Despite the vigorous public debate about performance pay for teachers, no-one has been arguing the case for performance pay for doctors.

This is curious as the community has at least as much to gain from increasing health care quality as they do from improving educational standards.

We know that Medicare is failing the most important test facing our health care system – the effective prevention and management of chronic disease.

Currently, the top 10 causes of disease burden in Australia are chronic conditions, such as diabetes, asthma and heart disease. Together these conditions account for 43% of our total burden of disease and are responsible for thousands of preventable hospital admissions each year.

Improving our prevention and early management of chronic diseases will reduce our overall disease burden and keep people out of hospital for longer, saving scarce hospital beds for those who really need them.

But to do this we need a different payment system for doctors.

Our current system of rebates for GP services was designed to support episodic and acute care. It is not suited to the more complex tasks required for effective chronic disease management, such as longer-term care planning and collaboration with other health professionals.

Paying doctors based on the number of times they see a patient makes no sense if the goal is to keep people as healthy as possible, so they require care less often. It means that doctors who under-perform by poorly managing chronic disease are paid more than those who excel in delivering high quality care to people with complex conditions.

Chronic disease programs introduced by the previous government focus on paying for activities, such as preparing care plans, rather than for outcomes. This undermines doctors’ professionalism by prescribing tasks, instead of rewarding them for using their knowledge and expertise to find the best ways of keeping their patients healthy and out of hospital.

Unlike in the case of teachers, we have solid evidence that performance-based pay for doctors works. In 1993, former Health Minister Michael Wooldridge introduced outcomes-based payments for GPs who achieved high rates of childhood immunisation among their patient population. This increased childhood immunisation rates from 53%, when the program was introduced, to over 90% today. It is one of Australia’s greatest health policy success stories.

Health Minister Nicola Roxon has rightly identified managing chronic disease as one of the major challenges of her ministry. Re-focussing Medicare to pay for outcomes, rather than activities, would be a great first step in achieving this important goal.