Now is the chance for change, so leap at it

By Tony Scott

The Australian,
19 April 2008, p. 15 (Weekend Health)

TAKING the Australian health-care system kicking and screaming into the 21st century will be no mean feat.

The structure of the system has remained largely unchanged since 1984, even though the things that should drive structural change and reform, such as changes in patterns of disease, patient expectations and technology, are changing at a fast pace.

The result is a health-care system not fit for purpose. Staying as we are is not an option unless we want to go down the slippery, inefficient and inequitable path of the health care system in the US.

After countless parliamentary and academic reports over the last 20 years which recognised the need for change, there is some optimism that at least Kevin Rudd and Nicola Roxon have a plan -- something entirely absent in the Howard Government. But the plan's success is not guaranteed, putting at risk the ability to make a real difference to the health-care system and the health of the population.

The Rudd and Roxon plan involves a two-stage approach. The first seeks closer state-federal relationships and co-operation to underpin the next Australian health-care agreements. If this doesn't work, then the second stage, the one that would involve much kicking and screaming and political risk, is to move towards a single funder of public hospitals and the health-care system at large.

Closer state-federal relationships under the agreements are, unfortunately, unlikely to make a difference to patients. Relying on a political solution to a systemic structural problem is misguided. This option does not address the widespread inefficiencies and duplication of having joint state-federal funding of health care. Performance benchmarks and incentives for improved performance are actively being discussed as part of the new agreements. However, these "toothless tigers" have always been a feature of previous agreements and there is little evidence to show they have made any difference.

Fights over money, inefficiencies, misaligned incentives and blame-shifting will continue, perhaps less so in the public domain with closer political co-operation, but they will happen nonetheless. Their persistence will entrench resistance to change that has been at the heart of the health-care system's paralysis.

There will be little opportunity to pool funds and deal with many of the problems raised by myriad previous reports. The National Health and Hospitals Reform Commission will, in all likelihood, reinvent the wheel of previous reports' recommendations, but this time let's hope the Government will listen and take action rather than ignore it.

Failure of this first option has not been defined, which is worrying. What criteria might be used to judge success or failure? Will patients have a say? No one knows, and debate is urgently needed.

The single-funder option would be difficult to implement, politically and practically, but sometimes the biggest pay-offs occur when risks are taken. A single funder of health care conjures up images of a government monolith and a command-and-control system with little flexibility to accommodate local circumstances. Such fears can be dispelled by paying attention to the detailed design of such a system, its structure, and incentives within it.

A single funder does not rule out flexibility, competition or innovation. For example, in the UK's National Health Service, public hospitals have more autonomy than those in Australia. Research has suggested that performance management schemes, with teeth, have made a real and sustained difference to waiting times. There is considerable devolution of health-care funding and decision-making to local level, through regional agencies with a population health focus, which are responsible for funding all health-care services in their geographical area.

The private sector can also be involved in this model. The single-funder model provides enormous opportunities to provide more seamless care for patients and improve the quality of their journey through a complex system. There will still be funding fights between regions and the centre, but at least these would no longer be politically motivated.

Meanwhile, the talkfest continues with the National Health and Hospitals Reform Commission and the Australia 2020 summit. Let's hope they stop talking and start "doing". Otherwise, the risk is that the next election will be looming and we will have missed a rare opportunity to provide the health-care system with the means to do what it does best: improve our health and well-being.

Professor Anthony Scott heads the health economics research program of the Melbourne Institute of Applied Economic and Social Research, at the University of Melbourne.