Amongst the deluge of reports on health reform that are released almost daily, here is one that is well worth a read. The Parliamentary Library has produced its annual Budget Review, and it gives a very useful analysis of health and aged care reforms and federal budget announcements.

My short and rather brutal summary is that a lot of money is being spent on health reform for most uncertain outcomes, while so-called reforms in medicines and pharmacy policy look to have benefited the pharmaceutical and pharmacy industries more than the public purse or public policy. Meanwhile, the government has wimped out on significant health workforce reform, while taking only baby steps towards achieving the promise of e-health.

Here are some snippets from the paper (and thanks to Australian Policy Online for the pointer to this report).

General overview


“….questions could be raised as to whether or not the Government has exercised sufficient fiscal responsibility in relation to the establishment of a National Health and Hospitals Network. Has the government spent too much in gaining the support of the premiers for this reform, especially given that there is some debate as to whether or not the reform will achieve its stated objectives. In relation to savings measures, it could be asked whether or not more significant savings might have been made by the Government in what it pays for medicines…the costs and benefits of the Government’s approach (in health and hospitals reform) will most likely be the subject of much debate for decades to come.”


“While the health funding and reform commitments in the Budget are significant, some argue that aged care, mental health, Indigenous health and dental health have not received adequate attention. The calls for greater investment in these sectors are likely to continue into the future. Mental health in particular remains an area of significant stakeholder concern.

“Reforming the health workforce to meet the challenges of current and future health needs continues to be a challenge for policy makers and, while alternative workforce options are being investigated, this Budget appears to have favoured more traditional solutions. Nevertheless innovative approaches, such as the budget proposals to manage patients with diabetes (and veterans with chronic diseases) through fund-holding arrangements, signal a preparedness to explore new models. However, changes are usually associated with uncertainty and questions remain over whether such approaches will deliver better care or create perverse incentives.

How the proposed independent Local Hospital Networks and Medicare Locals will improve integration and coordination at the local level is yet to be determined. Governance arrangements need to be established, performance standards set, information and data systems established, reporting protocols agreed and, not least, goodwill established between stakeholders and vested interests overcome. Furthermore, although Western Australia will continue to be funded through the existing National Healthcare Specific Purpose Payment arrangements, it will continue to remain outside these arrangements as long as it is not a signatory to the COAG agreement. A truly national reform program therefore remains an elusive goal.”


A noteworthy reform in aged care

p 161

“One of the more notable initiatives in the aged care budget was the introduction of consumer-directed aged care packages. These were a recommendation of the NHHRC and will give older Australians and their carers greater flexibility and choice about the type of care they access. Under this initiative, consumers will be able to tailor their care to their needs and make decisions about the design and delivery of the care provided to them. This represents a shift from the current model where care is largely linked to the package, not the consumer. Implementation will be phased, with 500 consumer directed packages to be released in 2010–11. The Government has not detailed what support (if any) will be provided to consumers about making decisions in relation to their care or when negotiating with service providers to ensure value for money.”


Only baby steps in e-health

P 166

“The idea of an efficient, secure national electronic personal health record system was arguably one of the most substantial reforms advanced by the NHHRC—an important systematic opportunity ‘to improve the safety and quality of health care, reduce waste andinefficiency, and improve continuity and health outcomes for patients’. The commitment in this Budget to such an e-health future is considerably less than some expected. It is short of recent estimates by the consulting firm Booz and Company which concluded that Australia would need to spend between $4 and $8.5 billion to implement an e-health strategy. As a number of commentators have pointed out, in effect, the commitment in this Budget is but ‘a small investment’. It appears the general consensus is that considerably more funding will need to be invested to ensure viable e-health outcomes.”


Pharmaceutical industry has done well

p 172

“The Government has signed a Memorandum of Understanding (MOU) with Medicines Australia which is designed to ensure ‘a stable environment for business and continued access to new medicines for all Australians’.

Although measures announced in this Budget are predicted to garner the Government $1.9 billion of savings over five years, the MOU with Medicines Australia also includes a guarantee that the Government will not seek to impose any further price savings on the pharmaceutical industry before 30 June 2014 or introduce any measure which favours the dispensing of generic medicines, thereby possibly precluding further measures which could deliver additional savings to the Government.”


Pharmacy owners have also done well

p 177

“The 5th Community Pharmacy Agreement was finalised on 3 May 2010 and the full details have been released with this Budget. The total value of the 5CPA is now $15.4 billon, around $300 million higher than originally announced. The projected savings are unchanged, highlightingthe strong negotiating skills of the Guild.

With one notable exception, the 5CPA does not appear to materially differ from past agreements. …

Three features of the 5CPA which benefit pharmacy remain relatively unchanged from previous agreements and each of these is not without controversy—the location rules, the continuation of the wholesaler Community Service Obligations payment in full (with a pause on indexation until 2011), and a dispensing fee for each PBS prescription dispensed. A new fee has also been added. This provides for $0.15 per transaction to be paid to pharmacists dispensing scripts under the Repatriation Pharmaceutical Benefits Scheme (RPBS) and under co-payment prescriptions that are generated electronically. This is expected to cost around $75.5 million during the life of the 5CPA.

The retention of the community pharmacy location rules includes the prohibition on a community pharmacy being co-located in a supermarket. The location rules were first introduced in 2000 as part of the Third Community Pharmacy Agreement and were amended in 2004 to prevent supermarkets from operating pharmacies. Critics have argued that these arrangements are anti-competitive, limit access and choice in rural and remote areas and prevent young pharmacists from owning their own business as a result of the high cost.

Due to the location rules, there are limited opportunities to open a pharmacy in most capital cites and major towns, resulting in a concentration of ownership and a relatively constant number of pharmacies across Australia since 1990.

Prior to the negotiations, media reports had suggested that the Government was prepared to ‘reassess’ the location rules. It was argued that population growth and lack of competition within the sector warranted a systematic review. The preservation of location rules, however, does raise questions about the influence of the Guild and why, despite widespread deregulation and increased market competition in the broader economy, pharmacy continues to be protected by successive governments.

The 5CPA reinforces the fee-for-service model for community pharmacy. This is in direct contrast to many of the reforms announced as part of the National Health and Hospitals Network which signal a shift from fee-for-service to block funding for the provision of services. Pharmacists are essential to the timely provision of PBS medicines, yet this does come at a cost to Government. It remains to be seen whether the projected savings will be realised, if consumers will benefit from the proposed changes to existing programs and how pharmacy will be integrated into the proposed Medicare Locals, the National Health and Hospitals Network and the new payment arrangements.

Both the MOU and the 5CPA are expected to deliver considerable savings to the Government, but there is no requirement in either agreement that these savings be delivered, or any indication what the consequences might be if the projected savings are not realised.

Both agreements limit the action of the Government for the next five years, creating certainty for the branded pharmaceutical industry and pharmacists, but potentially limiting the capacity of Government to respond to new and emerging policy challenges.

The overarching policy framework for the PBS is the National Medicines Policy and the objectives of access, equity and affordability. It remains to be seen whether the MOU and the 5CPA advance these objectives.”


Tobacco measures could have been fairer

p 191

The paper cites widespread public health support for the tobacco excise increase, but notes: “What the Government has not done for low income and disadvantaged groups is provide additional assistance such as increased funding for smoking cessation programs. For example, the Government has not adopted a March 2010 recommendation by thePharmaceutical Benefits Advisory Committee that nicotine replacement therapy patches be placed on the Pharmaceutical Benefits Scheme and subsidised by taxpayers. This was also one of the recommendations made by the National Preventative Health Taskforce. In short, the tobacco excise increase is not as progressive as it might have been had it been accompanied by further measures to assist low income and disadvantaged groups, such as those outlined by the National Preventative Health Taskforce.”


Questions about workforce reforms

pp 192-93

The paper says there are questions about whether the investment in expanding a general practice nurse initiative will “deliver where it is most needed”.

“There appears, for example, to be no guarantee that solo practices, which could gain great benefits from the services of a practice nurse, will be eligible for funding under the measure. Similarly, it could be asked if it would be more appropriate to encourage nurses into aged care, rather than general practice. This is particularly so given the increases in medical practitioner numbers that will be realised, albeit not for a decade or so, as a result of government initiatives. Because this initiative focuses on supporting the traditional, medico- oriented perspective of health teams, it could be seen as a backwards step to realising a more cooperative and collaborative health workforce in the future.

In essence, the Government’s enthusiasm for reform in other areas of the health portfolio is perhaps not matched in the workforce area. While previous budgets hinted there might be underlying enthusiasm to explore multiple options for workforce change, this Budget appears to have embraced a more traditional solution.”