps of several hundred dollars are not uncommon.

Specialist fees are the main driver of Medicare out-of-pocket costs and the main reason why people access the various Medicare safety nets (Extended Medicare Safety Net, the Original Medicare Safety Net and the Greatest Permissible Gap measure).

The Government has moved to make changes to the Medicare safety nets in the name of ‘simplification’ and the Health Insurance Amendment (Safety Net) Bill 2015 is currently before the Senate where it has been sent to the Community Affairs Committee for review.

Reforms to the Medicare safety nets are long overdue. There is considerable evidence that the current arrangements are inequitable, do not benefit those with the greatest need, and continue to be inflationary, despite legislative tweeks. This has led to increasing economic pressures on patients from their out-of-pocket costs with consequences for their health outcomes and quality of life. There are also pressures on hospital budgets from preventable admissions that can result when patients skip specialist appointments and fail to comply with treatment regimes because of cost.

As federal parliament considers the new safety net legislation, it is crucial to ensure that this does not have the unintended consequences that were inherent in the Extended Medicare Safety Net (EMSN). One such consequence was that the EMSN actually increased the ability of specialists to charge higher fees, particularly in areas such as obstetrics and assisted-reproductive technology services. In 2009 it was estimated that for every dollar the government spent on the safety net, only 57 cents went towards reducing patients’ costs and the remainder went towards increased doctor fees.

Preventing such problems will require an informed study of the impact of specialist fees and how specialists are likely to respond to efforts to limit reimbursements to patients of fees that are in excess of the Medicare Benefits Schedule (MBS). As it stands there is very little publicly available information in this area. Considerable work was done on a relative value study in the 1990s (regrettably with no outcomes) and the specialist medical colleges presumably have data from their members, but the Department of Health has shown no inclination to analyse their data or to make it available to academic centres for such work.

Medicare data for the June quarter 2015 show the following:

• The average bilk billing rate for specialists (for services in and out of hospital) is 30.2% although this varies dramatically by speciality.
• The average fee observance for out of hospital services is slightly higher at 43.4%.
• The average patient contribution for services that are provided out of hospital and are not bulk billed is $70.89. This varies considerably by state and territory – it is lowest in South Australia ($53.94) and highest in the Northern Territory ($89.38).

Over the past decade there have been some interesting changes in these figures that tell a story of policy and community pressures and influences.

Although the average bulk billing rate for specialist services delivered out of hospital has barely changed, the average out-of-pocket cost has more than doubled (from $32.66 to $70.89). For individual specialties there have been some dramatic changes. For example, the bulk billing rate for obstetrics, currently 51.5%, was only 21.8% in the June quarter of 2005. We can assume that the increase in bulk billing is due to the increases in Medicare reimbursements that were made as part of an effort to tackling the inappropriate use of the ESMN. But the bad news is that those obstetricians who don’t bulk bill have continued to increase their fees and the patient’s average contribution has risen from $51.75 in 2005 to $247.79 today. Moreover, my previous work on Medicare obstetric costs highlights that when loophole is closed, obstetricians look to shift their costs around between capped and uncapped and outpatient and inpatient billing items.

Specialists who work in radiotherapy and nuclear medicine have also changed their billing behaviours over the past decade. While bulk billing rates have increased impressively from 13.3% in 2005 to 68.5 % in June 2015, presumably in response to government agreements and legislation, average out-of-pocket costs for patients who are not bulk billed have more than doubled, from $16.33 to $38.74.

It’s important to think what the growing costs to see a specialist mean for patients such as older Australian with multiple chronic illnesses. A recent study shows 27% of older Australian reported having at least three chronic diseases, with high blood pressure, arthritis and cancer as the most prevalent diseases. Such patients may have a very competent bulk-billing GP coordinating their care, but in addition to the cost of specialist consultations there will be costs for diagnostic tests and monitoring, prescription medicines, over-the-counter medicines, and supplies for conditions such as diabetes, colostomies and incontinence.

National Seniors Australia found that older Australians with five or more chronic conditions spend $3528 per year on out-of-pocket health care costs. Small wonder then that approximately 10% of adults referred to a specialist delay or do not keep their appointment because of cost. This proportion rises to over 12% in the most socioeconomically disadvantaged fifth of the population. The current freeze on Medicare rebates to doctors will only aggravate the growth in gap fees. The gap between what Medicare pays and the AMA-recommended fee for MBS item 104 (initial referral to a specialist) is now $97.72; the new safety net will ignore $40 of this.

There are no Medicare incentives to encourage specialists to bulk bill. Because poorer Australians can’t afford to pay the gap fees to reach the safety net thresholds, less than 4% of EMSN benefits go to the most socioeconomically disadvantaged 20% of the population while over 50% of benefits go to the most advantaged 20% of Australians. This exemplifies the inverse care law – and poor public policy – as it is the poor who are most likely to suffer ill health, who have the lowest discretionary income, and who are most in need of protection from out-of-pocket costs.

The government’s “simplification” of safety net arrangements, eliminates the confusion of multiple Medicare safety nets and caps on reimbursement for selected items and ostensibly will make it easier for people to qualify for support if they have high out-of-pocket expenses. But this comes at a cost for patients – the new safety net actually provides patients with less financial protection against high out-of-pocket costs – and a saving for government.

It is estimated that new threshold levels will mean an additional 60,000 people will qualify each year for the Medicare safety net. The big question is whether the reforms will lead to a change in the type of people who qualify for safety net benefits and that is not easily answered. In testimony to the Senate Community Affairs Committee, Dr Kees Van Gool indicated that the answer depends on how many concession card families experience annual costs between $400 and $638 how many general families have out-of-pocket costs between $1,000 and $2,000 because these are the people who stand to benefit under the new arrangements. However he noted that concession card status is a poor proxy for household income. Capping the amount of out-of-pocket costs that contribute to the safety net threshold will have further implications for how many and what type of families qualify for the new benefits.

This reform may invoke a number of behavioural changes by both doctors and patients seeking to derive maximum benefits from the safety net. There are clearly greater incentives for patients to seek out doctors who charge less than 150% of the MBS fee and this, in turn, may invoke price competition amongst doctors. Doctors may act to redistribute their fees across an episode of are, as obstetricians have done, or increase the volume of services they offer. The Minister for Health has indicated that she wants to prevent the inappropriate provision of complicated medical services outside of hospitals, although it is not clear how the safety net legislation will address this.

In an era of budget restraint, what can be done to address the impact of rising specialists’ fees on the federal and individuals’ budgets in ways that do not undermine the business needs of the medical profession? In a paper written earlier this year, Jennifer Doggett and I proposed greater transparency around specialists’ outpatient fees and the out-of-pocket costs to the patient. This approach was also put forward by Dr van Gool in his testimony to the Senate Community Affairs Committee.

Anecdotal evidence indicates a wide range of fees charged, with some specialists charging dramatically more than the Australian Medical Association recommended fee (which is itself higher than the MBS reimbursement). However there is no evidence that specialists charging the highest fees deliver the best outcomes and patients and referring GPs might make different choices about specialist care if they knew the costs involved. At the very least the major outliers should be named and shamed. It is also important that consumers are provided with comprehensive information about their health care choices and are made aware of options, such as public outpatient clinics, where they can receive specialist services at no (or lower) cost.

There has been some support for this approach from the medical profession, perhaps driven to action by the fact that a few greedy colleagues are making life difficult for those doctors who bulk bill or have only a small gap fee. In July 2014, the Royal Australasian College of Surgeons spoke out against excessive fees, saying that the College “is highly concerned at the amount of reported out-of-pocket costs being incurred by patients in the health-care sector“ and further stating that the College “believes that extortionate fees, where they are manifestly excessive and bear little if any relationship to utilisation of skills, time or resources, are exploitative and unethical. As such, they are in breach of the College’s Code of Conduct and will be dealt with by the College”.

An information sheet on the College website strongly supports full disclosure and transparency of fees as early as possible in the patient-doctor relationship, advocates that patients understand all available treatment options, and encourages concerned patients to seek second opinions on recommended treatments and the fees to be charged.

Just recently, the Urological Society of Australia and New Zealand has been prompted by a study showing that out-of-pocket costs for prostate cancer can be in excess of $30,000 (this includes not just specialists fees but private hospital services, medicines and other costs) to talk to its members about the perils of extortionist fees and of not telling men about public health options for treatment.

Most importantly, the issue of out-of-pocket costs for patients and the impact these have on health outcomes and costs elsewhere in the health care system and the federal budget needs to be addressed across a range of issues currently under consideration – not just Medicare safety nets, but the Medicare Benefits Schedule review, the mental health and primary care reforms, and welfare supports. Many people will predictably always have trouble meeting their health care costs, and the solutions will not always lie within the purview of the Health portfolio.

There are branches within the Department of Health that deal with the medical profession, the pharmaceutical industry, and private health insurers; it’s time for a branch with specific responsibilities for consumers’ and patients’ needs. It’s an important part of the effective, efficient and equitable delivery of health care services.

Dr Lesley Russell is an Adjunct Associate Professor at the Menzies Centre for Health Policy, University of Sydney.

Medibank Pte has been in dispute with the Calvary Hospital Group and now with UnitingCare over performance in their hospitals.

At last our largest private health insurance company, MBP has come to understand that the private providers, hospitals and doctors, are really in control. These private providers determine the quality of care and its cost. The PHI companies like MBP are really powerless to control both the quality and cost of healthcare. They need to lift their game .But they are in a bind.

The problem that the MBP faces is precisely the same problem as the US healthcare system faces. In the US hundreds of competing private health insurers do not have the power to control quality and price setting by providers. If a private insurance company is too tough the provider will take the business to a competitor. The worldwide lesson is that only a single insurer can have a real effect on costs and promote quality.

The CEO of MBP has got into trouble by confronting the powerful providers, in this case Calvary and UnitingCare. He has resigned!  In his exit comments, the CEO of MBP, George Savvides said he was seeking to ‘reposition MBP from being a payer of bills, to a player in the health system’. He could not be more precise and correct. The private health insurance companies meekly accept the prices set by providers, both hospitals and doctors. I read Savvides’ comments to mean that the providers rebuffed him in his attempts to improve the quality and contain the cost of care. And his board did not support him. The providers have won again.

Apparently Savvides was insisting on two things. The first was that MBP would refuse to pay when any of a list of 165 ‘highly preventable adverse events’ occurred, including preventable falls in hospital and presumably hospital-caused infections. Secondly he proposed that MBP would refuse to pay hospitals for unplanned patient readmissions that occur within 28 days of a procedure, compared with seven days previously.

Good luck to PHI companies like MBP who refuse to be passive payers of bills and want to have a say in the cost and quality of care by private providers particularly in private hospitals.

‘Adverse events’ are a major cost in all health systems – mistakes, injury, infections and even death. Many are avoidable and many are not. Avoidable adverse events probably cost well over $ 5b p.a. in the Australian health sector. Good clinicians are caught up in a bad system. See link to my previous post ‘The personal, public and social costs of mistakes in health’.

Other PHI companies like BUPA must similarly be concerned about the difficulty in controlling provider costs. That is the reason why PHI premiums rise significantly each year. Since John Howard introduced the rebate on PHI in 1999 the cost of PHI premiums has increased 150%.Overall prices have increased by less than 50%.Not surprisingly a reader panel in the Sydney Morning Herald has found that 64% of people don’t believe that PHI provides value for money. The Minister for Health describes many PHI policies as ‘junk’

But PHI companies like MBP and Bupa contribute to high costs. Through GAP insurance that they provide they have underwritten an enormous increase in specialist fees in private hospitals. These specialists receive remuneration three to four times what is paid in public hospitals. And not to be out done on specialist fees the major private hospital; Ramsay Healthcare for example paid its CEO $31 m in 2014. No wonder MBP wants to get hospital costs down!

In addition to the inability of PHI companies to put pressure on health costs, there is the problem of waste in the delivery of health care – excessive pathology and radiology tests, over-treatment and over-prescribing. In the recent Four Corners program we were told about a tsunami of over-diagnosis and treatment. We heard about

• Care that is ineffective and sometimes unsafe;
• That perhaps a half of MRIs, are unnecessary;
• At least half arthroscopies are unnecessary;
• At least 20% of knee replacements may be inappropriate;
• The majority of MRI’s and CT’s for back pain are a complete waste;
• The scientific evidence for spinal fusion is just not there;
• As much as a third of money for stenting is potentially being wasted;
• And up to 43% of invasive coronary angiograms are unnecessary.

This waste is common across the health sector, both public and private, but I suggest that the problems are greater in the private sector and private hospitals in particular.

The Four Corners program highlighted the particular problems in private hospitals.

• ‘Stents are more likely to be given in the private sector than in the public’
• ‘Most spinal fusion is done in private hospitals’
• Angiograms are performed ‘more frequently in the private system’
• ‘In the last ten years we have forked out nearly $486 m. for knee MRIs in the private sector alone.’
• ‘It does seem that over-treatment is in the private sector’.

Four Corners did not examine Work Cover and the cost of injuries in the workplace, particularly back injury when it is treated in private hospitals.

Many clinicians and others in the Four Corners program pointed out that there is a great deal of data in all these areas but unfortunately it is invariably in silos and not readily accessible to the public so that we can effectively address the problems of ineffective, wasteful and sometimes harmful medical procedures. There are large variations in medical procedures between public and private hospitals and regions. We have a long way to go in rigorous evidence based care. Accreditation in itself does not tell us much about the quality of care.

There are particular reasons why we should be concerned about what is happening in some private hospitals.

• Fee for service in private hospitals and in the private sector generally provides a perverse incentive. Clinicians are rewarded for volume of work rather than the quality of care and patient outcomes. In the public sector, clinicians are more likely to be remunerated on a salaried or sessional basis without the financial incentives for over treatment.
• In the public hospitals peer review is much more widely practiced with mistakes, adverse events and poor performance more readily corrected.
• Dealing with less complicated cases, many private hospitals do not have the breadth and depth of experience and the skills that are found in public hospitals and particularly teaching hospitals. Some of the larger private hospitals are well run with peer review and strict accreditation. Some have training registrars and medical students. However the quality of care is patchy, particularly in smaller private hospitals.
• I am also advised that private hospitals are much more likely to import minimally qualified nurses on temporary visas. This inevitably leads to more adverse events.
• Private hospitals work much more on a cottage industry basis with visiting medical practitioners coming and going between the hospital and their private rooms. With hundreds of visiting specialists it is very difficult to develop professional collaboration and peer review and professional esprit des corps when they are coming and going on a part time basis.

Australia is spending $10 b. to subsidise private health insurance. In 2014/15 this was made up as follows

• $6.3 b for direct outlays as in Budget Paper 1
• $1.5b tax free income rebate.
• $1.0b benefit for exemption from Medicare levy surcharge.

The total is $8.8 b for 2014/15. This year it would be higher and before we look at the inflation effects of PHI

Most of the direct outlay of over $6b benefits higher income people accessing high cost private hospitals in the name of choice .In the process they jump the hospital queue.

MBP’s attempt to address some of these problems in negotiations with Calvary Hospitals and UnitingCare is the first public sign that I have seen of PHI companies recognizing their serious problems. The ‘canary in the mine’ is warning us about the quality and cost of private hospital care that is   generously subsidised by the Australian taxpayer.

PHI’s are financial intermediaries. They do not deliver healthcare. They are proving unable to effectively manage quality and contain costs in private hospitals. George Savvides has found out the hard way. But the government doesn’t care and diverts attention with nonsense about the unsustainability of our health system. Abolishing the $10b subsidy for PHI would greatly improve the quality of health care, reduce costs and make our health care system much more sustainable.

But the lobbying power of PHI companies and private hospitals like Ramsay Healthcare frightens almost all politicians and particularly Commonwealth health ministers from both sides of politics.

Taxpayer subsidised PHI will destroy our world class health system in the same way that PHI has caused disaster in the US.

Following the ABC Four Corners program on health costs in Australia, there have been a number of very good follow up articles.

The first, in The Conversation on 29 September is by Ray Moynihan ‘Costly and harmful: we need to tame the tsunami of too much medicine’.

https://theconversation.com/costly-and-harmful-we-need-to-tame-the-tsunami-of-too-much-medicine-48239

The second, in the AFR on 5 October, is by Neil Soderlund, Sam Stewart and Jan Willem Kuenen is entitled ‘Why overtreatment is costing Aussies $30 billion per year and how to fix it’.

http://www.afr.com/opinion/why-overtreatment-is-costing-aussies-30-billion-per-year-and-how-to-fix-it-20151005-gk1ktn

Nurse Practitioners were provided access to the MBS in November 2010. Besides limited access to pathology/radiology, nurse practitioners were provided with four time-tiered MBS item numbers for professional attendances. While most nurse practitioners have established themselves in public hospitals, primarily because of the relative financial certainty it provides, there are a handful of NPs trying to establish a niche in primary care.

There is tremendous amount of debate in primary care about burgeoning Medicare costs and the ability to offer fully subsidised primary care. Whilst GPs are well placed in primary care, primary health care nurse practitioners have demonstrated to be an excellent resource in providing care that is safe, effective and affordable. Besides improving patient satisfaction, primary health care nurse practitioners facilitate a focus on complex and chronic care needs, which may increase patient throughput and productivity. Such services provide excellent examples of nurse practitioners offering value-added service at little cost. Nevertheless, primary health care nurse practitioners face daily challenges, some of which are worth mentioning. This in order to gain better understanding of these problem/s and convert such challenges into possibilities for change into the future.

Challenges:

• Access to only four MBS item numbers out of 5,500 items is limiting growth of nurse practitioners in primary care at a time when there is an increase in ageing, chronic disease and mental health populations. Limited ability to earn a living is turning nurse practitioners away from collaborating with GPs in the provision of primary care.
• Primary health care nurse practitioners are unable to make MBS-reimbursable referrals to allied health professionals and have limited access to MBS diagnostic imaging items. This contributes to duplication of care and practice inefficiencies.
• There are no after-hour MBS item numbers for nurse practitioners working in primary care. This means that running such services from an administrative standpoint make it financially unviable.
• Lack of incentive payments for bulk-billing children, elderly and health care cardholders prevents primary health care nurse practitioners from focusing on the marginalized populations they were designed to serve.
• Primary health care nurse practitioners can independently perform simple procedures such as insertion of contraceptive implants, as well as spirometry and ECG interpretation. Unlike GPs, primary health care nurse practitioners have no access to procedural MBS item numbers. This means the full costs of performing such procedures are passed on to patients and/or GP practices, which provides a financial barrier to essential screening and diagnostic services. This also means that GPs have to foot the bill for consumables when nurse practitioners have performed such services. The cost must not be passed on to practices as part of a collaborative system.
• There is a lack of knowledge of the primary health care nurse practitioner role. The AMA has done an excellent job in muddying the waters by confusing the nurse practitioner role with that of the practice nurse. Nurse practitioners are independent practitioners who work beyond the contemporary registered nurse scope of practice. They are able to prescribe medicines, order and interpret diagnostic tests, and make referrals to medical specialists. They perform their functions above and beyond the practice nurse role.

Opportunities:

Minister of Health Hon Sussan Ley recently announced a new payment model that encourages General Practices to provide after-hours services. Though specific eligibility has not been announced, it is hoped that nurse practitioners working in collaboration with GPs are included in this arrangement.

At the same time an MBS Review Task Force has been announced. This taskforce will examine the relevancy of 5500 MBS item numbers and align them with clinical evidence. While this is encouraging there are no nurse practitioners on the review panel. This presents a missed opportunity to provide informed financial consideration of the nurse practitioner role in general practice.

The Primary Health Care Advisory Group (PHCAG) is another excellent announcement and shows the Minister’s commitment to support patients with chronic and complex health conditions. Except for the inclusion of the chair from the Australian Practice Nurse’s Association, nurse practitioners are missing from the advisory group. Perhaps it is time for a change of heart.

Nurse practitioners are underutilized in primary care due to financial constraints. This missed opportunity places added burden on GPs, and contributes to strain on the public health system. Small increases in government spending to improve access to existing MBS item numbers (at a reduced rate, e.g. 85%) will encourage nurse practitioner numbers in primary care and provide an impetus for practice nurses to enroll in nurse practitioner programs. While practice nurses work tirelessly, nurse practitioners provide an advanced level of expertise that can support general practices in a greater cost-effective manner.

Conclusion:

The current government is committed to cost savings in health and primary care is proving to be one of their toughest challenges. Primary health care nurse practitioners working together with GPs offer real support to all aspects of chronic and complex health problems, with the potential to contribute to real health systems savings. New payment initiatives and advisory committees demonstrate the government’s commitment to cost savings and evidenced-based care. Greater consideration of the primary health care nurse practitioners role can help support this Government’s aspirations. This valuable resource should be allowed to work to its full potential to demonstrate the potential of a cost saving alternative in the long term.

Mack Madahar is a PHC and MH nurse practitioner. He acknowledges the valuable input of Chris Helms, RN, NP, MSN, ANP-BC, FACNP, in writing this paper.

To justify an increase in the GST, Premier Baird has joined the long list of conservatives who keep telling us that our health system is unsustainable. Earlier the Treasurer, Ministers for Health and the Commission of Audit warned us in one way or another that the Australian health service is unsustainable, particularly with an ageing population.

The fact is that it is sustainable. .

We need to keep modernising Medicare but by almost any international comparison we have one of the best and most sustainable health services in the world. We need to keep our problems in perspective.

The Commonwealth Fund publishes a regular research report on health systems in major countries. The Commonwealth Fund is a highly regarded private US foundation that compares major systems around the world to stimulate innovative policies and practices in the US and elsewhere.

In its 2014 report ‘Mirror, mirror on the wall’ it compares the performance of healthcare systems in eleven major countries. The comparisons cover quality of care, access, efficiency, equity,‘healthy lives’ and health expenditures per capita.

Its overall health ratings for these eleven countries were as follows:

1. UK
2. Switzerland
3. Sweden
4. Australia
5. Germany and Netherlands (equal)
6. .
7. New Zealand and Norway(equal)
8. .
9. France
10. Canada
11. US

On almost all the measures the UK with its National Health Service is a stand-out performer. . Grounded in primary care and with a single payer it has well and truly stood the test of time. The regular laggard in almost all these rankings is the US. It tells us a great deal about the failure of a health service based on multiple private insurance payers. Our private health insurance lobby is trying to take us down this disastrous US path.

When one looks at the break-down of these rankings, the UK ranks at the top in quality of care, access, efficiency and equity. US ranks last in access, efficiency and equity. What is more, the UK system is the cheapest at $US3,405 per capita in 2011 compared with the US, the most expensive at $US8,508 per capita in that same year.

As indicated, Australia stands at number four in overall rankings amongst the eleven countries. In particular areas we ranked as follows

• In quality of care we ranked number 2.
• In access, we are well down the list at number 8. This reflects in part our high level of co-payments or out of pocket costs. The Abbott Government plans will make this worse.
• In efficiency, we rank number 4.
• In equity we rank number 5, which reflects in part our failures in mental health, indigenous health and in remote healthcare.
• In ‘healthy lives’ we rank number 4.
• In health expenditure per capita in 2011 at $US3,800 we were the third lowest amongst the 11 countries.

Another measure of our success of course is our high life expectancy.

It is quite clear that by world standards we rank quite well. We are behind the UK, but far ahead of the US. . Medicare has served us well but is 40 years old without major review.

But there are ways that we could improve our health services.

• Mental health, indigenous health and remote healthcare are major shortcomings.
• Our co-payments are confused and inequitable.
• Subsidised private health insurance makes it harder for Medicare to control costs.

There are many ways in which the efficiency of our system could be improved and costs better managed.

• Can we afford the funding we commit to IVF and end of life services at the expense say of indigenous and mental health?
• The split of commonwealth and state responsibilities adds to costs and hinders integration of hospital and non hospital care. We have in reality two stand-alone health systems, primary care and hospital care. There is little incentive for the Commonwealth to improve primary (GP) care in order to reduce pressure on expensive state run public hospitals. We need joint funding and planning of all health care that I have proposed for many years.
• The remuneration of doctors, pathologists and radiologist through fee-for-service is a perverse incentive which encourages over-servicing and over-prescribing. It also hinders the treatment of long-term chronic sufferers.
• The government subsidy to private health insurance adds $10 billion per annum to government costs benefits the wealthy and weakens Medicare.
• Australian drugs cost at least $2b. Per annum more than similar drugs in NZ because of the clout of Medicines Australia in negotiating prices with the Australian government.
• With its lobbying power, the Australian Pharmacy Guild protects pharmacists from competition.
• Our health workforce is riddled with demarcations and restrictive work practices. Nurses are not properly encouraged and employed. Yet they hold the system together.
• The Productivity Commission has drawn attention to great variations in productivity between public hospitals and between private hospitals.
• There is no accountability in any meaningful way for what the health industry produces particularly in general practise. There is little effective peer review in private hospitals. Where are the service bench marks in patient outcomes, the use of preventive strategies, and integration of care or even waiting times?

There is clearly a lot we can do to improve healthcare in Australia and better manage costs. But overall, we have a very good and sustainable health service which ranks well against comparable countries.

Sorry if I keep repeating myself on health care but the myths about our unsustainable health care are recycled time and time again and seldom contested.

Premier Baird has announced that he will require a 15% GST to fund our public hospital system in the coming years. It is certainly true that with present policies, revenue won’t match the cost of the anticipated future demand for hospital care. Hospital admissions climb steadily each year (average increase 3%) and the additional patients tend to be sicker and older. Our current health system puts pressure on our State and Territory governments to constantly find more beds and provide new hospital stock. Without financial restructuring his government will not be able to provide us with the quality service we need and expect. The better targeted suggestion from Victoria that we increase the Medicare levy won’t provide the money needed. The current levy only covers about 50% of the cost of Medicare.

However financial restructuring can involve two, not necessarily mutually exclusive tactics. In the policy vacuum that has absorbed Australian politics like a black hole, the easy tactic is for government to ask Australians for more money. A far better approach would see us at last addressing the structural inefficiencies in our health system that would provide savings that at least for health care, would make this huge increase in a regressive tax unnecessary.

Premier Baird’s problem is that the structural levers that need to be pulled to improve the health of the nation and its budget are in Canberra. It’s the Federal government that funds the majority of our primary (GP) and community care and it’s the inability of both, as currently structured, to reduce the demand for hospital care that so frustrates State and Territory governments. Any review of the benefits or otherwise of our federal system will reveal that it has created rather than solved many problems for cost-effective, equitable delivery of health care.

Our taxpayer funded public health system spends more than 55 billion dollars a year on hospital care but only 19 billion dollars a year on primary care. However, wearing federal blinkers, the federal government looks at Medicare as if it was a stand-alone health system and State and Territory governments are forced to focus on hospital care. Health economics 101 and much reliable international evidence tells us that if we spend more money on a structurally reformed primary care system we would save far more than these reforms would cost by significantly reducing the demand for hospital services. This is the “win, win” path we should be taking, not an increase in the GST.

Premier Baird and his fellow Premiers are looking at escalating fiscal problems for hospital funding over the next ten years. What we need is to take a reform journey through that decade that would see us still spending about 10% of our GDP on health but having a healthier population requiring far fewer trips to hospital. At least eight OECD countries are well advanced on that journey and many have evidence of reductions in hospital admission rates of 20-35%.

Available evidence tells us that the most important change our health system needs would see us introduce a model of primary care known as “Integrated Primary Care”. This model places an emphasis on prevention of disease (only 2% of our current health budget is spent on prevention), early detection of changes that could develop into chronic conditions if not treated in time, in house “team management” of all the health needs of those who have an established illness and outreach services from the practice into the community to treat individuals who otherwise might need hospital care. Research reveals that more than 600,000 admissions to our public hospitals each year could have been avoided with an appropriate community intervention. Around the world the model is increasingly referred to as a “Medical Home”. One enrols in this entity wherein multidisciplinary teams of health professionals can provide the above services. International experience shows us that patients and health professionals enthusiastically embrace the model.

As our federation is reviewed and our health care costs are wrestled with, consider the following inefficiencies that should also be addressed before considering an increase in the GST. We have nine departments of health for 23 million people. Duplication costs us 2-3 billion dollars a year. We spend over 6 billion dollars a year subsidising private health insurance using the false argument that such spending will see private hospital care reducing the demand for public hospital services. It doesn’t. The money would be much better spent on improving primary care and reducing admission to both public and private hospitals. My profession is steadily tackling the very unprofessional expenditure of up to 10 billion dollars a year on low value or no value procedures and tests. Australians spend 3 billion dollars a year buying vitamins and “supplements”, not needed by the vast majority of us, as they are led to believe you can neutralise an unhealthy lifestyle with something out of a bottle.

Tackling these problems as we progress along our health reform journey will provide us with a health system for the future that is second to none, equitable and cost effective. Even if we could afford a massive increase in the GST it would be money poorly spent on a health system calling out for reform. Now where oh where is the political leadership to take us on this productive journey?

John Dwyer is Emeritus Professor of Medicine at UNSW.

Current Affairs

The major pharmaceutical companies in Australia, almost all foreign owned, keep pushing their luck at the expense of Australian consumers and taxpayers.

In my series on health reform, I pointed to a minimum of $2 b. p.a. that we could save in drug costs if we had a government purchasing system like the New Zealanders. In the last budget the Minister for Health made a few changes around the edges but the high prices charged by Big Pharma will continue.

It is the same story around the world. Many American consumers find it worthwhile to cross into Canada to buy pharmaceuticals.

It is no surprise to know that Big Pharma is also highly influential in the secret negotiations for the Trans-Pacific Partnership (TPP). It is quite a scandal that we are kept in the dark on a trade arrangement which could have quite serious consequences for Australia.

Apart from the secrecy there are major concerns. As Choice Magazine has pointed out ‘The leaked chapters of the TPP indicate that the agreement may contain an investor-state dispute settlement clause(ISDS), which allows foreign corporations to sue Australia’s government for loss of future profits.’ Dr Matthew Rimmer, Associate Professor at the ANU College of Law, has said ‘Australian consumers have been betrayed. The intellectual property chapter of the TPP is a monster. The proposals in respect of copyright law, trademark law, patent law and data-protection would hit Australian consumers hard’.

There is major concern that the Australian government could become more vulnerable to law suits from multinational companies and particularly, Big Pharma. As Choice has pointed out, after the introduction of tobacco plain packaging rules in Australia, cigarette companies unsuccessfully challenged the new laws twice in the High Court and lost. Philip Morris then announced its decision to challenge plain packaging again, this time under international law by invoking a 1993 bilateral investment treatment that included ISDS provisions between Australia and Hong Kong.

And we know from experience, that US corporations have massively disproportionate lawyering power compared to our legal defence resources in Australia.

Joseph Stiglitz, the Nobel Prize winning economist, told us recently on the ABC about the benefits to the drug companies of TPP. He said ‘I talked to all the other trade negotiators involved in the drug provisions [of the TPP] and we know that the US is negotiating for a position that would make it much more difficult to get access to generic medicines and that would drive up drug prices.

Then there is the problem of tax avoidance. The Australian Parliamentary Library told a recent Senate Committee that in total the top five pharmaceutical suppliers to the PBS in Australia received $2.8 b. in public money. Their total Australian sales were $4.8 b. But research found their combined profits were only $50 m. They paid $53 m. in tax between them, or roughly one cent in tax for every dollar earned in Australia. For a full report by the SMH for June 15, see link here. http://www.smh.com.au/federal-politics/political-news/pharmaceutical-companies-called-on-to-explain-tiny-tax-contribution-20150602-ghf59s.html

We are really in triple-dipping country here – high prices for Australian consumers, attempts through TPP to weaken Australia’s bargaining position and widespread tax avoidance.

I think we are being taken for a ride.