What will yesterdays COAG agreement mean for hospital financing, health reform and the community’s health?

You can read what the PM and Premiers have agreed here, see attachment A in particular. Part of the agreement includes a commitment to sign a full National Health Reform Agreement by 1 July 2011.

Thanks to the many Croakey contributors who share their thoughts on these matters below (as always, there is a range of perspectives, but one strong theme is: primary health care reform is where the main game should be, and we still don’t know where it’s heading…)


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What about the elephant in the room?
Associate Professor David Atkinson, Broome, WA

In my view the new ‘deal’ is an improvement of the very complex Rudd approach, however it continues to be tinkering at the edges and neglects the main areas where real reform is needed.  Reform to primary health care, mental health and aged care are essential if the efficiency of expensive hospital services is to improve.

The plan for more ‘Medicare Locals’ is probably an improvement over one Medicare ‘Local’ for almost one-third of Australia in the previous plan. However, Medicare locals remain poorly defined and would still appear to be part of the problem not the solution.  Divisions of general practice, rebadged as GP health networks, do not have expertise in health reform or even allocation of funding.  The idea that amalgamating some of these organisations will produce the expertise to reform primary health care is ludicrous.

Not surprisingly this ‘deal’ does not address the elephant in the room. Private health insurance subsidies, all completely unaccountable, are why the Commonwealth is unable to fund its share of public hospitals. Vast subsidies to private health insurance are a major part of the cause of health inequality in Australia and without reform of the PHI rebate public health care for the majority of Australians will suffer.


How can we reward innovation and excellence?
Health policy expert Dr David Briggs, University of New England, Editor of the Asia Pacific Journal of Health Management

The agreement between the Commonwealth and the States on health reform needs to be seen in context, particularly given the short time frame from the announcement of last year of the Rudd led reforms.

We now have an agreement in principle that mostly focuses on funding and financing of the acute hospital sector. It will deliver more funds overall and a fair price mechanism for hospital procedures which should demonstrate relative levels of efficiency and provide data about effective utilisation. Hopefully, this will enable more informed decisions about how well we are using the taxpayer’s money.

Of itself, it does not guarantee improved healthcare or even improved access for rural regional and urban minority groups.

The establishment of national organisations to make transparent the funding (Independent Hospital Pricing Authority-IPHA), to monitor performance (National Performance Authority-NPA) and an apparent strengthening of the Australian Safety and Quality in Health Care Commission role in improved national safety and quality outcomes are significant investments and should be seen, in my opinion as precursors to a more nationally unified health system.

The significant departure from the promise of the Rudd reforms is that of greater community engagement in local health services and more local management. The admirable words supporting these major initiatives are still in the agreement but if the recent restructures into local health networks at the State and Territory level are meant to represent the health system’s response, then we are looking at a consolidation of highly centralised control of planning, policy and service delivery as most of the States and territories continue in these multiple roles. It is interesting that real transparency is proposed at the National level while effective separation of the multiple roles at the State/Territory level is effectively dismissed.

As the headlines say ‘the devil will be in the detail’. There are significant issues still in delivering an effective electronic record and in addressing workforce shortages, particularly in rural areas. These issues will continue to impact adversely on access and services will continue to be delivered in silos for at least the next decade while Medicare Locals (MLs) are ‘bedded down’.

The real test of the reform will then be how best to align the ML and LHN to ensure delivery of coordinated and integrated care across sectors and silos.

Now that we have a financing structure the next step is not more restructure but how best to provide incentives to providers to work together, how to recognise and reward innovation and brilliance in healthcare and to recognise that States and Territories, LMs and LHNs do not have to be all things to all people. Their major role should be in ensuring those services are available and accessible for all.

Rewarding innovation and brilliance in healthcare at a more local level by health professionals might prove to be the greater tipping point in health reform. Some of us would like this to be the emphasis of what will be continuing reform.


Now can we revisit the idea of a National Aboriginal and Torres Strait Islander Health Authority?

Selwyn Button, Queensland Aboriginal and Islander Health Council

The Queensland Aboriginal and Islander Health Council welcomes the signing the of the Heads of Agreement between States and Territories to commence the National Health Reform process, and takes comfort in the decision to establish a National Health Funding Pool to oversight the distribution of health resources throughout states and territories.

This concept is not too dissimilar to the only major recommendation from the original National Health and Hospitals Commission review report that sought to establish a National Aboriginal and Torres Strait Islander Health Authority to provide oversight for policy development and resource implementation supporting the improvement of health outcomes for Aboriginal and Torres Strait Islander people.

Ironically, the Authority for Aboriginal and Torres Strait Islander people was discarded by government when first considering the implementation of the review recommendations, although has seemed to raise its head when seeking to ensure transparency of outcomes for the broader community.

Perhaps the new proposed Authority may now reconsider the original recommendations of the review report and seek to enable Aboriginal and Torres Strait Islander people across the country access to the broader mainstream health resources, which is the only way we will really achieve the desired results of closing the gap in life expectancy rates within a generation.

Furthermore, this new Authority should also focus upon supporting the resourcing of community controlled health services across the country through mainstream primary health care expenditure to ensure improved outcomes for Aboriginal and Torres Strait Islander people, as recent research has proven that community controlled models of service delivery in primary health care are achieving up to 50% better outcomes than those in government services and private practices.


No news is not necessarily bad news for mental health
Psychiatrist Professor Patrick McGorry, former Australian of the Year

Yesterday’s COAG agreement on healthcare, like its predecessor in 2010, says almost nothing about mental health. Yet unlike 2010, the absence of mental health from the agreement will not attract the same chorus of disapproval and disbelief.

The main reason for this change is that there is a growing sense within the Australian community that Prime Minister Gillard is serious when she talks about mental health being a priority for her Government. This confidence is enhanced when Premiers such as Mike Rann and Colin Barnett add their support for action on mental health.

We will only know for sure at the May budget whether this confidence is justified, but it is fair to acknowledge that over the last few months Prime Minister Gillard has taken a number of positive steps to lay the groundwork for mental health reform. Most notably she has appointed Mark Butler as Minister for Mental Health and tasked him with developing and delivering a credible mental health reform plan.

Whether the COAG agreement reached yesterday helps or hinders the momentum building for mental health reform is unclear as substantial discussion of mental health by heads of Government has been deferred until the next COAG meeting.

What is significant about yesterday’s healthcare agreement is that it represents such a significant departure from the agreement reached last year under Prime Minister Rudd.

As long as the COAG 2010 healthcare agreement remained in place, it choked off the potential for meaningful growth funding in mental health care for 3-4 years. After so much vocal community concern about the poor state of mental health care across the nation, it would be inexcusable for Prime Minister Gillard and the Premiers and Chief Ministers to significantly re-engineer the 2010 agreement without addressing this structural funding barrier to mental health reform.

We will soon know whether heads of Government have learned from the experience of last year, and are serious about kick-start a large scale program of reform and investment in mental health care. Such a reform process will require sustained funding growth over 5-10 years to make 21st Century mental health care available to every Australian who needs it.

The Australian Government will need to increase its funding influence over this period, principally directed at providing accessible, high quality, whole of life and out of hospital mental health care. For their part States and Territories will need to improve the quality of acute hospital based care for mental ill-health. If both layers of Government can fulfill these responsibilities, then the prospects for mental health reform are genuinely good. However, the agreement reached yesterday tells us little about whether this will be the case – what happens next will be much more instructive.


What about the real reform issues?
Public sector financing expert, Ian McAuley, Fellow of the Centre for Policy Development

Understandably health administrators are saying “the devil is in the detail”. They have a huge task, particularly relating to the determination of standard costs for items of service.

Political pundits will see this as a success for a government still seeking to establish its legitimacy.

In terms of hospital funding it should achieve much of what the Rudd reforms were designed to do; we should see efficiency gains over time. Some economists may be puzzled that states were unenthusiastic about the Rudd reforms. States’ health care costs have risen from 22 percent of their budgets to 26 percent over the last ten years and are still growing; in that fiscal context the GST clawback looked attractive for the states. But that is to ignore other issues to do with the way powers are shared in a federation.

Those efficiency gains will be welcome; our public hospitals are costing around $35 billion a year, and various experts estimate that there is scope for 10 to 20 percent improvement in their operating efficiency. This is a sector in which work practices and use of cost saving technologies lags most other industries by decades.

Yet, the problem remains that this is still a hospital package, not a health package. After years of neglect by the Coalition Government, the Rudd Government had an opportunity to bring together health as an integrated system, centred on the needs of people, rather than on the traditional provider-based divisions. These divisions – primary care, pharmaceuticals and hospitals – are still entrenched. While hospital reform is necessary, we are still no closer to achieving an integration of health services. The patient’s journey is still through different administrative systems and different funding agencies.

The Rudd Government got off to a bad start when it established the National Health and Hospitals Reform Commission (note that even in its name is separates hospitals from health). This was a body of insiders, experts in their own fields, but who lacked the capacity to step back and see the opportunities for fundamental reform. They saw reform in terms of incremental improvements in existing arrangements, rather than in fundamental structural change, and they were too conscious of the influence of vested interests, particularly private health insurers.

Perhaps this agreement may sow the seeds for more basic reform, for the Commonwealth now has an open-ended stake in the growth of hospital costs. That financial stake may force it to consider how well-directed policies in public health and primary care can start to reduce our need for hospitalization.

Julia Gillard should now set about this bigger and more difficult task.  It will take time, but so too did the big structural industry reforms initiated by the Hawke and Keating Governments. It’s now time for a similar process in health.


A good beginning but a long road ahead
Professor Stephen Leeder, University of Sydney

The new COAG agreeement advances the cause of health reform by developing a new measure of national unity about how to face the challenge of increasing demand for health care.

By achieving buy-in from all states and territories and the Commonwealth, symbolised by the formation of a national health service funding agency and greater availability of information to citizens and government about what is being done with the billions invested, much progress has been achieved.

We should all be aware though that the long term problems in health care require decades to achieve full reform. Services can be adjusted to improve access to emergency care and elective surgery quite quickly but the big changes towards greater integration of hospital and community care and improved efficiency may take ten to 15 years.

But this is a good beginning.


There is plenty to like but let’s keep an eye on the detail
Carol Bennett, Consumers Health Forum

Getting the agreement of all states and territories in any major policy area is a major triumph and that’s the case in the preliminary agreement they signed with Prime Minister Julia Gillard at yesterday’s COAG meeting.

Overall, we health consumers will benefit from this Agreement but, as with everything as complex as health funding, the devil will be in the detail.

Here’s what the Consumers Health Forum likes:

  • A single national funding body – opportunity for more transparency and comparability between states.
  • More funding for a creaking hospital system – a total of $19.8 billion ($16.4b for hospitals and $3.4 billion extra for emergency departments, elective surgery and sub acute care);
  • A better targeted community focus though Medicare Locals.
  • Efficient pricing: at last consumers may be able to see how the money for services is actually being spent and whether they are getting value for money around the country. Until now, Commonwealth funding has disappeared into the black hole of state and territory budgets.
  • Greater community input, through trained and accredited consumer representatives who will have a say about how their local services are working to meet their needs.

All of that said, there are areas that are not mentioned in the communiqué that we’d like to know more about, particularly what efforts and funding there will be to ensure that our health services are better integrated.  The fragmentation that exists at present between hospitals and primary care services is one of the major bugbears for health consumers.

When it comes down to it, people who use and pay for the health system don’t really care too much about how their health services are funded. They want services that work efficiently, that are easily accessible, that are seamless and that are value for money.

We welcome the Prime Minister’s focus on getting the system right for health consumers rather than taking a health systems view.  In the coming months of wrangling over the detail we will continue to ensure that the voice and experiences of health consumers is listened to and taken note of in these discussions.


Primary health care reform needs substantial investment
Dr Mark Foster,  GP Access (aka The Hunter Urban Division of General Practice), Newcastle

The COAG agreement steps back from some of the Rudd reforms, but establishing agreement with all States and Territories is a step forward.

The proposed establishment of an independent national body to administer both State and Commonwealth funding for hospitals has potential to provide incentives for the hospital system to be efficient and meet performance targets. Whether this is achieved will depend on the final detail of the agreement and then improvement will depend on how this is implemented over time.

What we need to remember though is that even if the hospital system reforms work, they will achieve at best a short term reprieve if nothing is done to reduce the demand on acute services. This can only be achieved by strengthening primary health care.

It is good therefore to see that the agreement includes continued commitment by the Commonwealth Government to its primary health care reforms. It is also good to see mention of a specific focus on mental health.

Health reform investments to date have been dominated by increases in hospital funding. Further increases in primary health care funding have been flagged but these will need to substantial if Medicare Locals, and the primary health care reforms are to succeed.


The PM seems to be making progress in mental health
Professor Ian Hickie, Brain and Mind Research Institute, University of Sydney

The most recent attempt at national health reform is, from a mental health perspective, a small but significant step forward.

Real progress towards a single national funding pool for public hospital services is welcome. This will have important ramifications for improvement in hospital-based mental health services.

Of greater importance, is the clear COAG agreement to deal specifically with mental health in the very near future.
This has been championed by key Premiers including Mike Rann and Colin Barnett.

Most importantly, the Prime Minister is now responsive. She has a capable minister, Mark Butler, now focused on the task.

The challenge will be to turn this increased focus and goodwill into real outcomes – with a need to move swiftly to new community-based models of care.

Those new models will need to work closely with housing, employment, education and training and social services.
COAG will need to support innovation, particularly in the key area of early intervention services that have the capacity to transform the system.

Additionally, national accountability and transparency are key drivers.

We now appear to have a Prime Minister capable of pushing hard on that agenda – it is one that is urgently needed in mental health.


Now we need some action from Medicare Locals
Gordon Gregory, National Rural Health Alliance

It is to be hoped that this agreement will clear the air on hospital funding so attention can now move to improving primary care.

In rural and remote areas this means increasing the supply of primary care services (for early intervention, prevention and management) which in turn requires getting a decent supply of health professionals.

Once the services actually exist then the focus can shift to their proper coordination and management – heading for integrated primary care delivered by members of an interdisciplinary health care team.  (You can’t coordinate services that don’t exist!)

The identification of critical healthcare gaps, and this coordination of primary care, will be the task of Medicare Locals – and it will be a big ask for Divisions and other primary care providers to create new local entities with the necessary capacity.

In rural and remote areas Medicare Locals will need to be properly funded to meet the greater needs that exist: poorer health status, later diagnosis, poorer access, greater health risk factors etc.
In many areas they will need to deliver quickly some improvement in mental health, dental health, and integration of mainstream and community controlled Aboriginal health services, among other things.

So a great deal of the energy, hope and frustration that has built up around health reform will now focus on Medicare Locals and it is good news that there will be more of them established this year and more in total.

(The Alliance’s view is that they should be genuinely ‘local’ so we see the promise of a greater number as a good thing, despite the challenge it will give them where economies of size are concerned.)

As the details of the hospital agreements are confirmed, people in rural and remote areas will look for confirmation that block funding will be provided to smaller rural hospitals (or MPSs).  People in those areas want and need acute care facilities within a reasonable distance – whether provided by something called a hospital, an MPS, an acute care clinic and/or an integrated ambulance service.

Security of funding for hospitals should reduce the pressure on states to further ‘rationalise’ acute care services.

Rationalisation is the bane of the rural and remote health sector because evidence shows that once a particular service is lost. it is hard to regain.


Yes, there is some good news but still plenty more to do
John Mendoza, Director, ConNetica Consulting Pty Ltd, Adjunct Professor, Health Science, University of the Sunshine Coast, Adjunct Associate Professor, University of Sydney

The Heads of Agreement deal stuck last night is a significant improvement on the Rudd Health Reform package announced last April.

Firstly, it is a national deal with bi-partisan political support. The Federal Government was never going to get WA to hand over a third of its GST and faced the prospect of the newly elected Baillieu Government Victoria and an O’Farrell Government in NSW walking away from the deal. The fact that not one jurisdiction had signed the formal documents to hand over the GST, was a clear signal this was not going to happen.

Secondly, a single national statutory authority for funding will be a major step forward. The shady days of squirreling away Federal health funds for all manner of local political projects are over.

Third, this Agreement aligns with the key recommendations on the NHHRC on governance and financing long abandoned by Rudd when he embarked on his national hospital and bedside chat tour in 2009. The National Pricing Authority, National Funding Pool agency, a strengthened Australian Commission on Safety and Quality, along with the National Preventive Health agency, will address many of the structural problems identified by the NHHRC in our state controlled, hospital-centric health care system. This is subject to effective legislation for each authority.

The Agreement however again fails to tackle the urgent areas of priority identified by the NHHRC – namely mental health, dental health, rural and remote health and indigenous health. It seems addressing these critical issues will be an appendix to the core agreement.

There is no funding commitment other than a statement that “residual funds” (unspent hospital funds) can be spent by the states/territories on a range of issues including mental health. So again it seems mental health gets a few crumbs from the COAG smorgasbord.

We know that in mental health alone, the gap between current spending ($5.3b this year) and what is required (around $9b) is huge. The COAG agreement of 2006 on mental health effectively got us 20% of the additional funding needed. When we will see the next step toward closing the gap in mental health care?

And the Agreement fails to address the governance weaknesses of the Medicare Locals. It seems that Medicare Locals (will rely on goodwill and not much more) to influence Local Hospital Networks (set up as state statutory authorities with legal powers), individual primary care providers, the community health and social service providers and the all powerful professional bodies to build an effective primary health system. The Medicare Locals also have so little money to work with, it is hard to see them fulfilling their charter. One doesn’t need a degree in governance to see this is likely to lead to a diversity of outcomes and a continuation of our inadequate primary and community care services.


How can we move usefully beyond technical reform?
Associate Professor Paul Dugdale, ANU

The ‘in principle’ agreement is a technical reform aimed at putting in place the right drivers and feedback loops for engineering a substantial increase in funding for the health system, within the bounds of political acceptability. This is pretty dry stuff.

The evolution of the detail needs to offer tangible hope for better care to a variety of people: those caught out by waiting lists for surgery, those appalled by their treatment in emergency departments, those confused by the management of their chronic disease, those so worried about using their private health insurance that they choose to go public, those with simple problems who get caught up in techno-confusion and clinical buck-passing.

The ‘detail’ needs to let people see what the reforms might mean for them. Unfortunately, this is different for different types of people, and so a whole set of implications and public messages needs to be crafted – and delivered upon.

This is a great opportunity for professional governments looking to build their support through segmental politics and targeted consumer messaging, but will frustrate anyone looking to cut through with a simple message.


Good in principle but let’s wait for the detail
Professor Ian Olver, CEO, Cancer Council Australia

In principle, if the COAG Health Reform agreement serves to better define who is responsible for funding for particular components of the public health system thereby avoiding duplication, blame shifting and cost shifting both the patients and those who are employed in the system will benefit and we certainly support that.

The detail of implementation is important to the success of this reform and we await this further detail.


Is community health sector at risk?
Associate Professor Gawaine Powell Davies, CEO, UNSW Research Centre for Primary Health Care and Equity

Looking at the detail currently available, it seems that the focus is squarely on hospitals and hospital funding. This is disappointing: little has been done to bring the orphans of health care, dental health and mental health, into the fold, and little to reduce our dependence on hospital care.

If, as I understand, the Commonwealth will no longer fund 100% of primary health care, this may leave us with the current system of split funding and accountability which has hamstrung this sector for so long.

This may make the task of Medicare Locals easier – if they do not have to accommodate existing state community health services – but perhaps at the expense of better coordinated and protected primary health care. The accelerated development of Medicare Locals may or may not be a good thing: sometimes it is better to hasten slowly and learn as you go.

One would have to be concerned for community health: the Local Health/hospital Networks are likely to focus even more than at present on pre- and post- acute care, with even less focus on other primary health care roles. This may be less important in states like Victoria where much of community health is in the non-government sector, but a much bigger problem in NSW.


Now can we move on the population health focus?
Professor Helen Keleher, Public Health Association of Australia, and Monash University

With the agreement on changes to hospital funding arrangements now struck between the various jurisdictions, primary health care reform is now the main game.

The hospitals agreement has changed the focus of health reform and we ask Health Ministers to reaffirm the importance of reforms to achieve better health outcomes across the community through advancing public and population health as well as primary health care.

We await a vision from Health Ministers for Medicare Locals which must encompass core values of equity, effectiveness and efficiency.  Only with that breadth of vision can we achieve a better health in our communities which in turn, can reduce the use of hospitals.

A key element of the reform package includes population health planning. For the first time, government is requiring the new primary health care organisations (Medicare Locals) to develop comprehensive data to assess the health status of local populations, to audit the social determinants of their health and use this information to inform the ways in which health services can overcome gaps and reduce inequities.

For too long we have relied on primary care services designed for the worried well and those who can afford to consult medical practitioners. Population health approaches should allow the social and health gaps to be identified and socio-economic disadvantage be addressed so that we really can achieve health reform and better health outcomes for all.


The remote sector is feeling left out
Carole Taylor, CEO, CRANAplus

It seems that Primary Health Care reform is being shelved and the sole focus is on hospitals and the private sector medical model.

There is little or nothing in it for the remote sector (or so it seems). I feel it is a bit of a smoke screen for the States with no real detail about pooling and how the funds will be distributed.

The expansion of the Medicare Local program is a little concerning as the tender process whereby it allows those other than Divisions to enter the ML arena will be difficult to achieve with the accelerated tie frame – need to look closer at the detail.


Where is the political will for primary health care reform?
Health policy analyst Jennifer Doggett

It will be easier for health bureaucrats and the community as a whole to see where our tax dollars are being spent in the hospital sector and to compare performance across states. However, it still leaves the door wide open for disputes around the margins over how much each state and territory should be contributing to the joint pool and over the definitions of growth funding versus recurrent funding.

Overall, reforms in primary care have the best chance of delivering lasting gains to the efficiency and effectiveness of our health system. To achieve this, the Prime Minister now needs to focus on creating a primary care sector that delivers high quality, coordinated and preventive care and which is genuinely centred around consumers and their needs.

This will require a substantial investment of funds and political capital. Powerful interest groups, such as the AMA, will strongly oppose the much needed shake-up of doctors’ near-monopoly of Medicare funding and a move away from the fee-for-service system of health financing.

Achieving major changes in these areas will be a greater challenge than persuading the States and Territories to hand over some responsibility for hospitals. However, if she walks away from the health reform agenda now, the $16 billion spent on achieving the modest gains of the COAG agreement on hospitals will be wasted.


It’s about funding, not health
Professor Stephen Colaguiri, University of Sydney

… it is impossible to work out what, if anything has been achieved and what it will means for patient care and preventing chronic diseases. This won’t be apparent until the technical details are worked through.  At present it is a new “funding agreement” rather than a new “health agreement”.


Will there be more accountability?
Dr Mark Ragg, director of the health and communications consultancy Ragg Ahmed

If we go right back to the start … a major issue of concern is the lack of accountability in the health system.

Consumers are confused, quite understandably, about areas of responsibility. Under current arrangements, cost-shifting is easy. So is blame-shifting.

On any single issue, bureaucracies and the body politic can find a way, sometimes reasonable and sometimes not, to say ‘it wasn’t me!’

Will the change just announced be enough to stop that happening? Will we finally be in the position where a consumer working their way through the health system can know who is responsible for what? And who to contact if there are problems? And reasonably expect their concerns to be addressed?

We’ll see.


Reform of Ministerial Councils is welcome
Professor Mike Daube, Curtin University

One aspect of the COAG statement that may get overlooked is the long-overdue rationalization of Ministerial Councils. This should be beneficial, even if it probably entails significant losses for Qantas.

The Ministerial Council on Drug Strategy goes. This was established by the National Drug Summit of 1985 and did some useful work, but had become weighed down by complex support structures, and a reality that most key issues were dealt with by Ministerial Councils responsible for Health and Law Enforcement.

Tobacco is already dealt with by Health Ministers. It will be important to ensure that alcohol and drug issues remain as a regular item on the agendas of Health and Police Ministers.


Primary health care reform still lagging
Dr Tony Hobbs, rural GP who chaired the external Reference Group that developed Australia’s first National Primary Health Care Strategy

It’s a pragmatic response to a situation which needed to be resolved and hence the deal that’s on the table.

Despite the Prime Minister saying that she wants more attention on primary health care, most of the conversation is about hospital reform, hospital financing and governance. Only one of the five key points was around primary health care, and there was very little detail on that.

We are still not at the crux of the matter which is about primary health care reform and a primary health care system which will do what the ministers want to have happen, and that is to keep people in the community and to keep them out of the hospital with a focus on chronic disease prevention and management.

I do share the AGPN’s concerns about the move towards smaller Medicare Locals. We want primary health care organsiations to have the capacity to be able to deliver on those key things that need to be done. This is a more organised approach with population health planning which is about meeting the needs of those who most require services.

At the moment we spend most on those least in need. All of the planning and all of the conversation over the last couple of years suggested we needed about 50 primary health care organisations across the country. So suddenly to be talking about having more smaller organisations is a worry.


A political rather than a health solution
Dr Michael Vagg, physician in Victoria

At first blush this looks like nothing but a cobbled-together political solution that conveniently delays the real hard work until at least another election cycle.

It would appear that the PM is willing to consider any grudging agreement from the premiers to be a victory, even though it would have been well-nigh unthinkable for the states to have left the meeting without at least a heads of agreement, given the time wasted on securing a new deal by the previous PM. The PM had the fish in a barrel and may still have shot herself in the foot, as the new agreement does not look any more likely to work in practice as the previous idea did.

The extra red tape generated by a Pricing Authority and the pool it is required to interact with is potentially huge. This does nothing about the potential for ‘gaming’ the funding system which is currently dragging down the efficiency of the hospitals and distorting treatment decisions (for example hospitals giving priority to elective surgery such as orthopaedics which is a hot political topic where waiting lists are closely monitored, and ignoring chronic pain, general surgery and other treatments which are not as closely scrutinized).

Politically it leaves a flavour of compromise and backdown by the Federal government which is little short of total abandonment of Rudd’s bold plan, which had flaws but also strengths enough to possibly compensate for them. Whereas the States would have had to gut their health bureaucracy under the Rudd plan they are likely to stay intact now, and this will be one more set of powerful interests which will fail to make running a local hospital any easier.

The PM also beats the drum for primary care and preventive health but has just overseen an agreement which will keep the interests of primary care and hospitals forever at odds.

Medicare Locals will be funded entirely separately from acute and subacute care, leaving no incentives for innovation or co-operation. In some regional areas there may end up being direct conflicts of interest for GPs who are involved with both entities. As we currently actually have no idea how Medicare Locals will work and the new agreement is mostly hypothetical anyway (Barry O’Farrell could still sink it singlehandedly) there is lots of froth and bubble and no substance yet to any major reforms proposed by the Federal government.

One hopes that these new bodies will fare better than AHPRA which is a dysfunctional basket case already, and managing to make a royal mess out of what should have been a fairly manageable bureaucratic transition process.


Some welcome steps forward
Health economist Professor Gavin Mooney

There are important steps forward here, especially with respect to transparency, and that needs to be recognised. Failure yesterday would have been little short of disastrous.

Where real effort now is needed is to put in place procedures that will ensure increased ‘efficiency’ – and having this so-called ‘efficient price’ does not by itself do that since there is more to greater efficiency than lowering prices. This needs to be backed by some form of clinical budgeting to provide the right incentive structures.

And we need to keep a close eye on equity – by and large disadvantaged people with the same condition cost hospitals more. And smaller (regional?) hospitals may not get economies of scale.

And we need to recognise that asking the Australian public what they see as the social objective of hospitals is unlikely to provoke the response of ‘to maximise efficiency-price-weighted cases’! There is more to the good of hospitals than that.

But fingers crossed, the Australian health care system turned an important corner yesterday.


The move to look beyond acute care is welcome
Professor Lesley Barclay, University of Sydney

… the clarity and more straightforward nature of arrangements looks refreshing and more manageable. The linking of primary care and making sure that this emphasis is not lost is also good and shows priorities of Government are not just acute care.


Some concerns…
Professor Paul Glasziou, Bond University

..any major change in funding mechanisms is also an opportunity for other reforms – good and bad – to occur.

The “health-reform-hasn’t-started” article had some useful data and ideas, but it’s the detailed process that will matter in the end.

We have an agreement to pool funds on a metaphorical house, but without a plan or a builder at the moment.

One of my concerns is that financial incentives/pay-for-performance will increase (like the UK models).


At first glance, it looks good
Professor Philip Davies, University of Queensland

An initial response is ‘a welcome simplification that retains many of the stronger points of the initial Rudd-plan while removing some of it’s superfluous complexity. Of course, there’s still a lot of practical detail to be fleshed out…’


Can this Government really be trusted to manage reform?
Ron Batagol, pharmacy consultant

To me, the concerns that I have are on a few fronts:

1.       The capacity within the new arrangements to work out what is the efficient price, taking into account all of the legitimate local individual variations between States and individual hospitals, and whether this will take into account the variable needs of teaching, research etc.

2.       Locking the Federal Government into 38% funding for a long period.

3.     All about hospitals which is critically important, but no integrated programme to incorporate seamless care between institutions and community-based care, especially for the chronically ill.

4.  The greatest worry of all – this particular Federal Gov. ( under two Prime Ministers), being competent enough to effectively oversee large bureaucracies with any big spending programmes!!

I mean, after all – electrified roofs, million dollar tuckshops? And much more!  And in the health field – a Super Clinics programme that is moving at snail’s pace with a rollout longer than War and Peace and still waiting to get enough doctors!!

What actually staggers me about this latest Health Agreement is that none of the journalists have asked the Prime Minister the obvious questions:

i.e. “If your judgement under the previous Rudd plan was that it was the best plan, how come you now think your latest plan is a better one?”


“ How come you didn’t tell us then that Rudd’s programme needed to be drastically modified?”

and, most importantly of all

“Why should we believe you now rather than then?”

I really have to wonder why these sort of questions are not put to her!

And, yes, I know that the Opposition doesn’t demonstrate it could do better, but in a sense at this time in the electoral cycle, that is irrelevant. It is this Government which holds the purse strings and which has yet to demonstrate that it can actually spend large amounts of money on Government programmes without wasting it on expensive consultancies and bureaucracies!

At the end of the day, what we need most in the health field is greater resources for trained health professionals to provide co-ordinated state-of-the art health care programmes to those patients who need it most and in locations that they can easily access their care when they need it!

I really do fear that the type of reforms proposed, with this Government overseeing it, and the States likely to be reluctant to give up their control of the hospital purse-strings, will only add layers of further bureaucracy with even less funding available for important clinical and teaching programmes.


Why the focus on sickness?
Justine Caines OAM, Consumer Health Advocate

Prime Minister Gillard said her main concern was a “better deal for consumers”.  How can this be the case without any lasting blueprint for prevention and wellness?  Our politicians are rusted on to a system of sickness and hospitalisation.  Powerful vested interests peddle sickness and to date no politician has had the guts to take them on in the interests of the wellbeings of Australians now and our future generations.


Some more reading

• A Crikey wrap, including extracts from above

• ABC story

• SMH story

• Some of The Australian’s stories

•Plus Alan Kohler at The Drum

Additions to the original post

So what’s really changed?
Tania Hanzar, President – ACT Branch, Australian Health Promotion Association

Well the good news is that now states and territories now dont have to worry about their 30% GST being taken away, therefore more money could and should be allocated to prevention and health promotion! Otherwise, this is just an easy excuse for jurisdictions to continue with business as usual.

The most concerning statement from this is that Ms Gillard also secured a jointly-signed national partnership agreement dealing with targets in emergency departments and elective surgery. This says to me that it is still based on an economic model in which the more people they get through the door (so to speak), the more money that gets pumped into the hospital system! It’s just a different funding model.

Obviously we need a health system that is well equipped and well set up to deliver acute and chronic care services, but we also need a reorientation of the entire health system. How about we address the underlying determinants of health and try and keep people healthier for longer and out of hospitals as much as possible?