submissions

First published: Thursday, October 2, 2014

From a patient perspective we don’t have a health system. The nightmare for patients consists of multiple poorly connected pieces: the public hospital system, the publicly subsidised private hospital system, the GP system, the publicly subsidised private specialist system, the community care system, the publicly funded private allied health system, the mental health system, the private dental system, the publicly funded private dental system, the public dental system, the Aged Care system, and a myriad of other pieces.

Submission to the Senate Select Committee on Health

Health policy, administration and expenditure

Prepared by:  Dr Tim Woodruff vice president, on behalf of the Doctors Reform Society.

The Doctors Reform Society is an organisation of doctors and medical students which formed in 1973 to support the introduction of a universal health insurance scheme (Medibank). It is an organisation which continues to advocate for a health system which aims to address all preventable causes of poor health outcomes.

Terms of Reference

The impact of reduced Commonwealth funding for hospital and other health services provided by state and territory governments, in particular, the impact on elective surgery and emergency department waiting times, hospital bed numbers, other hospital related care and cost shifting;

1. the impact of additional costs on access to affordable healthcare and the sustainability of Medicare;
2. the impact of reduced Commonwealth funding for health promotion, prevention and early intervention;
3. the interaction between elements of the health system, including between aged care and health care;
4. improvements in the provision of health services, including Indigenous health and rural health;
5. the better integration and coordination of Medicare services, including access to general practice, specialist medical practitioners, pharmaceuticals, optometry, diagnostic, dental and allied health services;
6. health workforce planning; and
7. any related mattersThank you for the opportunity to address the many issues covered by the very broad Terms of Reference. Because they are so broad and because this committee will not be reporting until 2016, this submission highlights issues which can be expanded on as the committee focuses on the various issues that it chooses to address. We would be delighted with the opportunity to expand on such issues as they arise.Access to affordable health care  (a.)

   Our understanding is that changes announced in the May 2014 budget include abandonment of the National Partnership Agreement and a case mix funding mechanism which intended an increase in Commonwealth Funding to the States in the order of $1.8 billion over 4 years. In addition the abandonment of the agreement for the Commonwealth to fund 50% of new spending by State and Territory Governments into the future and revert to the old funding model will also lead to less funding by the Comm Government over time when expressed as a percentage of total hospital funding

   These changes will mean that the capacity of State and Territory Governments to fund public hospitals adequately will be reduced unless another source of funding is found. While an increase in the GST may be one way of proceeding, this will not happen easily or quickly, if at all.

   With these budgetary changes the 55% of Australians who depend on public hospitals for all hospital services will clearly be forced to wait longer than they do already for elective procedures.  We already have two tiered access to elective surgery, one for those who can afford private health insurance (PHI) and one for those who can’t. These changes will make that even more apparent as waiting times for elective procedures become longer. It is important to note that information on waiting times is not currently available across the nation and there appears to be little interest by most politicians to find out what those waiting times are. Whilst the AIHW and the Stats and Te publish data on waiting times, such data are grossly misleading as it refers only to waiting times from when a decision is made by a hospital specialist to list a patient for a procedure. It totally ignores the time taken to get from a GP or other specialist to have that decision made by the hospital specialist. That time can be 3 years or more.

   Unfortunately, access to other hospital services is also becoming increasingly two tiered because of inadequate funding of public hospitals. Those with life threatening problems are still treated in a timely fashion and the quality of care remains as good or better than would be received in a private hospital but there are increasing delays in investigation of possible life threatening conditions: e.g. procedures to investigate for cancer, where cancer is not a high probability. This wait can be extremely stressful for the patient.

   In addition, if public hospitals continue to be inadequately funded it is possible that access to or quality of care for those with Category 1 problems (i.e .life threatening), will decline. If that happens even the most wealthy may suffer and even die because Emergency Department care is suboptimal and even the wealthy sometimes need such care because that’s where everyone goes in cases of serious illness or accident.

   Another aspect of the proposed changes relates to primary health care. The intention (as stated by the Treasurer), is to reduce use of government services by the use of copayments (new for general practice, increased for pharmaceuticals).  Investment in primary health care is the cheapest way to provide care. If there is inadequate primary health care this leads to increased need for more expensive hospital care. If patients struggle to afford pharmaceuticals, they are more likely to become sicker. Thus these changes, although possibly saving money in one area of the health budget, will increase costs in another area. In addition they will lead to more preventable illness and even preventable deaths as patients go to GPs later in their illness than they should. We want patients to come early so that they can be diagnosed and treated early because that improves outcomes. Cost savings to a small part of the health budget should not be the priority especially to the primary health care budget.

   The general practitioner is critical to the Australian health care system and is perhaps the most efficient and under-rewarded component of the system. They perform a valuable “gatekeeper” role, which can maximise efficiencies in the use of the system, and are also vital to early prevention and diagnosis.

   In Australia’s mixed private-public system failures or under-resourcing at this level can translate through to much more expensive and ineffective care in general and, in particular, in the private sector, in which the array of perverse incentives rewarding the provision of extra care ensure a ballooning of health expenditure.

    

   Sustainability (a.)

   Medicare and indeed the Australian health system in general is not expensive by world standards. For example despite claims by the Commission of Audit to the effect that patients are seeing doctors too often, no data were presented to justify this claim.

   In addition, GP visits (which is what this extraordinary claim relates to), constitute a relatively small percentage of health expenditure and the bulk of increases in expenditure are occurring in other areas, driven by other factors ( improved and more expensive treatments and specialist investigations and treatments driven by the perverse incentives inherent in the private medical system )

   Despite repeated claims by the Treasurer that patients were seeing doctors on average 11 times/ year, the figure is about 5/year and unchanged over the last 10 years. Costs of care are rising as care becomes more sophisticated, but as a percentage of GDP the costs of the health system remain below OECD average. The costs of some areas in the health system are rising faster but there are multiple ways suggested to improve the efficiency of those areas eg the PBS, public hospitals, Medicare rebates, which do not affect equity and access. They have been ignored. Addressing these issues would help to make more sustainable both  Medicare and our health system in general.

   Health promotion and prevention (b.)

   The changes to and reduction of funding for the various agencies involved in these areas does not make sense. Of course one should avoid duplication of services and have streamlined bureaucracy. But the absence of dedicated bodies to guide policies in these two areas will lead to less initiatives in these areas which are so crucial to moving to a healthy society which emphasises health rather than just treats illness.

   Healthier people are more productive and less illness means less demand on the more expensive parts of the health system, such as hospital care. It is therefore better for the economy as well as for individuals to optimize strategies for health promotion and for prevention.

   Interaction, integration, co-ordination (c. &  e.)

   From a patient perspective we don’t have a health system. The nightmare for patients consists of multiple poorly connected pieces: the public hospital system, the publicly subsidised private hospital system, the GP system, the community care system, the publicly funded private allied health system, the mental health system, the publicly funded private dental system, the public dental system, the Aged Care system, and a myriad of other pieces.

   Thus, any initiatives to improve integration and co-ordination of Medicare funded services and all other services including Aged Care, need to be encouraged. No new funding has been committed to Primary Health Networks which are to replace Medicare Locals and are charged with co-ordination of health care. These organisations do need to evolve, but they are central to the creation of a health system that is a true system, rather than the myriad of health services listed above. They will need more funding if they are to fill that role adequately.

   More needs to be done, however, at a structural level to facilitate integration and co-ordination. Barriers to integration need to be recognised and addressed. Fee for service medicine needs to be recognised as such a barrier and an expansion of alternatives needs to be considered eg capitation, enrolment for primary health care services, increased salaried specialists in public hospitals, increased public radiology and pathology services.

    

   Improvements in the provision of health services (d.)

   Many regions of Australia and many economically disadvantaged groups do not receive the same level of health care as other Australians. In addition cultural differences also lead to poor access to useful, culturally appropriate health care services.

   There are multiple factors that lead to geographical barriers to health care, some of which cannot be addressed. There have been many different programs and projects to decrease these barriers, some of which have been partially successful. One barrier which has not been addressed is the fee for service funding mechanism for most GP and specialist care. The data clearly show a gradient of Medicare rebate funding from wealthy inner urban areas to remote and rural Australia. As a famous Welsh academic GP Julian Tudor Hart stated in the Lancet in 1971 ‘The availability of good medical care tends to vary inversely with the need of the population served’

   Alternative means of funding need to be considered so that the amount of money spent on those in more remote areas is at least the same, if not more than, those in urban areas (more needed because it costs more to provide services remotely). Whilst the prime method of funding remains fee for service this disparity will not be corrected. Regional funding through block grants on the basis of need based on demographic data and burden of disease and allowing for increased costs for providing services in more remote areas should be considered. Thus, funding should be on the basis of need, rather than on the basis of capacity to pay.

   Geographical disadvantage in access to medical care has many drivers. A core driver is the lower practice costs and greater profitability of both specialist practice and general practice in the city. Access to the financial rewards of private practice is greater in metropolitan areas, which contributes to significant shortages in specialist workforce in rural and regional Australia.  Similar effects are seen in the General Practitioner workforce.

   The rural specialist workforce is an ageing workforce and the difficulties in attracting staff have lead to an increased reliance on overseas trained doctors, both specialist and generalist. These doctors do excellent work, but there is high turnover in some areas, especially once their specialist qualifications are recognised locally and any geographical restrictions on their visa are lifted, allowing them to move to more attractive areas.

   This structure also lays down further problems for the future, in that regional specialists whose qualifications are not yet recognised by Australian Colleges are commonly unable to participate as supervisors of basic and advanced training for local graduates wishing to train in rural areas.

   Other determinants include “non-professional” factors such as educational opportunities for children, employment opportunities for partners and the wider range of leisure, cultural and recreational opportunities available in larger centres. Planning for regional services must address these factors as well.

   The effects of isolation and workload on the ability to remain medically up to date and to maintain an effective CME (Continuing Medical Education) regimen are important and are probably rather more amenable to a focused governmental approach than the wider family and lifestyle factors affecting the choices made by medical practitioners and their families

    

   Any related matters (g.)

   Australian can now sadly claim to have a very two tiered system in relation to access to elective surgery. Waiting times from referral to having a total hip replacement can be several years in the public system and a month or so in the private system.

   Proposals to expand the scope of PHI to cover various aspects of primary health care may be quite beneficial to those who can afford PHI. The majority of the population do not have PHI because it is too expensive. They will not benefit from such changes.Access to various aspects of primary health care will become two tiered. This will impact maximally on the most needy and vulnerable but will also have flow on effects to the middle class who will find PHI premiums rise to address the increased benefits apparently conferred and, if affected by serious illness which reduces income, may well find themselves going bankrupt trying to afford health care in the private sector ( Health Care costs are the leading cause of personal bankruptcy in the USA ) or forced to use the public system.

   The Commonwealth Government has indicated that it believes Medicare is meant to be a safety net, despite the fact that this is quite contrary to the intention of its founders and also fails to reflect community attitudes about Medicare.  As a safety net, its quality will be at the mercy of the political and economic forces of the day. This is about the Americanisation of our health system just as we see the United States struggle to move away from such an inequitable, unfair, and much more expensive system.

   Much of the public discourse about this issue has been characterised by statements that Australian Healthcare costs are “unsustainable” and will become more so. As we have shown, the evidence proves that this is not in fact the case, Australia’s system being distinctly average in terms of cost as a percentage of GDP, with  performance which is better than average. It is clear that the repeated use of the word “unsustainable” has more to do with propaganda and “spin” than with rational argument based in truth.

   To the extent that there is any problem with escalating health care costs it is necessary to look at the drivers if one is to control them in the long term. We can neither avoid nor begrudge improvements in medical knowledge and technology that lead to greater quality of life and life expectancy for the population, even though these may increase costs.

   The drivers at which we must look are the financial drivers of doctor and patient behaviour. The leading structural example of this is the heavily subsidised private medical system, in which services attract a Medicare rebate, an additional payment from the private insurer (subsidised by the PHI rebate) and very commonly also an additional charge by the provider (subsidised for many by tax rebates, which disproportionately advantage those on high marginal tax rates).

   It can be seen that this system provides the toxic combination of high public subsidy of an activity which shifts community resources from the less well off to those more wealthy, and a lack of regulation or control of what is actually done. Doctors and hospitals get paid for doing more procedures, regardless of whether those procedures need to be done. This is a perverse incentive that drives up costs, as is seen most egregiously in the United States.

   It should also be noted that the evidence strongly supports the view that private for profit care is associated with no improvement and, in many cases a worsening, of health outcomes. This is particularly so once one adjusts for known risk factors (public hospitals serve a more disadvantaged population with a higher disease burden – they take the hard stuff not managed in private).

    

   Therefore, by heading further down the privatisation pathway, we are guaranteeing a system which will be more expensive and which will produce worse outcomes, while ensuring a ballooning in healthcare costs.

   The solution can only lie in an integrated system, rooted in viable and effective primary care and backed by a strong and adequately funded public hospital system. Funding models based on salaried practitioners or capitation payments are inherently less likely to produce over-servicing and to reward effectively the provision of good preventative care.

   At the moment the Australian system, to the extent that it is a system, is biased toward the provision of an expensive ambulance at the bottom of the cliff and not toward the building of fences at the top of the cliff.