Category: Health

The Health Minister, Sussan Ley has just announced a 6.2% increase in private health insurance premiums.  Increases of this order happen almost every year.

Since the Howard government introduced the rebate on private health insurance in 1999, the cost of private health insurance has increased over 150%. Overall prices have increased by less than 50% in this period.

Because private health insurance has not got the will or ability to control prices, it is a ‘price taker’ as economists say, it underwrites large increases in health costs particularly by private specialists. That is why we are all paying more in out-of-pocket expenses. But it is even much worse than that. Private health insurance makes it more difficult for Medicare to control fees.

The private health insurance industry receives a $7 billion p.a. subsidy from taxpayers. This subsidy is far more than the car industry ever received. This is real corporate and middle class welfare. Abolition of the subsidy and at the same time funding a Medicare dental scheme would greatly improve equity and quality of care at no extra cost to the budget.

Abolition of the subsidy would also remove the Damocles sword that hangs over Medicare. Private health insurance has proven disastrous in the US. We must stop sleep-walking down a similar path in Australia.

Private Healthcare Australia runs a quite dishonest campaign. Private health insurance has not taken pressure off public hospitals. By funding excessive private specialist fees, private health insurance has attracted many specialists away from public hospitals. Comparing like with like, private and public hospital costs are about the same. The administrative costs of private health insurance are three times those of Medicare.

But subsidised private health insurance has one particular attraction. It enables wealthy people to avoid the queue for public hospital beds.

A major beneficiary of private health insurance has been private hospitals and one hospital group in particular. That group is Ramsay Healthcare which operates 120 odd hospital and day-care surgeries in Australia and offshore. Like other supporters of private health insurance, Ramsay Healthcare seldom argues its case publicly. It knows that its case will not stand up to public scrutiny.

Instead, Ramsay Healthcare relies on lobbying and political influence like so many other wealthy companies and people in Australia. In the last 14 years, Ramsay Healthcare and Paul Ramsay Holdings gave more than $1.8 million to the Liberal Party. Not a cent was given to the Labor Party. Paul Ramsay left an estate of over $3.4 billion recently. Before his death, he was Australia’s eleventh richest person.

The private health insurance industry relies on lobbying and political influence and not on a publicly defensible case.

The interests of Australian taxpayers and the Australian community would be better served if the $7 billion taxpayer subsidy was abolished and the money transferred to a Medicare dental scheme.

The response of the ALP to the latest round of PHI premium increases shows that it has little idea of what is at stake…. Medicare

See earlier post that I have made on this subject below:

Two days before Christmas and to avoid scrutiny, the hard-to-notice Federal Minister for Health, Peter Dutton, announced a 6.2% increase in health insurance premiums for next year.

We have seen the same pattern year after year with health insurance premiums increasing at well ahead of the CPI.

The Howard Government introduced the Private Health Insurance (PHI) rebate in 1999. Since then the average health insurance premium has risen by 130% while overall prices have risen by less than 50%.

The Chief Executive of NIB put the reason for the latest increase very bluntly. He said ‘the rise was necessary to meet the rising cost of providing health care’. But PHI is a key part of the problem of rising health care costs because PHI funds have little or no power in the market to contain costs. They are price-takers. The power to set prices in the health market is with the providers – doctors and hospitals – and only a single payer or national insurer, as in the UK or Scandinavian countries with national insurers, can and do exercise market power.

Medicare would have more market power to control prices if it was the only single payer. But its power is eroded by the PHI companies. A clear example of this is gap insurance which the PHI funds offer. This gap insurance has underwritten the largest increase in specialist fees in Australia in the last quarter of a century.

If Australians want to waste their money on expensive PHI that is their choice. But I see no reason for taxpayers providing an annual subsidy of $7 billion for PHI that enables the wealthy to jump the hospital queue.

In February 10, 2013 year, I wrote about the rising cost of PHI. See repost below. I have also reposted ‘Health care and the budget deficit in the US’ which shows the enormous damage that PHI has wrought in the US.

Repost (from February 10, 2013)

Last week Health Minister Plibersek approved an average increase of 5.6% in private health insurance premiums from April this year. It is the same story year after year with health insurance premiums increasing at 2% to 3% ahead of the rate of inflation.

There are two main reasons for these increases.

The first and least important reason is that the administrative costs of private health insurance companies run at about 15% to 16% of premiums. Medicare, including the cost of tax collection, costs about 6% per year. Broadly speaking private health insurance administrative costs, including profit margin, run at about three times the administration costs of Medicare.

The second and most important reason for the steady increases in premiums is that private health insurance funds are largely unable to control the price, quality and utilisation of services provided by doctors and hospitals. This is a problem for all insurers, both private and public, when services are provided free at the point of delivery. There is little incentive or opportunity for consumers to exercise power either over  the cost of the service or whether the service is  necessary. The power is with the provider, not the consumer. Economists call this ‘moral hazard’.

But when a country has a single payer or a single national insurer, as in the UK or Scandinavian countries, the national insurers can and do exercise market power. That is why health services in those countries is invariably delivered efficiently and at low cost. . Private health insurance has practically no power to control prices and demand for health services. What is worse, private health insurance in Australia undermines the ability of Medicare to exercise market power.

Evidence on the failure of private health insurance is clear. First, the standard example of private health insurance failure is the high cost and inequity of the US health service. That service provides the worst value for money of any health ‘system’ in the world. Secondly, The Economist, in an article on February 18, 2010, said ‘The biggest factor behind the cost conundrum is that insurers lack market power. Health care providers hold all the cards.’  Thirdly, our Productivity Commission said in 2005 ‘increased levels of private health insurance membership have been associated with a marked increase in the number of services performed and reimbursement for those services”.  Fourthly, in a review in 2003 of private health insurance in Australia, the OECD commented ‘Private (insurance) funds have not effectively engaged in cost controls. They seem to have limited tools and few incentives to promote cost efficient care … Private health insurance appears to have led to an overall increase in health utilisation in Australia …’

Increases in private health insurance premiums ahead of the inflation rate are not surprising. Private health insurance is badly serving Australians and undermines the power of Medicare as a single payer.

This is not to say that Medicare should not be improved. It is a very efficient payments vehicle. But it is much too passive. It was launched and still carries in its name, the ‘Health Insurance Commission’. If it were a proactive public health insurer, it could significantly reduce the malign influence of private health insurance in Australia.

See also article by John Menadue and Ian McAuley ‘Private Health Insurance: high in cost and low in equity’ – reposted today below.

In 2011 I gave the last Oration for what was originally the NSW College of Nursing in the Great Hall of Sydney University. In it I advocated for nurses to be able to work to full scope of practice, particularly in the area of primary and preventive health care, in order to alleviate demands on our overstretched hospital systems. Given we currently have a significant oversupply of nurses in this country, especially in our new graduate population, this seems like an excellent time to deploy nurses into some of these roles, long overdue in Australia but commonplace in other parts of the world. . The first ever NSW College of Nursing Oration was given on the 15^th September 1953 by M.I. Lambie, who was not only the first Orator for the College, but the first woman to give an Oration in the Great Hall of Australia’s oldest university. Miss Lambie was the New Zealand Nursing Adviser to the World Health Organisation (WHO) and Chair of the Expert Nursing Committee of WHO. Let me read to you her introductory words as she talks of the problems in health care in the developed world:

These facts have caused increasing demands on hospitals; the rapid turnover in surgical beds together with the larger numbers of elderly and chronic patients has forced consideration to be given to the whole problem of hospitalisation by many authorities. The increased use of hospitals means automatically more staff or the better use of existing staff”[1]. 

Plus ca change, plus la meme chose. She goes on to advocate for the growth in primary health care that is occurring in developing countries “putting more emphasis on the preventive aspect, which in turn will set an example to many of the older countries”. Well sadly not much yet, Miss Lambie, not much yet. I’m afraid the people you were advising didn’t take your excellent advice. Lots of us have been there.

She goes on to say

These are examples whereby preventive means, home education and treatment have reduced the demands for hospital beds. In fact it would not have been possible to treat in this mass way in an institution. The education of the home for this kind of treatment means, however, the preparation of a worker to carry out the program. Funnily we speak of this NEW approach to medicine, and yet in her Notes on Nursing, Florence Nightingale speaks of “the need to nurse the home as well as the family[2]. 

So we come full circle in what is needed for health care in Australia, advocated by Florence Nightingale in the 19^th century, advocated by the first NSW College of Nursing Orator, Miss Lambie in the 20^th century, and advocated in the 21^st century by the (then) Australian Nursing Federation[3]. Let us hope, in the promises of Luke Foley to introduce four nurse-led clinics in NSW should Labor win the next election, that the wise words of our nursing forebears do not have to wait another 62 years before somebody decides to act on them. This is so obvious a solution that one wonders why it is not commonplace, rather than tentative.

Mary Chiarella is Professor of Nursing, Sydney Nursing School, University of Sydney.

[1] Lambie IM (1953) First Annual Oration The changing scene in health work throughout the world in The 50^th Anniversary Annual Orations Vol I NSW College of Nursing: Sydney, p.9

[2]  Ibid, p.10

[3] Australian Nursing Federation (2009) Primary health care in Australia: a nursing and midwifery consensus view ANF: Canberra

Luke Foley – great!

Congratulations on committing to nurse led clinics as part of to a primary health care strategy to increase access to community based health care. The four nurse led clinics promised last week are a welcome adjunct to the current but often overstretched GP services.

The ACT has led the way in nurse led clinics with the first, based in an emergency department, being evaluated as providing high quality safe and appropriate care; however where there was also easy access to medical care there was the risk of over-servicing lessening the cost effectiveness.  So with lesson learned the two new ACT services are in underserviced areas and are providing high quality care to a population which otherwise would have had difficulty in quick and affordable access to health care. Information on these services is available through ACT Health. It is a success story, ask the people of Belconnen and Tuggeranong.

Our current NSW Minister for Health, Jillian Skinner, also has a public track record of commitment to improving community based services. So come on Jillian, match this promise and let’s not let party politics and election posturing get in the way of a really good idea for the health of the public.

The past few weeks has clearly demonstrated that we are heartily sick of party based oppositional politics and if NSW does not want to risk going down the same path as Queensland or suffering the public disenchantment experienced by the Prime Minister this is the moment and this is the issue to demonstrate that the health of the public is a genuine bipartisan concern and that this is an excellent strategy. Let’s make these clinics a reality irrespective of any election and have a public commitment from both sides of politics NOW.

I can’t let this topic go however without addressing Saxon Smith’s comment on behalf of the AMA in the SMH yesterday. He is quoted as saying “There is actually evidence suggesting nurse-led clinics can make the quality of the care worse”. What research? Conducted how and where and published in what peer reviewed journal? It is a glib and easy thing to say but where is the evidence? How does it stack up against the 20 years of rigorous, published, Australian based research which clearly demonstrates the safety and quality of the work of Nurse Practitioners?

It’s always worth reminding ourselves  that the AMA is not only a professional body but it is also the doctor’s union and protecting income and turf is its job. We have 25 years of documented AMA opposition and scare tactics about nurses being able to work to their full scope of practice and making a broader contribution to community health.

The vast majority of doctors in practice with whom I speak fully support an extension of the role of nurses in primary health care/ community care. They particularly understand the need to provide better access to underserved communities. This is work nurses want to do, are educated to do, and have the skills to do. Luke and Jillian please bring it on, make the commitment and don’t let better healthcare become a political football.

Jill White was formerly the Dean of the Faculty of Nursing and Midwifery at Sydney University. 

The Coalition government has been claiming that Australia’s public health system is unsustainable since the 2014 budget. But its plans for the health system actually reflect the underlying belief that user-pays health systems are better – despite evidence to the contrary.

Less than a year and a half into the Abbott government’s first term, we’re on our second health minister and the third iteration of some kind of plan to introduce a co-payment for seeing a doctor. Despite widespread and vocal opposition to its plans, the government remains committed to introducing this price signal into the public health system.

Underpinning this move is the government’s commitment to a user-pays health system. But there’s now a large body of evidence showing such systems not necessarily great for the nation’s health. Here are four common ideas about market-based health systems and why they are not true.

Myth one: market forces increase efficiency

The administrative costs of Australia’s public health system are considerably lower than that of the private health insurance sector. So while this cost for Medicare is around 6% per year, the 2012-13 private health insurers’ annual report estimates that 15% to 18% of private health insurance premiums go towards administration.

Both these figures are similar to those in the United States, the country with the most expensive health-care system in the world. Figures from the OECD estimate that, in 2011, the per capita health cost in the US was US$8,508 (A$10,912) per head or 17.7% of GDP, compared to Australia, where the figure was US$3,800 (A$4,875) per head or 8.9% of GDP.

But the US figure quoted above is effectively still an underestimate. The premiums for about half the Americans who have health insurance are paid by their employer; they are essentially a business deduction underwritten by the taxpayer.

The inefficiencies of the market-based system are also apparent when comparing costs for similar conditions. Health insurance industry figures from a 2013 report show the average total reimbursement for a private hospital appendectomy in the United States is A$17,770 (US$13,851), while the cost for the same procedure in Australia is A$5,467.

Myth two: market forces increase quality

There’s no lack of evidence showing the market forces operating par excellence in the United States offer inferior health care when compared with public health systems. OECD data comparing mortality rates in member countries between 1980 and 2005, for instance, show only Portugal has had a smaller fall in adult mortality rates than the United States.

And although it spends the highest proportion of GDP on health internationally, the United States ranks 19th in infant mortality, 43rd in female mortality and 36th for life expectancy.

This is not to say that US health care cannot be outstanding; it just comes at a price rendering it grossly inequitable. Consider this 2008 study of 121,092 Americans admitted to hospital with bleeding from liver cirrhosis. It found likelihood of death was significantly higher for certain groups.

By contrast, a 2011 English study of gastric bleeding in 245,438 patients found that, once hospitalised, the risk of bleeding and mortality was independent of social class. So in England, an unemployed street sweeper with gastric bleeding faces a similar risk of death in hospital as a stockbroker. But the stockbroker would have a much better outcome in the United States.

It’s also important to remember that more care does not necessarily equate to better quality care. The Institute of Medicine recently estimated the excessive annual cost of systemic waste in the US health-care system at US$765 billion. This is almost 30% of total health expenditures.

Over-servicing is a big problem in private health-care systems, where profits can create a perverse incentive to treat. Indeed, they potentially create a conflict with purely medical reasons for treatment.

A landmark 1970 analysis (not available online) comparing surgery and surgeons in the United States and in England and Wales showed that the former, with its fee-for-service system, had twice as many surgical procedures as the latter places, both of which have public health systems. A 1973 analysis found a similar doubling of discretionary surgical rates in fee-for-service Canada compared to the United Kingdom.

Myth three: public health care is unaffordable

A number of studies indicate that it is actually private health care that’s unaffordable. It’s estimated that almost two million people in the United States declared bankruptcy due to medical bills or conditions in 2013.

That makes health care one of the biggest issues affecting bankruptcy in that country. Worse still, the majority of these bankruptcies were expected to affect people in the prime of their working lives, between the ages of 35 and 55.

Worse still, the problem may be snowballing: a 2009 study found medical reasons for bankruptcies had increased from 46.2% in 2001 to 69.1% in 2007. Most medical debtors were well educated, owned homes and had middle-class occupations, and 75% had health insurance.

Despite the Coalition government’s warnings to the contrary, health-care costs are not spiralling out of control. According to an Australian Institute of Health and Welfare report on health spending for 2012-13, growth in health expenditure was the lowest since the mid-1980s.

In fact, the average health expenditure per person fell from A$6,447 in 2011-12 to A$6,430 in 2012-13. This puts Australia’s health spending as a proportion of gross domestic product at 9.4% in 2012, just above the OECD average of 9.2% – and much lower than the cost of the US market-based system.

Myth four: price signals work

Indeed, the government’s commitment to price signals is itself rather problematic. Price signals temper consumption by making people consider whether what they are about to buy is worth the cost. This makes them ill-fitted to the health-care sector, which is not an optional commodity subject to the same thinking that influences decisions to buy a television or a pizza.

The latest evidence about co-payments comes from the introduction of the 2005 Deficit Reduction Act in the United States, which allowed states to introduce emergency department co-payments for non-urgent visits. A very recently published analysis of figures from eight states that charged a co-payment and ten states that didn’t showed no difference in annual number of emergency department admissions, visits, or inpatient days.

Evidence to date is overwhelmingly against the privatisation of medicine. By pulling together in a public system, citizens get better value and the government gets better outcomes.

Along with education, health is a basic pillar of a just society. It represents government investment in the country’s social capital – its people. Failing to provide these adequately and equitably will reduce Australia’s productivity, competitiveness and, in the end, the sense of social cohesion that comes from equal access and equal opportunity.

John Attia is Professor of Medicine and Clinical Epidemiology at University of Newcastle.  John Duggan is Conjoint Professor at University of Newcastle. This article first appeared in The Conversation, 5 February 2015.

In the first part of my commentary on John Menadue’s Health Policy Reform in his blog, I discussed  the barriers frustrating any reform agenda. In this second part I will comment on John Menadue’s suggestions for “overcoming these obstacles to health reform” and provide my own thoughts on what a reformed health system might look like.

In his blog he commented that “seldom do we stand back and ask the central issue: what do we need and expect from a health system”? For some years now I have presented the following answer to that question to professional and community audiences. We need, deserve and can afford a health system that—-

“Is focused on the needs of the individual, is resourced to maximise opportunities for avoiding illness (prevention), is demonstrably equitable, sustainable and provides evidence based quality care in a timely manner available on the basis of need not personal financial wellbeing”.

A few years ago, thanks to an initiative of the Division of Primary Care at the University of Queensland, I had the opportunity to take part in a series of town meetings around Australia where we discussed what citizens wanted from their Health Care system. We dissected the elements of the above definition and each of the elements therein was readily appreciated and endorsed. The concept of a “medical home”, (recently discussed in Pearls and Irritations) as provided by an Integrated Primary Care model was often greeted with a “Why didn’t we introduce that ten years ago” question. I was interested in the acceptance by audiences that we may need to pay more for a better health system and the willingness to do so.

I discussed the above definition and its ramification at a national meeting of the Australian Health Care Reform Alliance to which we had invited Tony Abbott, health minister at the time. He told us that he did not like to hear talk of “reform” when we already had the best health system in the world that only needed “a little tinkering at the margins”. I was reminded of this when reading John Menadue’s comment that reform “will be hard without political leadership and political will”. There are none so “non-reformist” as those who insist there is nothing to reform.

What reforms would provide us with the health system we need and how do we overcome the political inertia? A single funder of our national health scheme remains the “Holy Grail” for most reform commentators. As John Menadue highlights the jurisdictional division of health care such that hospitals are the responsibility of the States while our Federal government funds Primary Care(GP’s and others) is the single largest barrier to both integrated and cost effective (sustainable) care. We are the only OECD country so burdened. Perhaps Federal and State governments think that the cost shifting and “blame game” that follows is politically attractive as the public may be unsure who is responsible for problems. No one is asking the Commonwealth to be the sole provider of health care. Rather we are suggesting that the Federal government fund providers that will, implement the health care model Australians and their government have agreed upon. However while we must not abandon the goal, the current reality is that neither major political party is interested in the single funder model.

Looking at our needed reforms and learning from the experience of other countries that have modernised their health systems it is not difficult to provide a map for a reform journey.  As is true for any journey one must have a definite destination in mind. The journey may have its trials and tribulations but the destination is set. Our destination (the Health Care system we need and can afford) must be determined by in depth discussions with Australians about the need for change. Readily understood models must be put forward for analysis of their benefits as well as the associated ramifications. This is particularly important if more public expenditure is required to fund the new model.

Apart from the old-fashioned “Town Hall” style meeting referred to earlier, there are numerous opportunities for providing information to and receiving feedback from the community.  I was most impressed with the quality of the discussions provided by “citizens juries” moderated by the much-missed Gavin Mooney.  All media outlets including social media would be utilised. I agree with John Menadue that the process of consultation and the formulation of the desired model and the elements it contains (our destination) should be overseen by a Health Reform Commission populated by independent professionals and community representatives so that it is demonstrably apolitical. The model must be “efficient and equitable”, efficient in that it provides the clinical outcomes desired in a cost effective manner and equitable in that its benefits are available to all Australians.

While the longest journey starts with the first step, in this case it is the very first step that is likely to be most difficult. That first step requires us to break through the barrier of political intransigence.  International experience and a study of what I believe we need to do in Australia suggest that our journey will take about a decade to achieve the desired transformation. As John Menadue suggests it cannot be rushed. And there immediately is a political problem as increasingly short-term governments are disinterested in projects without imminent political kudos.

However if we are ever to achieve political support for reforms we must be able to present a clear vision of what we want. Perhaps the most frustrating part of the present Government’s attacks on primary are is that it is devoid of any vision for improving outcomes and cost effectiveness.

What follows is a summary of the initiatives and organisation we might see if the community and government were to want our health system to have the characteristics I described above.

The Health Reform Commission would hand over reform implementation to a new statutory body; say the Australian Health Authority (AHA) and certainly not the Department of Health and Aging. This organisation must take us to our destination. It holds all the health care funds expended by the Commonwealth and States. It replaces nine departments of health. It mangers a series of necessarily central bureaucratic processes, such as the PBS, public health policy and interactions with numerous agencies in order to support the social determinants needed for a healthy community. It establishes a series of Regional Health Authorities (RHAs) dividing Australia into logical and manageable demographic clusters and provides each with funds based on a resource distribution formula that is responsive to local need and not just population numbers.  In this way the current problems created by State boundaries being artificial health boundaries are overcome.

RHAs would seek providers for Hospital, Community and Primary Care services. The States may well seek funds to continue to manage their hospitals but the role delineation for such hospitals would be negotiated with the RHA. A number of Primary Health Care organisations will be funded in a region. (The current model of having a small number of PHOs replacing Medicare locals and responsible for improving care over huge areas but not actually offering direct care is fatally flawed}.

Within RHAs Primary Health Organisations would act as hubs in a hub and spoke model directly offering primary and secondary services (In New Zealand they may run 23 hour wards and treat minor emergencies). PHO’s would offer a range of supportive services to affiliated primary care practices. These would include help via bulk purchasing, continue professional development, drug education, and IT management and, crucially, help with required data collection to document health outcomes.

The preferred model of primary care supported by RHAs would feature the “medical home” model of Integrated Primary Care wherein funding is available to support teams of health professionals (including dentists and dental hygienists) working in the one practice to help enrolled patients with prevention strategies and early diagnosis and management of health problems that could result in chronic illness. In house teams would manage chronic and complex disease and care in the community for many currently sent to hospitals.

In this model “Fee for Service” (FFS) payments would only be applied to “drop ins’ with short term self-limited problems. (John Menadue  accurately pointed out the perverse incentives attached with FFS payments and certainly young doctors contemplating a career as a GP are turned off by the thought of practicing “turnstile” medicine. (Some movement within the AMA to support a move away from FFS heartens me). Chronic disease management is covered by capitation funding with a bonus system for better health outcomes. A consumer controlled electronic health record facilitates integration of the care offered by all providers and hospitals.

Best practice management in community and hospital settings is facilitated by the availability of standardised evidence based clinical pathways for a given problem These would be generated by “craft groups”, specialist doctors, nurses and allied health professionals working in a given field who “think globally for action locally”. Professors Kerry Goulston, Graeme Stewart and I set up such a process with excellent outcomes in NSW. The methodology is now applied more broadly by the Agency for Clinical Innovation. This provides a major weapon in the effort to reduce expensive investigations and procedures of little clinical value described in the first part of my commentary.

In the light of these new directions medical education has to change and inter-professional learning curricula are necessary to prepare the next generation of health professionals for “Team Medicine”. Rural based medical schools with postgraduate specialist training available in rural settings is  necessary to solve the shortage of medical practitioners in rural Australia.

John Menadue’s forecast that 15 billion dollars could be saved by health system reform is too modest. The above “imaginario” if implemented would save much more. Overseas experience suggests that we could expect a 30-40% reduction in hospital admissions over 10 years. Just before Christmas the UK government received a commissioned report indicating that by spending an extra 72 million pounds on improving primary care the health system would save 1.9 billion pounds by 2020.  By spending more on Medicare (now a specific health care program not a doctor’s bill payer) to implement these changes we could save many billions, as hospital care is so expensive. It is quite possible that the elimination of inefficient health spending as outlined in part one of this commentary could fund the changes.

Lessons learnt from change management strategies in other health systems tell us that reform must be community supported and feature “bottom up” modelling. Clinicians would not be forced to adopt change with early implementation of the desired model involving a “coalition of the willing”. The latter should participate in establishing government funded “proof of concept” primary care services as described. How one laments that fact that the Super GP clinic money provided by the previous government could have readily funded a series of “medical homes”.

For two decades John Menadue has championed the idea of a “proof of concept” demonstration of the value of whole of health care integration by creating a State/Commonwealth Health Commission in Tasmania to begin with,  wherein pooled funding would allow many of the above concepts to be trialled. Of course I would strongly support such an initiative for although, if successful, its importation to the mainland would leave us with many problems that could be solved by the re-alignment of health boundaries, patient focused integration and cost effectiveness would certainly be improved.

I suspect that the Abbott government wants to reduce, as much as possible, its health footprint and would be happy to see health care handed over to the private sector. In every country where this has happened health expenditure has increased but not satisfactory health outcomes. The government’s initiation of a review of the benefits or otherwise of federalism may lead to a discussion of the possible assumption by States of all the public health care offered to their citizens. Any discussion that moves us away from the “status quo” is welcome. John Menadue’s three health policy reform blogs are informed and provocative and I hope will revitalise the reform debate.

Medibank/Medicare was launched 40 years ago. It was designed to fund the health delivery system at that time.  We need now to address the basic issues concerning the way health services are delivered.

I am grateful for the opportunity to add my comments.

John Dwyer is Emeritus Professor of Medicine at UNSW.

As I suspected  would be the case with many readers who enjoy “Pearls and Irritations”, I experienced in equal measure, satisfaction and frustration as I absorbed John  Menadue’s informed and insightful analysis of the problems that beset our health system and prevent urgently needed structural reforms. His three essays accurately explore the major issues. He has experienced political power and politician’s motivations from the inside. Fortunately, his passion for good government has, for two decades or more, been particularly interested in improving our health system. Here too, importantly, he has had first hand experience of how the system works (and doesn’t work). His recent survey provides us with a very valuable document, as it is, in fact, a template on which we must build a reform agenda.

What about my feeling of frustration engendered by these essays?  While comprehensively exposed and explained, few of John Menadue’s conclusions are controversial among would be health system reformers who have first hand knowledge of the issues and who are studying the results of health system reforms in other countries. As he highlights, we have benefitted from political leadership willing to embrace major reforms to our financial systems but both sides of politics in Australia have failed us leaving health reform in the “too hard basket”. I remember a conversation with health minister Roxon on the need to introduce Integrated Primary Care into Australia.  She appreciated the benefits but as such a reform would increase Medicare expenditure she told me, “like many good ideas this will just have to lie on the table till the time is right”. The time was right 15 years ago.

The comments that follow presume that readers will have read John Menadue’s important analysis. In this first part I will address some of the issues he presented and in a second part expand on the strategies need to progress reforms and what those reforms should embrace.

As highlighted, the power of vested interests to urge lay politicians, who don’t understand our complex health system anyway, to hold to the “status quo” is frustrating. Recently “Australian Doctor” asked doctors (mainly GP readership) who was the least competent of the last ten health ministers. Peter Dutton won in a landslide but I feel this was a measure of current frustration rather than an historical analysis of the question.  I would have voted for Kay Patterson. As the new century started health reform advocates were active and the then minister for health in NSW, Craig Knowles, listened and accepted our argument that the next round of negotiations re commonwealth funding of state public hospitals should include a reform agenda not just a dollar agenda. The States and Commonwealth agreed and 13 sub committees were established to prepare structural reform agendas on everything from indigenous health to the funding of prevention strategies. After months of work and legitimate expectations that we were entering a new era for health reform, Minister Patterson pulled the plug on the reform agendas and reduced the COAG negotiations back to dollars. Had those reforms and the methodology for creating those reforms been accepted we would have a far better health system today. As John Menadue has highlighted here was another example of vested interests derailing a most important initiative.

John Menadue emphasised the importance of every Australian having access to Medicare funded Primary Care with ability to pay being irrelevant to the quality of the service received.  Rightly, he warns us of the possibility of Primary Care becoming a two-tiered service with better access and facilities being available to those with private insurance. Such an arrangement has destroyed equity in the US system and dramatically pushed up costs. The Abbott government does not seem to understand that inequity is not only “unaustralian” it’s also very expensive. In 1900 the average Australian died aged 56. Many deaths were attributable to unavoidable and untreatable conditions particularly those caused by infectious organisms. The great flu pandemics did not discriminate between rich and poor. Today we can avoid most of those causes of early death and we live remarkably longer. Disease patterns today focus on dangerous life-style choices that lead to the development of Chronic and Complex problems which kill us slowly and for too many rob their extended years of life of quality. With the exception of poor health caused by excessive alcohol consumption all the risk factors for chronic disease are more prevalent among socio-economically disadvantaged Australians. We only spend 2% of our health budget on trying to help people avoid lifestyle induced illness and so we all end up paying much for the care of our fellow Australians with advanced disease.

We need new money to fund important structural reforms so it’s appropriate that John Menadue looks at dollars we use poorly in our current system. He correctly targets the lack of leadership that has us paying far more for drugs than other similar countries. The duplication of health bureaucracies (nine departments of health for 23 million people) cost us 3-4 billion dollars annually, while the estimated 600,000 admissions to public hospitals that could have been avoided if the infrastructure for management in the community was available would save us at least 15 billion dollars. Over servicing by my profession when performing non-evidence based investigations and procedures of low value is estimated to cost 20 billion dollars a year. And then there is the Private Health Insurance Rebate that John Menadue discusses in detail.

With some means testing now the rebate probably will cost taxpayers this year closer to 5 billion dollars rather than 7 billion but there is no doubt that the amount of health available from this initiative is not worth the price. While the Insurance industry and government disagree two facts are indisputable. The first is that the rebate has not been responsible for a significant number of Australians taking up private health insurance. After the introduction of the rebate, health insurance rose by no more than2%. The stick that did increase coverage was the whole of life rating system and tax accountants telling clients they would pay more tax if they did not sign up. The second fact is that the rebate and indeed the increased uptake of PHI did not reduce pressure on public hospitals. As John Menadue rightly points out increased activity in Private Hospitals where 75% of the patients have surgical problems, has seen a loss of surgical capacity in public hospitals greatly increasing the ability of surgeons to charge more while public hospitals are swamped with chronically ill medical patients and not able to offer as much timely surgery as they would wish.

An obvious but important point emphasised by John Menadue reminded us that the PHI rebate and the pressure to hold PHI is vey unfair to many rural based Australians for there are no private hospitals available in the majority of rural communities. In truth many health inequities are entrenched in rural Australia. The 35% of Australians who live in the country and supply 66% of the nations wealth have far poorer health outcomes than their city cousins. White Australians living in rural communities are likely to live 4 years less than average city dwellers. From depression to heart disease to infant mortality to cancer, outcomes are inferior in rural Australia. This gross inequity is not being addressed despite numerous enquiries highlighting the changes needed to reverse the situation.  (e.g. reducing dependence on overseas trained doctors by training more rural based students in medical schools established in a rural setting and (as John Menadue emphasised) far better use of the existing non medical workforce, and numerous other evidence based strategies.) How frustrating for country citizens that the National party promised major rural reforms if the coalition won the last election when, in reality, they have had no power to influence rural health initiatives.

Talking of the better use of the non-medical workforce brings me to one point where I would place a caveat beside one of John Menadue’s recommendations. Pharmacists are men and women trained at university to understand scientific methods and appreciate the importance of evidence based Medicine. Indeed their professional charter demands they only offer medicines know to be clinically effective to their clients. Certainly they should be integrated into our Primary Care system. However there is a professional (commercial) cancer eating away at their integrity as they offer so many products that have no real value to customers. Their prescription services are usually assigned to the back of a shop in which 80% of the space is provided to offering health products that are no doubt lucrative but of little value. Recently calls for Pharmacists to rid their shelves of Homeopathic products following the NH&MRC report emphasising they can have no more than a placebo effect, have been rejected. Pharmacists should be telling clients that the 2 billion dollars spent each year on supplements and vitamins is largely a waste of money and that you can’t neutralise an unhealthy lifestyle with something from a bottle.

In many countries any clinical observations made and the drugs supplied to an individual are entered into the persons electronic health record in real time. John Menadue criticises the Department of Health for failing to roll out an electronic health record for Australians, an initiative he describes as a minor reform.  In fact an electronic health record is a much-desired major reform and can be the lynchpin for much needed integration of patient focused care. Many countries are now reporting on a decade of experience with an electronic health record and the improvement in care made possible by this initiative and clinician and patient satisfaction with the system are most impressive. Kaiser-Permanente in the US is reporting that in the last decade it has turned two million face to face consultations into email consults. The organisation’s initiatives, which include major prevention strategies delivered via an Integrated Primary Care system, have seen it have the best health outcome results nationally in 10 of the 12 major indicators used to measure success in treating chronic diseases.

So summarising John Menadue’s concerns, we have a health system that by international standards is not meeting our contemporary needs, is provider, disease, and hospital centric, held hostage by vested interested that dissuade governments from embracing structural reform, is very cost ineffective, does not focus on efficiency and equity while Medicare, which though in need of reform remains invaluable to Australians, is at risk.  In the second section of this commentary I will comment and expand on John Menadue’s suggestions for breaking the impasse and providing a structure on which we might be able implement needed change.

John Dwyer is Emeritus Professor of Medicine at UNSW.

Part 2 in this series was originally posted in August last year.

In my blog of 6^th October on what we can learn from overseas health systems, I drew attention and warned against government subsidised private health insurance. Any growth in this industry spells trouble for a good health service.

Another thing that we could learn from overseas experience is that our fee for service (FFS) for GP consultation results in higher costs and inferior treatment. There are many disadvantages in FFS.

• It drives up costs
• It encourages ‘turnstile medicine’ whereby the GP earns more money the more patients he or she treats. It is sometimes called ‘ten minute medicine’. Follow up appointments are encouraged.
• FFS leads to overprovision of care through over servicing. In Australia for example we see our doctor much more than patients in the UK or NZ where FFS is not practised at all or is being wound back.
• For many patients with chronic or multiple health problems, FFS is inappropriate.
• FFS is paid to the general practitioner in such a way that it discourages ‘team medicine’ and the use of other health professionals, particularly practice nurses, nurse practitioners and many other allied health persons, such as dieticians and physiotherapists.

Many countries have moved away from FFS in favour of paying GPs, at least in part, on a capitation basis. Patients are enrolled in a practice and the GP is paid for ‘looking after them’. FFS may be appropriate for occasional care but it is not appropriate for long-term care of chronic patients.

Capitation arrangements are widespread in NZ particularly for those with chronic healthcare problems. For 100 years capitation has been the principal means of paying GPs in the UK. In ‘managed care’ in the US capitation is widely used.

A capitation scheme in Australia could not be introduced overnight but we need to scale back FFS to improve the quality of care and to discourage over-servicing and over prescribing. FFS is a perverse incentive. It rewards doctors when patients are sick. Doctors should be paid to keep people healthy.

Another matter that we could learn from overseas is that we must find ways to overcome the split between commonwealth and state responsibilities in health. Broadly, the commonwealth funds general practice in the community and the states run public hospitals.

This division of responsibility between hospital and non-hospital care is a major barrier to integrated and effective health care. Successful countries in health care, again like the Nordics and the UK, don’t have this split responsibility. They all have unitary systems with delegated health delivered  to local levels within a defined national policy.

A major objective of any health service should be to keep people out of hospital. Hospital care is intrinsically more expensive and much more traumatic for patients. In his blog on August 20      Professor John Dwyer pointed out that if we had had a more effective integration of hospital and non-hospital care, we could have avoided 600,000 hospital admissions if there had been appropriate general practice care in the three weeks before hospital admission. That would be a very large saving.

A good health service must have a strong grounding in primary care and general practice. This is one reason why the UK system is so good. In the UK they understand better than we do that hospitals should be the last and not the first resort.  Unfortunately government ministers put priority into iconic hospitals rather than primary care. We spent for too much in hospitals and not enough in primary care

Primary and GP care provides the cheapest and best quality care and it can keep hundreds and thousands of people out of hospital. And when we have a good linkage between hospital and non hospital care, patients discharged from hospital can be effectively supported again by their local doctor.

But because of our federal system the integration of hospital and non-hospital care is difficult. In my blog of June 3, 2014 I outlined a way to address this issue through a single funder in each state. This is fundamentally a political problem which causes difficulties in the health sector. Unfortunately commonwealth and state health ministers and their health bureaucracies seem more concerned about health territory rather than a health system that best serves our needs. The ‘blame game’  in health is unresolved.

This article was initially posted in June last year.

There has recently been quite a number of articles, including in The Conversation, about what we can learn from overseas health systems.

Before looking at these international comparisons, it is worth reminding ourselves that we do have a pretty good health service in Australia. It is not as good as it should be, but Medicare has stood the test of time since 1974. It costs less than the average of all OECD countries, as a percentage of GDP. Nevertheless there are some things that we can learn from overseas experience that should guide us.

In my view the most important thing we can learn from overseas experience is to be extremely wary of corporate welfare to the private health insurance industry. If it is allowed to grow in Australia through government subsidies it will represent a major challenge to an efficient and universal system of health care. The taxpayer subsidy to the private health insurance industry in Australia is about $5b billion per annum. That subsidy is about three times the annual subsidy which we used to pay to our automobile industry. Private health insurance is an expensive financial intermediary that does not deliver any health services.

The evidence around the world is clear that private health insurance is both extremely costly and very unfair. At one end of the spectrum is the US which has one of the worst health systems in the world in terms of equity and value for money. It is horrendously expensive. That is due largely to the fact that the funding of so much of health care in the US depends on private health insurance.

Americans pay about 8% of their GDP in private health insurance premiums. These premiums are really private taxes. If these premiums could be transferred to the federal government, the US would have a better health service through a single funder and it would also eliminate in one swoop the US federal deficit. See my joint blog with Ian McAuley of December 26, 2013.  The scale of these private health premiums in the US gives some idea of the cost and the political power that private health insurance brings to bear. Experience in the US shows that a multitude of private health insurers cannot control costs and they weaken the power of the public funder to do so as well.  President Obama may have expanded coverage of health care but reliance on private health insurance instead of a strong public payer, or price control, means that he will not be able to control costs.

At the other extreme in private health insurance is the UK and the Nordics who all have strong public funders and health service and with little or no reliance on private health insurance. The result is that these countries have amongst the best health services in the world.

The growth of private health insurance in Australia is the greatest risk we face in health… This threat should not be underestimated. The $5 billion p.a. subsidy should be abolished and transferred to a Medicare Dental scheme. This would shore up Medicare as a strong public funder for the future and expand the coverage of Medicare.

But the signs are that the Coalition Government wants to go in the opposite direction and extend private health insurance. We know from experience in this country that the administrative cost of private health insurance are three times higher than Medicare, that private health insurance favours the wealth and , that private health insurance particularly through gap insurance  makes it more difficult for Medicare to control costs because of such policies as gap insurance. Furthermore private health insurance has not taken pressure off private hospitals.

Private health insurance enables the wealthy to jump the hospital queue ahead of other people. The private health insurance industry is now trialling in Queensland, and is lobbying to extend its role into general practice. An inevitable outcome of that would be that privately insured patients would be able to jump the queue in seeing their general practitioner.  But there is more from these destructive private health insurers. Despite the denial by the CEO of Medibank Pte, George Savvides, the AMA insists that Savvides told an AMA dinner in March this year that he would like to see private health insurance policy holders receiving priority in admission and treatment in emergency departments of public hospitals.

International warnings are clear. Private health insurance is a real threat to an efficient and equitable health service. Maintaining Medicare as a single funder of health services in a critical issue.

Whether health services are delivered by the private sector or the public sector is a secondary issue. For example in Australia at the moment private medical services are overwhelmingly delivered by private doctors even though Medicare is a public funder. Health services should be delivered by people and organisations that can ensure quality and best value for money. But a single public funder is essential in my view.

The private health insurance lobby in Australia is unremitting. It never convincingly argues its case. It relies heavily on secret lobbying. Before the 2007 election the industry made a secret deal with Kevin Rudd that a Labor Government would maintain the government subsidy for private health insurance.

If people want to waste their money on private health insurance that is their choice. But it is extremely bad public policy for taxpayers to subsidise this pernicious industry. Warren Buffet described private health insurance as the tapeworm in the American health service.

It is the same problem in Australia and we must resist any growth in taxpayer subsidised private health insurance that would take us closer to an American style disaster.  The corporate privileges for the inefficient and dangerous private health insurance sector must be rolled back.

That is the most important lesson to learn from looking at overseas health services.

This repost is an outstanding article on prevention that I originally posted in October last year. Part 2 will follow tomorrow.  John Menadue

One of the more curious decisions of the Abbott Government in its 2014 Budget was the decision by Health Minister Peter Dutton to reduce Commonwealth expenditure on prevention.

Funding for population health broadly is set to decline substantially – although the brunt of the cuts are for later years and the real devil is in the finer detail.

For the Commonwealth Department of Health in Outcome 1 – Population Health, the pain in the first full Dutton year is minimal – a decrease from $167M in 2013-14 to $166M in 2014-15 – peanuts! But even in this set of numbers, there are interesting messages. Prevention includes activities that “look like” medical work, for example immunisation and cancer screening programs. These areas were largely protected.

But prevention also includes the more difficult and contentious health promotion tasks – regulatory policy for alcohol and tobacco and food (which requires examining industry behaviours like advertising of junk foods, salt levels used in processed food, and alcohol promotions) as well as programs targeting people’s lifestyle choices in areas such as smoking, alcohol use, physical activity and eating habits. As we saw last week with Liberal Democrat Senator David Leyonhjelm’s outburst on “excessive’ smoking taxes and his right to accept Big Tobacco donations, these lifestyle messages and the regulation of these industries in the interests of population health is political by definition and is likely to be an anathema to libertarians and the hard right. The imagery reached for is that of a ‘nanny state’ – see the Institute of Public Affairs (another recipient of Big Tobacco largesse) for a detailed exposition of the position.

It is this latter area of work that took the real Budget hit.

Programme 1.2 of Outcome 1 (for us non-bureaucratic mortals this is the part of the budget dealing with drugs like alcohol, education against illicit drug use, and tobacco) was reduced from $224M in 2013-14 to $161M in 2014-15.   And it goes on. This area will be further reduced to $131M by 2017-18 according to the forward estimates – a decrease in nominal terms of over 40% – while some of the other population health activities actually see some modest increase in that period. The axe is being swung not only at the federal level. With the Dutton death blow to the COAG^[1] Partnership on Preventative Health, some $400 million of promised funding for the State and Territory Governments’ lifestyle prevention initiatives were axed as well – programs in particular focussed on children’s physical activities, community exercise and nutrition initiatives, education about lifestyle related risks and so on.

Is there good logic to this – why cut prevention rather than, for example, reducing funding for some of the 150 low-value medical interventions that have been identified?^[2]  Had the need for work in prevention lessened?  Were the metrics now moving so clearly in the right direction that government could turn its attention (and money) elsewhere? Almost all other developed countries had also been significantly increasing their attention and expenditure on prevention in the 21st century, were they cutting back too?

SNAP – but no crackle and pop

In 2011, the primary driver for establishing the National Partnership on Preventative Health was the alarming increase in preventable chronic disease related to people’s lifestyles.  These lifestyle issues – in particular Smoking, poor Nutrition, Alcohol misuse and Physical inactivity – the SNAP lifestyle risk factors – already accounted for some 40% of potentially preventable hospital admissions according to the Australian National Preventive Health Agency (not just a cutback but abolished in the 2014 Budget).   The growth of lifestyle diseases worrying those watching health expenditure were primarily in diabetes, various cancers, COPD, strokes and other preventable cardiovascular system diseases.

Let’s check how the SNAP risk factors are doing.

Tobacco

Tobacco reduction strategies are the star performers on a population basis – a national decrease from about 35% in 1980 to 16% in 2012.  That’s one of the lowest adult smoking rates in the world.  But with some big holes. The COAG Reform Council, whose job was to assess performance of governments against their stated targets (the Council was also abolished in the May 2014 Budget), reported on the performance of the Preventative Health Partnership in 2013 and noted that Indigenous smoking rates were much higher than those of the rest of the population – still over 40%. Also important were socio-economic factors – if you are in the lowest socio-economic demographic, you have a 25% likelihood of being a smoker as compared to a someone in a more advantaged situation. Further, the city-country divide is extraordinary.  The National Health Performance Authority (to be abolished as a standalone statutory body by decision of the 2014 Budget with the functions to be amalgamated in a mega ‘productivity and performance’ entity) reported in October 2013 that in areas such as the Grampians, smoking rates were 28% as compared to city areas such Inner West Melbourne where the rate was 8%. In general, on most of the risk factors for chronic disease, the further from the city you live, the less healthy you are likely to be!^[3]

While overall population figures might suggest that smoking is largely ‘done’, what the more granular data suggest is that success has been high in higher-income higher-educated urban populations and that significant effort is needed elsewhere where rates look like statistics from 30 years ago. Some focused attention was in fact occurring, in part. A major initiative – Tackling Indigenous Smoking – spearheaded by Tom Calma – was rolling out across Australia; it has had its expansion “paused” to undergo a review of its efficiency during 2014. One note of optimism: although not quantified in terms of expenditure, the May 2014 Budget committed to continue Australia’s defence of the plain-packaging of tobacco cases brought within the WTO and bilateral trade treaty arrangements.

Alcohol

There’s good news and bad news on alcohol. The evidence about alcohol as a risk factor has been mounting, and it’s a Group 1 carcinogen (ie good evidence it’s harmful to humans). This led a couple of years ago to a tightening of the guidelines from the NHMRC on alcohol consumption (the NHMRC is a medical research funder – and medical research is Abbott’s favourite thing – so it wasn’t significantly cutback, planned to be amalgamated or otherwise mauled in the Budget apart from the plan to set up a duplicating bureaucracy in the new Medical Research Future Fund).

Harmful consumption of alcohol has two forms – long-term consumption at risky levels and single occasion risky consumption (basically binge drinking).   Latest stats are that about 20% of the population continues to drink at levels risky to their long-term health – pretty well unchanged from the ABS results in 2007-08; half of males and one-third of females drank riskily for single occasion risk. These are quite high statistics at a population level. The good news is that since the 1970s, our per capita alcohol consumption has declined although it remains above the OECD average.

By far the most concerning SNAP areas are the ones leading to the disturbing trends in obesity and overweight. Both nutrition and physical activity contribute to obesity – more on the statistics and their implications in the next blog tomorrow.

***************

^[1] Council of Australian Governments

^[2] Elshaug AG, Watt AM, Mundy T, Willis CD. Over 150 potentially low-value health care practices: an Australia study. Medical Journal of Australia, 20212; 197(10): 556-560.

^[3] Risk Factors Contributing to Chronic Disease, AIHW, 2012.

In case you missed it, this is a repost of a blog that I posted on 12 December last year.  It is highly relevant to the continuing debate about copayments and general practice.  John Menadue.

The most distressing feature of the government’s determination to have us pay more for a visit to our GP is its the total lack of vision for the structural reforms we should be discussing to provide Australians with Primary Care services that meet contemporary needs, are equitable and more cost effective. Instead of focussing on new models of care that around the world have been shown to achieve better health outcomes than we enjoy in Australia, the  $5 reduction in the remuneration for a standard GP consultation will make matters worse. The logic associated with this latest initiative is seriously flawed. Placing the money saved into a research fund means that the proposed reduction will do nothing for the budgets bottom line, the imperative presented to us in the May budget.

The Government wants to send a “price signal” to Australians to remind us that no longer can we expect Medicare to be free. Australian taxpayers provide every cent of the 19 billion dollars we spend each year on Medicare. If you pay to join a tennis club but do not pay extra for having a game of tennis you don’t consider that game to have been free. There is in fact plenty of evidence that current additional expenses associated with Primary Care see many delay seeking help and unable to afford prescribed medicines. Our out of pocket expenses for health care top 29 billion dollars a year, on a per capita basis, second only to the United States.

Australians on average, make five visits per year to a GP.  That does not suggest that we are abusing our entitlement to Primary Care services such that we need to be discouraged from visiting our doctor. With health expenditure at 9.3% of GDP there is no health budget crisis and there is time to make structural reforms that would achieve better outcomes and continue to make our expenditure sustainable.

The truth is that many of us need to visit a GP more frequently if we are to avoid the pain and suffering associated with chronic disease, the problem that is eating up the majority of our health care dollars. Many rural Australians, whose health outcomes are disgracefully inferior to those of their city cousins, would willingly consult a GP more frequently if there were GPs to consult. If Rural Australians accessed Medicare funded services as frequently as urban Australians the cost to Medicare would be an additional two billion dollars.

The future availability of sufficient numbers of general partitioners is already problematic. Only 13% of young doctors express any interest in becoming a “GP”. Only one percent are contemplating a career as a rural GP. Primary Care training is rigorous and GPs are true specialists. How does all the rhetoric from Canberra about the pivotal role they play sit with the proposed $31 fee for a standard consultation? Given the training required and the responsibility associated with medical care this fee is frankly insulting. The discrepancy in the income potential for GPs when compared to that of other specialists is now huge. No wonder young doctors considering career options are increasingly ruling out Primary Care. The ability of GPs to consider “bulk billing” the majority of their patients is only possible if the total remuneration they receive is satisfactory. Bulk billing doctors will not be able to absorb the five-dollar cut in the Medicare rebate and are appalled by the added levels of bureaucracy and paper work that the new arrangements will entail.

Young doctors looking at the professional life of our GPs are uncomfortable with the current “fee for service” model which encourages “turnstile” medicine that is so professionally unfulfilling. Many GPs join corporate Primary Care providers preferring a salary. In New Zealand the government has facilitated 85% of the nation’s GPs moving away from “fee for service” payments. The same is true for 65% of US Primary Care physicians.  Throughout the OECD health systems recognising the perverse incentives associated with fee for service remuneration are exploring changes that increase a GP’s remuneration for keeping people well.

Were it not for the destructive division of health care responsibilities shouldered by State and Federal governments, Canberra would not be looking at Medicare as if were in isolated from the rest of the health care system. Hospital expenditure, at more than 50 billion dollars per year, dwarfs Medicare spending and is increasing more rapidly. There is now abundant international evidence that we should be spending more on Primary Care services to reduce the spiralling cost of hospital services and at the same time achieving better health outcomes for the community. Just this week the UK government has been presented with a review that concluded that an extra 72 million pounds spent on improving Primary Care in the community would save the system 1.9 billion pounds by 2020! The future of quality hospital care in our country is totally dependent on reducing demand for hospital services through better Primary Care.

A competent government would be looking at the way we can introduce the highly successful “Medical Home” model of Primary care where teams of health professionals populate a practice and are available to enrolled patients. The infrastructure is available to help people avoid illness, have potential problems recognised earlier, offer coordinated “in house” care for people with chronic problems and care for many in the community currently sent to hospital. But no, all we discuss is this five-dollar impoverished initiative. The Abbott government should abandon this latest plan and start a dialogue with health professionals and the community about needed structural reforms that would extract far more health from the available dollars.

Professor John Dwyer is Emeritus Professor of Medicine UNSW.

If there’s a problem in primary health care then nurses are (and always have been) the solution. 

Susan Sontag wrote in 1978 “Illness is the night side of life: a more onerous citizenship. Everyone who is born holds dual citizenship, in the kingdom of the well and the kingdom of the sick”. I was working in palliative care nursing when I first read this and it struck me that, continuing the metaphor, nurses were therefore like tour guides for those negotiating these health care kingdoms of both the well and the sick. We provide the translator services (“what did they say nurse?”), the coordination of meetings and events (“I need an appointment to see…”); the advice on what to do and how to do it (“I don’t know how to work this spacer thing”), and always, always, always the assistance to do whatever needs to be done when people lack “the necessary strength, will or knowledge” (Henderson, 1966) to do it themselves.

If we look to primary health care (PHC) there is clearly a need for “tour guides” in this space, whether it be to help them stay in the kingdom of the well or to assist them to travel in the kingdom of the sick. John Menadue has suggested the key is to rethink funding for general practice. I would go further. The key is to rethink who provides the bulk of PHC and then think about how to fund it.

In 2009 I compiled a compendium of nurse-led PHC models in 38 countries for the World Health Organisation (WHO, 2009).The elements of PHC identified for reporting purposes in the template were that each service, programme or project should:

• provide essential health care based on practical, scientifically sound and socially acceptable methods and technology;
• be universally accessible to individuals and families;
• involve full participation of the community;
• have a cost that the community and country can afford to maintain;
• foster self-reliance and self-determination;
• be an integral part of the country’s health system and overall development; and
• have an entry level for patients located close to the heart of the community.

The main needs of the populations served were those of the chronically ill and the elderly, basic social and infrastructure needs, psychological and mental health needs, maternal and child health needs and acute care needs (particularly in war zones).

To provide a local example of what is possible, the work of an Aboriginal renal nurse practitioner in Australia with both indigenous and non-indigenous groups suffering from end-stage renal disease brought about significant health gains. The need for this role was identified as a result of the rising number of people needing acute dialysis 24 hours a day. A retrospective study of the causes of this rise suggested that 80% of the patients had risk factors that, if addressed early enough, would have prevented admission to the tertiary referral hospital for acute intervention. These risk factors were further examined and the diagnostic, clinical and referral skills required to address them were evaluated, and it was found that the scope of practice of a nurse practitioner met the requirements. The community nephrology nurse practitioner was able to develop and implement nursing models that integrated evidence-based clinical management with nursing advocacy for quality of life.

Two key areas, considered central to the success of the case studies, presented challenges for a number of contributors. These were the issues of reliable and adequate funding and resources, and challenges to narrow thinking about the capacity of staff to take on new roles. The issue of sustainable funding; access to other resources such as medication, equipment, textbooks and staff created significant challenges. Some projects were completely or predominantly funded through the charitable sector (for example Chile, Haiti, United States). For example, a US project working with a poor community in Chicago sought its primary funding from a charity, and supplemented it with grants from no less than 16 funding sources and a further 13 in-kind donation sources. The time required to undertake the fundraising, administration and reporting on so many donations takes the nurses away from much-needed care delivery.

In addition, there were a number of reports of medical and some nursing staff having difficulty in letting go of conventional and stereotypical thinking about who ought to perform which tasks. This issue has been much studied and discussed (Chiarella 2002) and has been described in relation to affirmative action as the ‘myth of the meritocracy’ – the possibility of work being taken on by another group, unless similarly qualified, is unthinkable because they are seen as incapable of meeting the challenge (Hall 1997). Yet there is ample evidence and experience to show that different personnel and community members are capable of equal, high quality participation in health care decision-making and delivery. Strong claims to maintain the status quo are often made on the grounds of safety and quality, but the evidence about the outcomes demonstrates this resistance to change is based only on protecting professional power and privilege.

There is such potential to harness the skills of nurses to provide first class primary health care in this country, yet currently we seem to move further and further away from this potential and back to outdated models of health care provision that service only those who can afford to pay.

Mary Chiarella is Professor of Nursing, Sydney Nursing School, University of Sydney.

Last year taxpayers spent A$6.3 billion on GP services through Medicare, about 6% of the total government health expenditure. This was a 50% increase (A$2.1 billion) in today’s dollars over the past decade and equates to about A$60 more per person in real terms.

Health Minister Peter Dutton says this growth is “unsustainable”. He plans to introduce a GP co-payment in hope of reducing the number of times Australians visit a GP and to ensure users foot some of the bill.

But targeting primary care for cost savings could backfire. Research we’re releasing todayshows that while the number of GP visits has increased, the services are cost-effective. If the same services were performed in other areas of the health system, they would cost considerably more.

Under pressure

Unsustainable or not, Australia’s health-care system faces a number of challenges, most notably from the rising prevalence of chronic conditions, such as type 2 diabetes, heart disease and cancer. This is due to three major factors.

1. Australia has an ageing population as our world-class health system keeps us alive longer.
2. In response to government encouragement through Medicare initiatives, GPs are diagnosing disease earlier and providing preventive interventions for health risk factors and diseases such as hypertension, high cholesterol and type 2 diabetes.
3. An increasing proportion of Australians are overweight or obese, putting them at risk for chronic conditions.

Earlier diagnosis means people are living longer with diagnosed disease. The result is exponential growth in required care over their lifetime.

The search for more cost-effective health care for our population should be applauded. But reducing spending on GP services is not the answer.

What do we get?

Our team has been studying general practice activity for over 16 years through the Bettering the Evaluation and Care of Health (BEACH) program. This cross-sectional encounter-based study uses changing random samples of about 1,000 GPs per year, each of whom contribute details of 100 encounters with consenting patients. This provides a representative sample of about 100,000 encounters per year from across the country.

Results from one of the BEACH books, released today, shed some light on what we got for the $2.1 billion of extra Medicare spending on general practice. In 2013-14 there were 35 million more GP services than ten years earlier, a 36% increase. This included 17 million more attendances by patients aged 65 years and over (a 67% increase).

Length of GP consultations recorded through BEACH suggest that the average consultation now takes almost one minute more than a decade ago. The result is that GPs spend an extra ten million clinical hours with their patients, a 43% increase.

The number of problems managed at these consultations has also significantly increased. GPs managed an additional 68 million health problems at these encounters (an increase of 48%), including 24 million more chronic problems.

Management of these problems involved an additional ten million procedures (a 66% increase) and 12 million clinical treatments, such as counselling, advice and education, than a decade ago.

 In addition to Helena Britt, other contributors to this article were:  Christopher Harrison, Clare Bayram, Graeme Miller, Joan Henderson and Julie Gordon. The Article first appeared in ‘The Conversation’ on 11 November 2014.

The adjustments that Tony Abbott announced to the Medicare co-payment are presumably intended to remove this particular ‘barnacle’.  According to Graham Richardson, that self-styled political expert writing in the Australian, Abbott’s parliamentary colleagues ‘are breathing huge sighs of relief … that the Medicare co-payment has been so restructured that it scarcely exists anymore’. Really? Are they stupid or don’t they and Richardson know the facts?

The reality is that the $7 co-payment has been abandoned for pensioners, other card-holders and children, but for the rest of us the co-payment is still $5 a visit instead of $7. Furthermore, this difference of $2 has been taken back from the doctors who were previously going to receive this $2 while the government got the remaining $5. According to Abbott’s press release the revenue raised by this latest version of the co-payment will still amount to more than $3 billion, which is not much less than the $3.5 billion shown in the Budget; the difference of $0.5 billion presumably reflecting the loss of revenue from pensioners and children who will now not have to pay this extra charge.

In my view there is almost no chance of doctors lowering their prices by $5 and thus absorbing it, especially given the government’s intention that the Medicare rebates will be frozen with no indexation until July 2018. Instead, now that the doctors will not get the extra $2 that the government previously thought was justified, why would anyone expect the doctors to take another cut of $5 per visit.  Accordingly the $5 co-payment will almost always be passed onto the patient. Everyone will pay $5 more; about half of us for the first time, and the other half will have another $5 added to their existing co-payment. And with the Medicare rebate frozen it is likely that the extent of bulk billing will fall over time so that the co-payment will effectively increase by more than $5 on average over the next few years.

While removing the co-payment for pensioners and children has significantly ameliorated the impact of the co-payment on the lowest income groups, this latest change in the co-payment therefore does little for middle Australia.  The majority of people will be $5 worse off instead of $7 worse off and why should they be expected to thank the government for this.

Nevertheless, it has been argued that the budget has to be fixed and expenditure brought down, and in that context setting a price signal is good policy if we are to make health funding sustainable. The issue then is will the new $5 co-payment be more likely to deter unnecessary visits to the doctor, or is it more likely to deter patients who should see their doctor? In the latter case the co-payment is likely to lead to increased health expenditure where necessary treatment is postponed.

We cannot be sure of the answer to this critical question whether doctor visits, which might be deterred by the co-payment, are necessary or not. But it is worth noting that around half the people affected by the new co-payment, already face a significant price signal so in their case the risks would seem to be more towards the risk of not seeing a doctor when they should. While for those who will face a co-payment for the first time, it is worth noting that the increasing use of hospital outpatients wards, notwithstanding very long waiting times, seems to suggest that people with tight budgets are mostly not seeing a doctor unless they have a good reason.

Finally as John Menadue showed in his blog posted on 12 December there are many other better ways to restrain the future growth of expenditures in health care. So what Abbott’s announcement of his revised co-payment demonstrated is that we have yet another example of not very good policy that the voters are again likely to reject – the worst of all possible worlds.