When problems in healthcare hit the headlines, as they so often do, extra spending on health is inevitably suggested as the solution.

However, there are a number of reasons why this may not be warranted (and don’t forget that health care is already arguably the biggest business in Australia, consuming 9.0% of GDP in 2006-7).

First, it is not clear that the Australian healthcare system is operating as efficiently as it might be. If it is inefficient, then additional expenditure may be wasted rather than used effectively.

Second, there is no plan for the Australian healthcare system. It is reasonable to want to know what return additional investment is expected to deliver. The Australian healthcare system is 69% government funded, so public accountability demands an answer to this question.

Third, the law of diminishing marginal utility means that each additional dollar spent on healthcare delivers less than the previous one. Money spent on healthcare is money not spent on education or combating global warming or to reduced taxation. The community may feel that money would be better spent on one of these things.

One common theme underpinning these issues is that outcomes measures for the Australian healthcare system are limited.

The health of non-indigenous Australians compares favourably with the rest of the world. For example, our life expectancy is, 81.4 years, second only to Japan. The evidence suggests that this is due to a high standard of living and social equality, rather than the quality of our healthcare system.

This phenomenon is reflected in the fact that among OECD countries there is no relationship between expenditure on healthcare and health measures such as life expectancy.

Performance measures for healthcare in Australia have tended to focus on health outputs rather than outcomes because of the difficulty of linking health outcomes to health system inputs.

Political and media attention tends to focus on waiting lists rather than on the health of the people needing care because waiting lists are easily measured. The problem is that, even at this level, it is not clear that Australia is as efficient as it might be: As noted Australia spends 9.0% of GDP on healthcare, compared with 8.3% in the UK. In Australia in 2006-7, 90% of patients waiting for elective surgery were admitted within 226 days, about seven months. In the UK less than 1% of patients wait more than six months.

There is a similar difference in emergency department performance. Incidentally, life expectancy in the UK is 79 years, demonstrating that health outcomes and health outputs do not necessarily align.

Important performance measures are lacking. A 1993 study found that 16.6% of hospital admissions were associated with an “adverse event”, and in 4.9% of these, the patient died. These figures are comparable with those in other Western nations.

Significant investment has been made in quality improvement in healthcare across Australia. Unfortunately the impact of this investment is unknown because the study has not been repeated.

The significant investment in quality in the absence of any assessment of the value this provides is symptomatic of the single biggest problem with the Australian healthcare system: It is not clear what it is trying to achieve and so we can’t have a plan to get there.

The numerous reviews of healthcare seem to assume that what we are presently doing is good and doing more will be better. Such an approach ignores the opportunity cost of health expenditure.

Quite apart from this, more healthcare is not necessarily better. If more and more less and less necessary health services are provided, but the rate of adverse outcomes in the healthcare remains unchanged, then the risk of harm for any individual will increase, while the additional benefit declines.

Additional investments in healthcare should only be made in areas where it can be shown that they will add value. Additional funds are required to identify robust outcomes measures and collecting them so that this is known. Only once these data are available can it be said that additional investment in healthcare is worthwhile.

These are Patrick Bolton’s personal opinions and do not represent the views of any organisation or institution with which he is affiliated.

Peter Fray

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