Sunday 11 April now looms as one of the key dates between now and the Federal election later this year.  That’s the date when the Federal Government will present its new National Health and Hospitals Network proposal to a COAG meeting and, as Kevin Rudd said at lunchtime today, if they reject it, he “will take this reform plan to the people at the next election.”

Between now and then, we’ll hear much of what will probably become the mantra of the Government’s reform plan, “funded nationally, run locally”.  The plan also involves a switch to activity-based funding, to commence in 2012, with major implications for how hospitals are run in states like NSW.

The core of the proposal is for the Commonwealth to amend the GST agreement with the states – by roughly one-third – and take responsibility for:

  • 60% of the “efficient price” of public hospital services;
  • 60% of public hospitals’ recurrent expenditure on research and training;
  • 60% of the cost of maintaining and improving public hospitals infrastructure; and
  • Up to 100% of the efficient price of ‘primary health care equivalent’ outpatient services.

Funding will no longer be paid in block grants but via activity based funding.  Funding for procedures will be based on an “efficient national price”, independently set by a national regulator taking account of regional and population issues, and paid to Local Hospital Networks that will be substantially smaller than current regional health administration areas.

The plan envisages a transition from current state-run hospital administration to the new model, with the development of national performance indicators that will enable comparisons between hospitals.  The Local Hospital Networks will be governed by councils with clinical representatives and a CEO, and will be relatively small entities covering geographically or functionally-linked hospitals.

The Government will also take over funding of all GP and primary health care services with the aim of better coordinating patient care and the transition of patients between hospitals and out-of-hospital treatment.  The Prime Minister also today flagged coming announcements on the areas of:

  • medical workforce training;
  • more hospital beds;
  • better GP services; and
  • e-health.

Kevin Rudd must be hoping the states and territories are up for a fight, giving the opportunity to appeal to voters in a referendum that will pit Rudd versus state governments, with the Opposition stuck trying to differentiate itself in the middle.  Apart from anything else, it would help Federal Labor dissociate itself from the terminally-unpopular NSW Government.  The emphasis of the plan on local control enables the Government to outflank Tony Abbott, who has begun calling for local hospital boards.

The reform package enables the Government to get back on the front foot and start shaping the political agenda again after weeks of being buffeted by the insulation issue, focusing voters’ attention back onto an issue that, for all the criticism of Rudd for delay in launching the package, presents substantial advantages for Labor.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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