Chapter 3
The adequacy of the COAG health reforms
3.1
This chapter will consider the adequacy of the COAG health and hospital
reforms in light of the evidence before the committee. It also considers the first
eight terms of reference.
Labor promises in 2007
3.2
It needs to be highlighted that the Rudd Government had nearly two and a
half years to develop a health policy that would 'end the blame game',
including a Summit, numerous Reviews, a Commission and 'hospital road shows'.
However evidence provided to the committee indicate that the Prime Minister's
health reform policy, A National Health and Hospitals Network for Australia's
Future, announcement on 3 March 2010 at the National Press Club was
rushed and developed by a health taskforce working group in the Department of
Prime Minister and Cabinet that met for the first time on 5 February 2010.
3.3
Prior to the November 2007 federal election, the then Leader of the
Opposition, Mr Kevin Rudd announced that if in power, the Labor Party would
seek a mandate from the Australian people to take financial control of
Australia's public hospitals if state and territory governments failed to reach
agreement on a national health and hospital reform plan by mid–2009.[1]
Third, if by the middle of 2009 the State and Territory have
not begun implementing a national reform plan, a Rudd Labor Government will
seek a mandate from the Australian people at the following election for the
Commonwealth to assume full funding responsibility for the nation's public
hospitals.
The assumption of Commonwealth funding for all public
hospitals would require a parallel reduction in Commonwealth outlays to the
States and Territories at the point of transfer. There would therefore be no
windfall gain of any description to the states and territories.
If necessary, Federal Labor will also consider the
possibility of conducting a national plebiscite or referendum at the following
federal election on the question of any proposed Commonwealth takeover.[2]
3.4
Indeed, at Labor's campaign launch on 14 November 2007 Mr Rudd told the
Australian public that he had a plan:
On hospitals, we have put forward a national plan to end the
buck-passing between Canberra and the States.
I have a long-term plan to fix our nation's hospitals.
I will be responsible for implementing my plan, and I state
this with absolute clarity: the buck will stop with me.[3]
3.5
However, it emerged from Senate Estimates on 10 February 2010, that
there appears to have been no plan.[4]
In an answer to a question on notice, the Department of Health and Ageing was
unable to confirm that it had received any documents other than the Rudd health
election policy, New Directions for Australian Health when Labor came to
office.
The National Health and Hospitals Reform Commission
3.6
In February 2008, the Rudd Government established the National Health
and Hospitals Reform Commission (NHHRC). The NHHRC's aim was to develop a
national blueprint for health reform. The interim report of the NHHRC released
in February 2009 contained several policy proposals for health care services
reform.[5]
3.7
At the same time that the NHHRC was undertaking a structural review of
the health and hospital system directed at 'long-term system-wide health
reform',[6]
the reform of the health and hospital system was being considered by the
Council of Australian Governments (COAG). The COAG Communiqué of 3 July
2008 stated that:
COAG has an ambitious health and ageing reform agenda
proposed for implementation from 2009. This includes a substantial program of
hospital reform, improvements to Indigenous health, chronic disease management
and preventative health care. When fully implemented, reforms will improve the
health outcomes for all Australians, contributing to increased productivity.
The Commonwealth and the States will continue to work cooperatively to progress
this vital program of reform.[7]
3.8
The NHHRC's final report was released on 27 July 2009 and contained
123 recommendations directed at both immediate and longer-term reforms. It
highlighted the importance of government action to achieve three reform goals:
- tackling major access and equity issues that affect health
outcomes for people now;
- redesigning our health system so that it is better positioned to
respond to emerging challenges; and
- creating an agile and self-improving health system for long-term
sustainability.[8]
3.9
The Government responded to the release of the NHHRC report, by undertaking
another consultation process in addition to that undertaken by the NHHRC. The
Prime Minister and Minister Roxon embarked on their listening tour or 'consultation
process' which involved about 123 visits to hospitals, photo opportunities with
the Prime Minister and Australians in myriad hospital situations.
3.10
Evidence at various Senate Estimates refers to about 103 consultations. However
the committee found that despite these many months of 'consultation', a large
majority of stakeholders reported that they did not fully understand the
hospital plan, had not been provided with in-depth detail about its
implementation and operation and further details. In this sense, there are specific
parallels to the Henry Review where the Rudd Government sat on the review for
months and then announced the super profits mining tax with minimal detail and
no implementation plan. This parallel extends to health with taxpayers funding
a health communication plan (launched the day after the budget) when many
proposed changes do not take place for some years and legislation has not yet
been presented to Parliament implementing the reforms.
3.11
Despite efforts to ascertain the process by which this 'consultation
process' was devised and planned (i.e. who decided where to visit, how were the
locations chosen, who was invited), officials of the Department of Health and
Ageing would not provide further details about the involvement of the Office of
the Prime Minister in this process.[9]
3.12
Indeed, officials from the Department of the Prime Minister and Cabinet (PM&C)
denied that PM&C had any role in determining the location of the visits
that the Prime Minister undertook stating that the process was 'managed' by the
Department of Health and Ageing.[10]
Post COAG December 2009
3.13
At the COAG meeting in December 2009, the Commonwealth, states and
territories acknowledged that long-term health reform was required to deliver
better and more responsive services.[11]
3.14
The Prime Minister and Minister for Health and Ageing met frequently
with state and territory counterparts to discuss health reform ahead of the
April 2010 COAG meeting. However formal negotiations commenced on 5 February
2010 with a dedicated Health Reform Working Group, headed by the PM&C Deputy
Secretary, Mr Ben Rimmer.[12]
Sub-groups were created under the Health Reform Working Group to focus in
greater detail on primary health care services, public hospitals, and
financing.
3.15
On 3 March 2010, the Rudd Government announced various reforms (contained
in the 'Blue Book') which it described as representing 'the biggest changes to
Australia's health and hospital system since the introduction of Medicare and
one of the most significant reforms to the federation in its history'.[13]
3.16
The reforms purported to be based on a national network, funded
nationally and run locally:
- a national network: to bring together eight disparate
State run systems with one set of national standards to drive and deliver
better hospital services;
- funded nationally: the Australian Government taking the
dominant funding role in the entire public hospital system; and
- run locally: Local Hospital Networks bringing together
small groups of hospitals.
3.17
It was indicated that the Commonwealth will achieve these aims through
the following action:
- taking 60 per cent of funding responsibility for public hospitals
by investing one third of GST revenue – currently paid to the states and
territories – directly in health and hospitals;
- taking over responsibility for all GP and primary health care
services;
- establishing Local Hospital Networks (LHNs) managed by health and
financial professionals and responsible for running their local hospitals,
rather than central bureaucracies;
- paying LHNs directly for each hospital service they deliver,
rather than just handing over block funding grants to the states; and
- bringing fragmented health and hospital services together under a
single National Health and Hospitals Network, through strong transparent
national reporting.[14]
3.18
On the same day, the Commonwealth published the policy document, A
National Health and Hospitals Network for Australia's Future, to ensure
clarity of its proposed reform agenda.
3.19
It is important to also note that on 3 March 2010 when Mr Rudd announced
the hospitals plan his government was still to respond to the draft Primary Health
Care strategy and the National Preventative Health Taskforce report. The Government
finally responded to these two reports as part of the Budget announcement.[15]
"Real reform" or just more business as usual with the states?
3.20
It is clear from the evidence at Senate Estimates on 25 May 2010, that
the Health Reform Working Group did not commence its formal deliberations until
5 February 2010 and the group only held four meetings.[16]
3.21
Indeed, it is apparent from the Estimates hearings, this inquiry and answers
to questions on notice that the hospital plan, the so called 'biggest change to
Australia's health since Medicare' was 'hurriedly put together' between 5
February and the 3 March. Despite the Department of Finance and
Deregulation claiming to have been 'involved in costings through various stages
of the process', the Department conceded that it only started the formal costings
process for the plan on 17 February 2010.[17]
3.22
After more than two years of reports, reviews and hospital tours by the
Prime Minister and Minister Roxon, the so called 'biggest change to Australia’s
health since Medicare' took only 19 working days to produce and this included
printing of the document, A National Health and Hospitals Network for
Australia's Future.
3.23
The subsequent documents, (A National Health and Hospitals Network:
further investments in Australia’s Health and A National
Health and Hospitals Network for Australia’s Future: delivering better health
and better hospitals) produced at COAG took 33 days to
write and print and were necessary due to the additional financial inducements
provided by the Prime Minister to gain the approval of the states and territories.
WA remains elusive.
3.24
Consequently, the claim by Mr Rudd and Ms Roxon that this is the biggest
health reform since Medicare is yet another example of overblown rhetoric. The
spectacular dumping of the National Funding Authority, a major plank of
transparency and accountability underpinning the 'plan', within barely weeks of
the finalising of the agreement between the Commonwealth and the states (except
Western Australia), makes a mockery of the whole process. If not for the Senate
Inquiry the dumping of the National Funding Authority would have been kept
secret. This information was only made public as a result of the Coalition's
question on notice, an answer that was slipped out the afternoon of the Press
Gallery Mid Winter Ball.
3.25
The recent Senate Community Affairs Budget Estimates hearings and hearings
for this inquiry have revealed plans for local hospital networks are lacking in
key details: there is no clarity about the precise number of LHNs; where they
will be located; how they will interact with other parts of 'the plan'; and
perhaps most importantly, that there is no certainty of local involvement in
LHNs.
3.26
In his speech at the National Press Club on 3 March 2010, Mr Rudd
stated:
For the first time, Local Hospital Networks, run by local
health, financial and managerial professionals, rather than state or, for that
matter, federal bureaucrats, will be put in charge of running the hospital
system.[18]
3.27
The reality is that the Prime Minister has not followed through on this
commitment. Many submissions and witnesses are concerned that the wording of
the Intergovernmental agreement indicates that there is no guarantee that local
clinicians will be involved in the management of LHNs, to be created by state
and territory governments.
3.28
Clause A10 of the Agreement outlines the governance structure of the
LHNs. In relation to the crucial medical composition of the LHNs, the
Agreement states at A10(b)(ii):
ii. clinical expertise, external to the LHN wherever practical.
3.29
This contradicts what Mr Rudd lauded was to be the case on 3 March. If
the doctors on an LHN have to come from outside the LHN, they will not be 'run
by local' health professionals.
3.30
When pressed at Senate Estimates about the specific wording of the
Intergovernmental Agreement, the Secretary of the Department of Health and
Ageing, Ms Halton disagreed with this reading of the document:
Senator FIERRAVANTI-WELLS—But this Prime Minister has made so
much of local hospital networks ‘run by’ local health. You see them in the
advertisements now. Those advertisements refer to ‘run locally’.
They have spent so much money on advertising. That is false.
Take my local hospital network in the Illawarra, for example—there will be one
down there in the Illawarra. What, effectively, this says is that the clinical
expertise for the local hospital network that will be based around the
Illawarra will not come from the Illawarra; it will come from outside the
Illawarra.
Ms Halton—With respect to your 20 years as a lawyer, I have
nearly 30 years as a bureaucrat and I can tell you how this will be
implemented, and it will be—
Senator FIERRAVANTI-WELLS—That is not what the agreement
says, Ms Halton.
Ms Halton—I am telling you how it is to be implemented.
Senator FIERRAVANTI-WELLS—Ms Halton, if that is how it is
going to be, perhaps you should have written the agreement, because that is not
what is in the agreement. If this is the agreement that the states have signed
up to, is there going to be a second agreement, a modified agreement?
Ms Halton—No.
Senator FIERRAVANTI-WELLS—The point is: what is in the
agreement and what the states have signed up to, except Western Australia, is a
document that says that the clinical expertise will come from outside the Local
Hospital Network wherever practicable.
Ms Halton—With respect, my observation is that actually the
clinical community will not give a rat’s about formal agreements or otherwise.
What they will care about is how this is implemented and what they will care about is the arrangements as I have
outlined to you, which will be how this will be implemented.
Senator FIERRAVANTI-WELLS—With due respect, the agreement
specifies, virtually down to the letter, the obligations of the states in
relation to this agreement, and I would have thought that state bureaucracies
are going to follow to the letter what they are required to do, presumably
under eventual legislation that is going to be established to give effect to
this agreement. I would have thought that the parameters of this agreement are
going to carry much more weight, Ms Halton, than your interpretation of what
potentially might be the situation.
Ms Halton—I can tell you with absolute confidence that my, as
you describe it, interpretation—indeed, let us put it more broadly: the
approach to implementation of this has not just been my whim or whimsy but has
been discussed between myself and the others, just to confirm that this is
indeed how it will be implemented.[19]
3.31
In short, it appears that the Agreement may be implemented in terms
different from the plain reading of the terms contained within it. The
committee finds it difficult to determine a position on this due to the lack of
detail available but notes Ms Halton's statement in this regard:
Senator
FIERRAVANTI-WELLS—We will deal
with it in outcome 13, but my point here is that, in what the Prime Minister
outlined of these lead clinicians groups, the language is not directive. There
is no mention of variation in this speech of the agreement that the states
agreed to, in relation to the clinical expertise being external to the Local
Hospital Network. That is my point. Even after the Prime Minister gave his speech
to the AMA, there is nothing concrete in this speech that I see that varies the
agreement with the states. That is the point.
Ms Halton—As I pointed out to you, there is no need
to vary this agreement with the states. The arrangements, as I have outlined to
you, are how this is to be implemented, and this is the way it will be
implemented.[20]
3.32
The committee considers that Ms Halton's comments on this point raise
the spectre of what else in this Intergovernmental Agreement will be implemented
in a fashion otherwise than specified in the specific terms of the Agreement.
3.33
Various indications have been given that the exclusion of clinicians in
the wording of the Intergovernmental Agreement was at the behest of the states,
and most particularly, by Victoria. The committee specifically asked this
question. The Department of Health and Ageing failed to answer the question and
referred the committee to the answer provided by the Department of the Prime
Minister and Cabinet (PM&C).[21]
3.34
The answer from PM&C was hardly clear and simply referred to the
wording of the Intergovernmental Agreement. In short, the committee was not
provided with an answer to this question.[22]
3.35
There was considerable questioning of officials from PM&C about this
issue on 25 May 2010. Shortly after this at the AMA conference, Mr Rudd
announced $58 million for the establishment of Lead Clinicians Groups. This
appears to be an afterthought for which little detail is available. It is
clear that their role will be purely an advisory role and not the directional
one that might be supposed would be the case with local doctors appointed to
their LHNs.[23]
3.36
Another concern raised by some members of the committee is the number of
hospitals that will be covered by the health reforms. The Australian of
22 April 2010 states that the deal excludes 80 per cent of hospitals. The front
page article entitled Rifts open in Rudd's health plan states:
Kevin Rudd's claim to have delivered historic health reform
is under increasing challenge, with doubts emerging about whether it achieves
its aim of sidelining inefficient state bureaucracies.
As the government yesterday confirmed that as few as 165 out
of the nation's 764 hospitals would be converted to the activity-based funding
model the Prime Minister championed as the key driver of a more efficient
health service, Canberra has also agreed to take a hands-off approach to the
management of local hospital networks. This would give states total control
over appointments to the new bodies.[24]
3.37
In Senate Estimates, Mr Rimmer from PM&C confirmed this:
... If I recall that article correctly, what it refers to is
the number of hospitals that will be funded through activity based funding.
There are, as you would know, a large number of very small hospitals in
regional and rural Australia where it is not appropriate to provide for
hospital services through activity based funding because the small volumes
involved make it very difficult to make budgets balanced and to keep hospitals
sustainable. So the activity based funding scheme will apply to a number
something like that of hospitals, but it is worth pointing out that those 165
hospitals cover the overwhelming proportion of hospital services that are
provided in Australia. I think it is roughly 90 per cent, but I would want to
ask for further advice about that.[25]
3.38
The Department of Health and Ageing has failed to provide a direct
answer to the question as to how many hospitals will have activity based
funding and how would this be determined. The committee has been advised that
COAG will determine this at some point in the future.[26]
3.39
The Department of Health and Ageing was unable to provide a list of
hospitals with block funding in each state.[27]
3.40
Prior to COAG, there were reports about potential closures of hospitals
in NSW as a consequence of the reforms. The Department of Health and Ageing
have denied receiving any documents on hospital closures from states and
territories in the context of COAG health reforms.[28]
3.41
The committee heard that many stakeholders saw the reforms as a missed
opportunity to realise the recommendations of key reports including that of the
National Health and Hospital Reform Commission (NHHRC). For example, CHA stated
that much of the NHHRC's reform vision which would otherwise 'lead to vast
improvements in the health of all Australians', had not been addressed by the
government.[29]
3.42
A number of stakeholders voiced concerns in relation to both the
proposed overarching and specific management and coordination structures.
Coordination was of central concern in relation to the establishment of Local
Hospital Networks and Medicare Locals as Primary Health Community Organisations
(PHCOs) and of the relationship between them.[30]
3.43
The so called health reform process has been very much driven by Mr Rudd
and his Department. This is clear from evidence at Senate Budget Estimates from
PM&C on 25 May 2010.
3.44
Not surprisingly, answers to questions on notice highlight the limited
involvement that the Department of Health and Ageing had, with only one of its
officials participating at the COAG meeting of 19 and 20 April.[31]
Ms Halton, Secretary of the Department of Health and Ageing, has routinely
attended high level meetings relating to COAG health reform but it has not been
possible to ascertain if Ms Halton is the one official referred to above.[32]
3.45
Ms Halton in Senate Estimates advised that there will not be a second or
modified Intergovernmental Agreement.[33]
In view of the backflip on the National Funding Authority, the proposed
implementation of LHNs contrary to the terms of the Agreement and the
indication that the 4-hour target in emergency departments is subject to substantial
caveats, it again begs the question - what else will be changed before the Agreement
is implemented?
Lack of detail and missed opportunity
3.46
Many of the submissions criticised the Government for the lack of detail
relating to the reforms. There is no evidence that the detailed implementation
work has been done and it is difficult to determine the degree of real reform
that will result from this policy. Catholic Health Australia said:
There is much detail still to be worked through at all levels
of government as to how the arrangements will work. In an area as complex as
health, the detail will be fundamental in determining the extent to which the
reforms will lead to an improvement in the health system.[34]
3.47
The Australian Medical Association reiterated Catholic Health Australia's
criticism about the lack of detail provided:
The Commonwealth Government has committed to considerable new
investment in hospitals, including in subacute beds, and provided incentives to
State governments and hospitals to increase capacity, but there is no detail
explaining how this will be achieved.[35]
3.48
The Australian General Practice Network criticised the lack of clarity
and detail in the government’s reforms:
The lack of clarity around which level of Government will be
responsible and accountable for key aspects of primary health care and
particularly the apparent enhancement of the role of State Government’s in
primary health care policy. Rather than realise the reform objective of
greater coordination and service integration this may lead to additional
bureaucracy and fragmentation of services.[36]
3.49
Dr Adrian Sheen from Doctors Action made some pertinent comments in his evidence
about this reform taking Australia into unchartered waters:
The government now wants to embark on changes that take
Australians into uncharted waters. I feel they do so at their peril. To import
failed schemes from overseas such as superclinics and have them imposed upon
the community can only result in increased costs, increased bureaucracy and the
extinction of the family doctor. These clinics are similar to polyclinics in
the National Health Service in the UK, otherwise known as Darzi clinics, yet
these United Kingdom clinics have proven to be an expensive white elephant. Now
it is found that the cost per patient treated in these polyclinics is more than
twice that of patients being seen in their local general practice. Importantly,
these NHS polyclinics have always been GP led, whereas in Australia the GP is
being increasingly sidelined.
Not surprisingly, the only polyclinics in the United Kingdom
that are in any way successful are those that are located in areas of doctor
shortage, not where they are located for political expediency. Reforms that put
taxpayer funded Woolies and Coles style superclinics into competition with
private medical practices are inherently bad. The government has announced it
wants 450 superclinics. To give you some idea, for every two McDonald’s
restaurants there will be one superclinic. Superclinics already have started
advertising for patients, and the stress that this will cause on nearby
practices—not just on doctors, but on their staff, on the local allied health
and on local chemists—must never be underestimated.
Is it the role of governments to openly compete with local
businesses? As shown by numerous surveys, including a recent one by the AMA
published last month, Australians value their relationship with their family
doctor. Politicians can underestimate the importance of this relationship.
There is no suggestion that any of the government reforms will enhance the
relationship between patients and their own doctor. For many people the family
doctor is a highly significant person in their lives. Patients rely on their
family doctor for diagnosis, for management of their problems, rely on them to
help them through the health system, for advice on all sorts of diverse
matters, discussion of their history, their secret history, in a confidential
and caring environment. No society as wealthy and advanced as Australia can
afford to lose this human element in care.[37]
3.50
And the National Primary Health Care Partnership joined the criticism of
the lack of detail with the Government’s plans:
The NPHCP supports the general intent of a Commonwealth
Government take-over of funding and policy responsibility for all primary
health care, however, is concerned about the lack of clarity regarding who will
be responsible or accountable for key aspects of primary health care under the
funding structure outlined in the Agreement and the seeming enhancement of
hospital authority to deliver primary health care services.[38]
3.51
Submitters argued for increased capacity in the system, ending the
'blame game' between the Commonwealth and the states and territories, and
providing flexibility to ensure that the system is responsive to local needs.[39]
Aged and Community Services Australia (ACSA), for example, argued that there
was a 'pressing case for reforming Australia's health and aged care system' and
that there are barriers in the current system to 'genuinely patient or
client-centred care and obstacles in the way of efficient and effective service
delivery'.[40]
3.52
Whilst there is consensus that some reform is needed, there was a
divergence of views on the details of the COAG health reforms. Many, including
the Australian Medical Association (AMA), support a number of aspects of the
reforms in principle, including the development of national standards. However,
other aspects were not supported. For example, the AMA raised concerns in
relation to the division of responsibility between the Commonwealth and the
states, which it noted, has the potential to create disconnect between 'what
hospitals are expected to do as opposed to what they are paid to do'.[41]
3.53
Others argued strongly that the reforms are inadequate in the areas of
mental health, Indigenous health, dental health, primary care, community health
and a number of aspects of prevention.[42]
The CEO of the Rural Doctors Association of Australia (RDAA), Mr Steve Sant,
noted that in terms of the impact of the reform package on rural Australians:
We have yet to see whether that have will any effect on the
health of rural Australians. We certainly believe that without those specific
rural incentives, and specific rural supports, we will not see the health of
rural Australians in any way being improved, nor will we see the workforce,
those 5,400 nurses, the 1,800 doctors, moving back into rural Australia where
they are needed.[43]
3.54
Given the criticism regarding the lack of attention to mental health in
the Government's plans, it was not surprising to see the recent front page
article entitled Rudd Adviser Quits and the comments made by Professor
John Mendoza, Chairman of the National Advisory Council on Mental Health after
he tendered his resignation in a letter to Minister Roxon last Friday. He is
reported as stating:
It is now abundantly clear that there is no vision or
commitment from the Rudd Government to mental health," he wrote.
"The Rudd government is publicly claiming credit for the
increased investment in mental health when almost all of this is a consequence
of the work of the Howard government".[44]
3.55
The report goes on to state that: 'A sticking point is the Better Access
program',[45]
which was the subject of considerable discussion at Senate Estimates with the
recent decision by the Rudd Government to scrap payments for social workers and
occupational therapists who offer one-on-one mental health services. Coalition
Senators pressed officials about the angst in the industry following the
Government's decision. Officials conceded that the 'department did not consult
with social workers and OTs before the government's decision'.[46]
3.56
A considerable number of stakeholders contended that there was a lack of
clarity regarding the details of the reforms, which made it impossible to
establish how they will work in practice. For example, ACSA stated:
The COAG reforms refer to three different networks:
hospitals, primary care and aged care but the announcements provide little
detail about these or how they are to work together – as they must to provide
coordinated and efficient person-centred care.[47]
3.57
The position of the AMA in relation to the National Health and
Hospitals Network Agreement (NHHN Agreement or IGA) also reflected these
concerns:
There is still considerable detail to be developed about how
many of the reforms and initiatives will be implemented...Their success will
depend on this detail and how much flexibility there is in how they are
implemented.[48]
3.58
Mr Martin Laverty of Catholic Health Australia (CHA) contended that CHA
'cannot speak to the implementation' but can only recommend that those outside
of government service delivery are involved in the design of the system. This
would enable those with experience and another perspective 'ensure that the
principles are achieved, that local governance can be achieved, if there is
that opportunity for transparent scrutiny as to how these systems are
established. At the moment it is uncertain to us'.[49]
3.59
Others contended that such lack of clarity was creating uncertainty and
in some areas, anxiety and confusion.[50]
The AMA noted for example:
Even within this framework of additional funding, there
continues to be uncertainty about how this funding will be used and the impact
it will have. For example, where funding has been announced to create beds, it
is still unclear how this will be guaranteed and demonstrated to have happened.[51]
3.60
The Royal District Nursing Service commented that despite current talk
of a shift to focusing on out-of-hospital care and thus preventing or reducing
the need for hospitalisation as a long term solution for the health system,
'the majority of funds and new spending appears to continue to be allocated to
existing programs'.[52]
3.61
Those most critical of the reforms suggested that they amount to 'little
more than a refinancing package for our public hospital system'.[53]
3.62
Concerns were raised that the COAG health reforms offer an inadequate
investment for long-term gains and genuine improvements.[54]
Professor John Dwyer stated:
The additional money for hospitals is welcome but still
inadequate; and the structural reforms needed for improved equity, cost
effectiveness and a focus on health maintenance are missing in action.[55]
3.63
While CHA endorsed the use of activity based funding 'because that is
very much the way in which our public hospital systems work today and have
worked for many years',[56]
other submitters viewed the use of activity based funding with considerable
concern. In particular, it was argued that there is insufficient data to
calculate a single national price whilst there are differences across the
states in the costs of procedures and superannuation and problems in adjusting
the formula to account for differences in Aboriginal and Torres Strait Islander
and rural populations.[57]
Activity based funding is discussed further below.
3.64
The committee also received evidence that there is a lack of focus on
preventive health. CHA noted that COAG could have adopted the World Health
Organisation (WHO) framework on the social determinants of health to prevent
ill health in the community and therefore reduce future health costs.[58]
It noted, however, that whilst the Commonwealth has accepted the principles
enunciated by the WHO, the approach being taken by government at all levels in
addressing the social determinants 'remains fragmented and piecemeal'.[59]
Mr Martin Laverty, CEO of CHA stated further that improving the health of
low-income earners implied addressing the social determinants and that:
We are unashamed in saying that we will not address the
disparities in health outcome between high-income Australians and low-income
Australians until such time as health policy also incorporates an understanding
of the role of education, the role of housing and the role of income support.[60]
3.65
Similarly, the Royal District Nursing Service (RDNS) argued that a
considerable number of the reforms are 'more of the same' with new funding
provided through existing funding streams which amount to a missed opportunity
to address the social determinants of health including education, employment,
and housing on the health status of the community. The RDNS went on to comment:
A more holistic approach which considers all elements of the
individual and community is required, rather than focusing on the present
(medical model) domain and the focus on mainstream health service.[61]
3.66
The Australian Health Care Reform Alliance (AHCRA) was disappointed that
there was no underlying guiding principles or overall agenda for health care
reform. The AHCRA stated:
COAG's failure to articulate the underlying values of our
health system make it difficult for stakeholders to assess the individual
proposals in terms of their contribution to improving the health system
overall.[62]
3.67
Others raised concerns regarding the long-term viability of the health
and aged care sector in Australia given the country's ageing population. This
was raised in the context of the provision of care in the home by unpaid family
carers. Carers Australia lamented the lack of provision for the country's
almost 2.6 million carers in the health and aged care sector, and the community
care, mental health and palliative care systems and highlighted that decisions
regarding health should not be based on the assumption that family carers will
continue to provide unpaid care without appropriate support or inclusion in the
health sector.[63]
Carers Australia argued that without such support:
No future health, aged, mental health or community care
system will be able to respond to the changing demographics and health needs,
clinical practices and societal influences in the long term without carers.[64]
3.68
Mr David Crosbie, CEO of the Mental Health Council of Australia (MHCA)
also highlighted the centrality of community carers to the health sector. Mr
Crosbie stated:
The other aspect of that is that you have a lot of carers in
the community who are ageing. When I go out and talk to carers their biggest
concern is what happens to their 50-year-old child as their capacity to care
diminishes. There is real concern in the aged care community that they are
getting younger people coming in who previously might have been cared for at
home, but it has got to the point where the ageing parent can no longer provide
that care and they have ended up in aged care homes in their fifties. I think
that is an emerging need.[65]
3.69
One of the points that has been highlighted by various submissions, is
the analogy with the National Health Service in the United Kingdom. The post
COAG publication, A National Health and Hospitals Network for Australia's
Future: Delivering better health and better hospitals stresses that better
treatment in the community will help keep Australians healthy and out of
hospitals.[66]
3.70
The management of today's major chronic diseases needs expert advice
from GPs together with commitment from patients to make healthy lifestyle
changes. It could take years and decades before any benefits from improved
chronic disease management reduces demand on hospitals. There is no guarantee
that the promise of the Prime Minister's plan to keep people healthier and
reduce demand on hospitals will be delivered in the near or even distant
future. The demands of health spending and expectations are driven by many
factors not just an individuals or populations’ health status.
Term of reference (a): New financial arrangements and the dumping of the
National Funding Authority
3.71
One of the key features of the 'plan' was the need for accountability
and transparency. The centrepiece of this was the National Funding Authority.
This was set out in A National Health and Hospitals Network for Australia's
Future: Delivering better health and better hospitals:
Reforming funding arrangements for public hospitals
The Commonwealth will create a National Health and Hospitals
Network Fund comprising;
- funding sourced from the National Healthcare Specific Purpose
Payment;
- an agreed amount of GST revenue, which would then be allocated to
health and hospitals reform; and
- additional top-up funding to be paid by the Commonwealth,
reflecting the Commonwealth's greater responsibility for financing growth in
hospital costs.
Commonwealth funding for public hospitals will be made from
this Fund.
Commonwealth and state funding for public hospital services
will be clearly identified, and delivered transparently and directly to Funding
Authorities in each state. Jointly governed by the Commonwealth and the
relevant state, Funding Authorities will transparently report on the number of
services provided and paid for, introducing new levels of transparency in how
hospital funding is distributed, and giving greater confidence to governments
and the community that scarce health dollars and going directly to hospital
services.[67]
3.72
However, the real reason for setting up the Fund was to ensure that
there was no diversion of funds for other purposes or simply to fund additional
bureaucracy:
Commonwealth funding will flow automatically through Funding
Authorities directly to Local Hospital Networks based on service actually
provided. States have also agreed to transparent about their funding
contribution for each public hospital service, by making payments on an
activity basis through Funding Authorities. There will be no scope to divert
these funds for other uses, and no scope for health departments to use the
money for bureaucracy. This will give hospitals more funding certainty than
ever before. Transparent funding arrangements will also support transparent
performance reporting and drive continuous improvement within each public
hospital.[68]
3.73
The information regarding the Government's scrapping of the National
Funding Authority was released in response to the following question to the
Department of Finance and Deregulation regarding the formal establishment of
the National Funding Authority and its staffing:
I understand that the National Funding Authority falls under
the Financial Management
and Accountability Act 1997, in this respect will the staff be employees of the
Australian Public Service and if so how many staff will be employed?
3.74
Notwithstanding the information provided at Senate Estimates by the
Department of Finance and Deregulation at Senate Estimates about the National
Funding Authority, it chose not to answer the question and instead advised that
'this question is being handled by the Department of Prime Minister and Cabinet
as the more appropriate agency to provide a response'.[69]
3.75
The answer provided by the Department of the Prime Minister and Cabinet was
both a major surprise as well as representing a significant change to the plan:
Following further discussions between the Commonwealth and
States and Territories it
has been agreed that the National Funding Authority is not required and will
not be established.
Payments from the National Health and Hospital Network (NHHN)
Fund to State NHHN Funding
Authorities, and through them to Local Hospital Networks, will be reported
transparently in Commonwealth Budget documentation.[70]
3.76
Consequently, the decision by the Government to scrap the National
Funding Authority brings into question the effectiveness of transparency and
accountability measures in the plan, given that the National Funding Authority
was portrayed as being so integral to it.
3.77
Minister Roxon was questioned about this 'backflip' on a major component
of the reform plan at a press conference on 17 June 2010:
Reporter: I guess the only thing is though, why was it in the agreement in the first
place if it wasn't necessary and isn't it one - sort of one less annual report
that one less layer of scrutiny that we have, you know, on the current system?
Roxon: [Laughs] Well I suspect if I was giving you a different answer today you'd say
isn't that one more layer of bureaucracy we don't need? We are not going to set
up a separate authority where the function is to make sure that we can
transparently account for funding. This will deliver that. There will need to
be people who can process essentially the cheques that need to be paid through
to local hospital networks, but it doesn't require an authority.
We've had these negotiations with the states and territories
following the agreement that was reached at COAG and essentially, of course,
this comes from a compromise that was reached with the states putting up this
change, them also putting their money into this pool. We think that's a benefit
for the community all round and remain very unapologetic about this being a
good outcome and still having plenty of ability, much more than we currently
have to track where the money is going, and also of course with the
establishment of the performance authority to make sure we're also looking at
the performance that comes from those extra investments.
Reporter: Why wasn't it agreed to in the first place then? What has changed since the
time the premiers and the Prime Minister signed the agreement?
Roxon: Well, look, we're going to be able to find a whole range of things throughout
the introduction of this very complex health reform agenda where we will find
that there are better or more strategic or more streamlined ways to do things.
I don't think anyone in this room, let alone in the
community, would want us to establish an extra authority for no particular
purpose. We believe that we can get the transparency that is needed, that we
can actually track the way the money will be spent and passed onto local
hospital networks without establishing a separate authority and of course that
flows from the agreement that the states and territories or the proposal that
the states and territories put to us throughout that COAG negotiation which
included their concession or compromise or proposal to put their health money
into these pools also, and that changes the nature of whether you need to have
a separate commonwealth authority to do it and we are determined to make sure
that we are investing our money in more doctors and nurses and front line staff
and not in more bureaucrats.[71]
3.78
It is interesting to note that the prospective scrapping of the National
Funding Authority was not disclosed at the hearings for this inquiry. In Budget
Senate Estimates, the Department of Finance and Deregulation was questioned
about the establishment of the National Funding Authority and gave no
indication that it was about to be axed.[72]
3.79
Its scrapping was disclosed in an answer from the Department of the Prime
Minister and Cabinet and not the Department of Health and Ageing. It was not made
as a public announcement. This reflects yet again that the main driver of the 'reform
process' has been the Prime Minister and his Department. Minister Roxon's
response at her press conference on 17 June 2010:
Reporter: Minister, when was the decision made and why did you choose to release it in
the way that you did in an answer to a question or notice? Why didn't you
publicly announce it?
Roxon: Well, look, it has not been a secret. We have been absolutely clear and
commenting whenever asked about the way this funding process will work. I'm
afraid you'd have to put the question to PM&C about why they decided to
release it at a particular time last night, that's not something that was in
our remit.
But I would hasten to tell you that actually the Prime
Minister and Cabinet and the Department of Health and Aging are answering
questions on notice every single day, I think following estimates, my
department has something like 400 plus questions to be answering. We do that in
a normal way and they get released at various times.
I don't know why it was particularly released yesterday, but
it certainly hasn't been a secret from our point of view and we have been
asking and answering questions when they've been asked about this process and
describing the funding, warehousing arrangements, the change that came about
with the states and territories putting this proposal forward.
Reporter: Was this a PM&C decision or was this your decision? Who made this decision,
given PM&C released it?
Roxon: PM&C were asked and they released it to a - a question on notice that was
asked in the Senate, I understand as part of the Senate Estimates process, I
stand to be corrected on that.
Of course we've also been asked, both our departments, a lot
of questions during the Senate inquiry on health reform, so there's been plenty
of opportunity, there's plenty of information coming out.
PM&C and health, myself and the Prime Minister are
intimately involved in all of these discussions and decisions so it's been made
as a collective decision. I simply can't tell you why it is that PM&C has
put out that answer now but I think that there's been a lot of similar
questions asked and we have provided those same answers from the Department of
Health as well.[73]
3.80
The above exchange raises important questions about what else is now
going to be dumped from the Intergovernmental agreement. Indeed, had this
specific question not been asked, would this major 'backflip' remained
undetected, given questions were asked about it only weeks earlier? Either this
information has been withheld or it is another example of the Agreement not
actually representing the terms of the Government's health reforms. It poses the
questions: what else is being withheld and what else will be dumped or altered?
3.81
Concerns have also been raised throughout the Inquiry in relation to the
management of funding and coordination arrangements. Services for Australian
Rural and Remote Allied Health (SARRAH) for example, raised three concerns:
- the lack of clarity regarding ultimate responsibility for key
aspects of primary health care under the National Health and Hospitals
Network Agreement;
- the need for funding to reflect a coordinated primary health care
services approach to meet rural and remote community needs; and
- the need for consultation with primary health care service
providers in the development of new funding and program guidelines.[74]
3.82
The Society of Hospital Pharmacists of Australia (SHPA) and National
Primary Health Care Partnership articulated similar concerns. They argued that
with the Commonwealth assuming funding responsibilities for a number of health
care services, it was not clear where accountability lay for the effective
provision of many services and how they will relate to the planning and
coordination role expected of the Primary Health Care Organisations (PHCOs).[75]
The SHPA continued:
It is therefore unclear how this offers an improvement over
current arrangements and whether it will confer the potential benefits
associated with national funding and regional coordination. There is no clear
integration between PHCOs and Local Hospital Networks (LHNs).[76]
3.83
This concern was also echoed by the AMA which argued that the Agreement
did not end prospects of 'the blame game' continuing. The AMA President, Dr
Andrew Pesce contended that:
The 60-40 funding split, I am afraid, has potential not to
end the blame game. It will just provide different opportunities and different
scenarios to undermine and game the system.[77]
3.84
The AMA continued that:
The IGA provides for new performance reporting and monitoring
to ensure that States are accountable. However, it is yet to be seen whether
this will provide sufficient leverage in the short term or sufficient political
clout in the long term, given that performance monitoring of the health system
is difficult to do fairly and accurately, without introducing perverse
incentives that compromise patient care. The IGA focuses on States' performance
rather than hospitals' performance.[78]
3.85
The AGPN similarly voiced concern regarding duplication and
accountability as a consequence of the proposed health funding structure by
arguing that:
The dispersal of primary health care responsibility and
authority across States and LHNs will perpetuate current problems with service
duplication and poor service integration, so promulgating the blame game and
fragmentation that these reforms are intended to overcome.[79]
3.86
The ACSA questioned how the linkages between services are to be ensured
to work effectively for clients given that management of hospital networks and
system-wide planning of hospitals will remain a state responsibility while aged
care services and primary health care will be Commonwealth responsibilities.
The ACSA noted:
It is not clear how seamless service delivery, including to
older people with complex and chronic needs, is to be planned for and supported
in these arrangements. The NHHN Agreement suggests that the Primary Health Care
Organisations will 'assist with patients' transitions out of hospital, and
where relevant into aged care'. How this is to occur or how other linkages
between services are to be ensured is not yet clear.[80]
3.87
The AMA also held the view that the NHHN Agreement or IGA does not
'accurately reflect the most important health care issues'. It recognised the
need for a staged approach in implementing health reform but questioned the
prioritisation of the COAG reforms, arguing that a comprehensive national
approach to mental health, aged care and Indigenous health are 'first stage'
priorities which it noted, have 'not been adequately addressed'.[81]
It also argued that, there 'appears to be only a weak connection between the
Commonwealth Government's contribution to funding and the agreed planning and
purchasing of services under the IGA (where State governments undertake the
planning and purchasing of hospital services and Medicare Locals undertake the
planning and purchasing of primary care services)'. The AMA commented further:
The Commonwealth Government has no commensurate
responsibility for ensuring bed capacity or service delivery or infrastructure
organisation. While it is taking on more funding responsibility, it will have
little say on the development of these input measures and will rely on broad
level performance targets to ensure it expectations are met.[82]
3.88
Concerns about the blame game continuing are best summed up in this
succinct quote from the AMA's submission:
As a result, it is unlikely that the new arrangements will see
any end to the ‘blame game’.[83]
3.89
It must be stressed that the LHNs will be determined by the states, whereas
Medicare Locals will be created by the Commonwealth. Many submitters
emphasised that the relationship between the LHNs and Medicare Locals was
unclear. Indeed, there is no information about how the proposed independent
LHNs and Medicare Locals will improve integration and coordination at the local
level.
3.90
The Rural Doctors Association of Australia (RDAA), also questioned the
relationship between the Medicare Locals and LHNs and emphasised the need for
an alignment in the boundaries between them particularly in smaller rural
communities. The RDAA argued:
In many rural communities, there is no line drawn between
primary care and secondary care. This is particularly the case in smaller
communities where GPs provide coverage for obstetrics and anaesthetics, or
perform specialist procedures, at the local hospital and provide after hours
medical care through the local hospital's Emergency Department. Where this is
the case, it will be critical that accountability and performance indicators
are at such a level that they measure the health of the community rather than
just through [in]put of the hospital.[84]
3.91
In terms of moving towards a national structure with streamlined
standards, the Australian Institute for Health and Welfare noted that national
standards required national performance reporting arrangements. It held that
such arrangements should be established which provide a 'single flow of data,
from hospitals and other health care providers, through their governing bodies,
to a single national repository, with data being validated before it is
reported'.[85]
Increase in bureaucracy
3.92
The Government has undertaken that it will ensure that there is no net
increase in Commonwealth bureaucracy as a proportion of the ongoing workforce
and no net increase across state and territory bureaucracies.[86]
Yet, again, no detail is provided on how this guarantee will be fulfilled given
the new layers of oversight and additional reporting and infrastructure.
3.93
In raising the distinction between funding for the reforms and funding
required to support the implementation of the reforms, the AMA questioned
whether there was adequate funding or whether the additional bureaucracy will
add real value. The AMA continued:
For example, the recent Federal Budget included $91.8 million
to establish and run the Independent Hospital Pricing Authority and $163.4
million to rollout activity based funding. Establishing and running Medicare
Locals and after hours primary care will cost $416.8 million over five years
but it isn’t clear how much of this will actually involve delivering health
care services.[87]
3.94
Mr Steve Sant, Rural Doctors Association of Australia (RDAA), also
viewed any increase in the level of bureaucracy as a concern. Mr Sant stated:
Our members would certainly see that as a major risk, that we
could end up with more people between them and the patient. That is an area
about which a number of members have come back to us and expressed concern.
Again, I think it is absolutely critical that we get the formation of those new
organisations absolutely right, that we make sure that those organisations
reflect their local community of interest and that the local clinicians who
understand the system, along with the local community, are involved in the
management and are part of the boards of those organisations, and have a real
role rather than just being window dressing at the side, that is, we have
consulted you about this.[88]
State-based health funds pool
3.95
Concerns have been raised regarding the GST pooling mechanism whereby a
compromise was reached with the states at the April 2010 COAG meeting to pool
health funds. Dr Christine Bennett, who chaired the NHHRC, raised concerns that
the state-based pools may amount to another level of decision-making and
governance and stated that:
I can understand the concern that many are voicing, whether
it's going to increase the bureaucracy and complicate and overly focus on the
hospital part of our system.[89]
Sub-acute beds
3.96
In Senate Estimates, the Department of Finance and Deregulation gave
evidence about costings of the COAG plan, although it did take considerable
information on notice relating to assumptions.[90]
The Department did state that that it was not responsible for $800m costing
agreed at COAG meeting.[91]
3.97
Whilst some stakeholders including Catholic Health Australia[92]
were satisfied with the provision of additional sub-acute beds, Mr John Mendoza
commented that even if all of the 1,300 sub-acute beds went to mental health,
and had an appropriate model of step-up step down care:
...we would still be a 1,000 short of the number of sub-acute
beds that existed in the mid-1990s and we would again be putting another patch
on a broken system.[93]
3.98
Professor Patrick McGorry argued that it was unclear what proportion of
the sub-acute care services would be dedicated to the needs of those with
mental ill-health.[94]
Similarly, the AMA questioned how the new incentives to state governments and
hospitals to increase capacity will work. It raised the concern that despite
the additional investment, there was no guarantee that such funding would
result in new acute beds.[95]
3.99
In relation to bed occupancy, the AMA stated that:
The AMA considers there should be a maximum 85% bed occupancy
in public hospitals in order to meet emergency department and elective surgery
demand, and for hospitals to operate at internationally accepted, safe bed
occupancy levels. There is strong evidence that patient safety and quality of
care are compromised when hospitals consistently run at higher average
occupancy rates. Our current estimates are that, nationally, an additional 3870
new beds are needed to meet this.[96]
Term of reference (b): $5.4 billion funding
3.100
Term of reference (b) of the committee's inquiry required the
identification of what amounts of the $5.4 billion Commonwealth funding is new
spending, what is re-directed from existing programs/areas, the impact on these
existing programs and what savings are projected in existing health programs
across the forward estimates from these new financial arrangements, including
the inputs, assumptions and modelling underpinning these funding amounts. The
joint submission provided by the Departments of Health and Ageing, the Prime
Minister and Cabinet, Finance and Deregulation and the Treasury stated:
Details of the Government's funding for initiatives announced
at the 20 April 2010 COAG meeting are provided in the 2010–11 Budget Paper No.
2. Further, Appendix B – Summary of Measures of the 'A National
Health and Hospitals Network for Australia's Future: Delivering Better
Health and Better Hospitals', released on 12 May 2010, provides details of all
National Health and Hospitals Network initiatives, including those announced
after the COAG meeting of 19 and 20 April 2010.[97]
3.101
As indicated earlier, the Department of Finance and Deregulation did not
commence its formal costing efforts until 17 February 2010.[98]
3.102
While the documents noted in the joint submission do provide information
on the reforms, they do not identify the detail required under the committee's
terms of reference. In answer to specific questions regarding the $5.4 billion
funding, Ms Jane Halton, commented:
I am happy to give you that in a bit more detail, rather than
just referring to the budget papers. I can tell you that there has not been—as
you put it—a raid on any programs. The only saving that I would point you to
that is significant in the portfolio is the saving in relation to the Medicines
Agreement with Medicines Australia, which, as you are probably aware, will
generate a net $1.9 billion, and the saving from the Pharmacy Agreement. Those
are the significant redirections in the portfolio.[99]
3.103
When pressed for a breakdown of every item of the $5.4 billion, Ms
Halton responded:
It is not possible to do a line-by-line redirection table,
because budgeting does not work like that. It is the case that there is a macro
position for the portfolio. There are some savings in various places. They have
all been declared in the budget papers. To say that a green dollar from here
has gone over there is not quite how we work this. In some cases existing
programs have been changed—I will acknowledge that—but in terms of the macro
position, we can do that for you, yes.[100]
3.104
The committee notes that answers to many questions regarding the
financial details of the Agreement questions remain illusive. Furthermore, many
answers to questions on notice simply do not address the information sought.
3.105
Submitters commented on issue of redirected funds. The AMA raised
concerns that the reduction of funding in the 2010–11 Budget from high care
residential care to long stay older patients in public hospitals and high level
community based care 'suggests there may be no net increase in high level aged
care places'.[101]
3.106
Professor McGorry corrected his submission that shows a majority of mental
health funding redirected:
In addition to the questions above, I would also like to
correct one section of my written submission, in light of recent clarifying
evidence by DoHA officials about headspace funding.
Section 2.2 of my submission should now read:
2.2. Of the $173m mental health funding announcements, the
entirety of the $57m for flexible care packages is pre‐existing funding. Therefore the actual
increase in mental health funding in the COAG agreement is $116m or
approximately 2% of the total new funding announced as part of the COAG
agreement. This represents in effect a widening of the gap between mental and
physical health care funding.[102]
3.107
Allied Health Professions Australia (AHPA) was of the view that there
was a disproportionate allocation to acute hospital services and 'not enough
funding dedicated towards management of chronic diseases in the community
through comprehensive primary health care initiatives'. The AHPA commented
that:
It is well recognised that the ageing of the population and
the increasing prevalence of chronic diseases in the community will place the
Australian health care system under enormous strain in the coming years – one
of the key drivers of the health reform.[103]
3.108
The AHCRA also argued that there was too much focus on hospitals at the
expense of primary health care and prevention. Of its view, it argued that:
These sectors are the key to improving the health status of
the community and reducing the reliance on hospitals in the future. AHCRA
advocates a health system oriented around primary care and we believe that the
COAG reforms will maintain the current centrality of hospitals within our
health system, and hence a continued over-focus on the bottom of the cliff,
rather than more humane, strategic and sustainable mending of the fences at the
top.[104]
Term of reference (c): Additional/new services in elective surgery,
emergency department treatment, diabetes spending measure, GP treatments in
aged care facilities
3.109
Information provided by the Department of Finance and Deregulation that shows
that the 'funding envelope of $251.4 million was determined by the Department
of Health and Ageing'. The $251.4 million over five years is to expand capacity
within the hospital system for emergency department treatment.[105]
3.110
This demonstrates, again, the limited involvement of the Department
of Finance and Deregulation in
costing key elements of this package.
Emergency department treatment
3.111
In A National Health and Hospitals Network: Further Investments in
Australia's Health, the following commitment is made:
To improve timely treatment in emergency departments, for the
first time the Government will introduce a four hour National Access Target.
Anyone presenting to a public hospital emergency department anywhere in the
country will be admitted to hospital, referred for treatment, or discharged
within four hours, where it is clinically appropriate to do so.[106]
3.112
To help public hospitals meet these targets, the Government was to
provide the states with $500 million as facilitation and reward funding. Its
implementation is couched in the following terms:
This four hour National Access Target and reward funding will
drive improved access to timely and safe emergency department services for
patients. Patients and their families will have the peace of mind of knowing
that when they or their loved one need emergency department care, they will no
longer have to spend the night sitting in the waiting room or waiting for a
bed.[107]
3.113
In the Communiqué of 19 and 20 April, there was an agreement for:
Additional funding for emergency department services to
implement a new four-hour National Access Target to ensure patients are
admitted, referred or discharged within four hours of presentation to an
emergency department. This will support the delivery of around 805,000
emergency attendances in 2013-14.[108]
3.114
CHA noted that meeting the targets in relation to patients presenting at
public hospitals for emergency or elective surgery will be determined by the
ability of new resources, both financial and personnel, to be directed towards
ensuring targets are met.[109]
3.115
The AMA supported the introduction of performance targets for emergency
care as a means of driving improvements in hospital service delivery (given
that delays in emergency departments are almost always due to capital
constraints elsewhere in the system), but noted their limitations by arguing
that:
...any efficiencies driven by these targets can only provide a
one-off capacity gain. It cannot substitute for ongoing bed capacity in our
hospitals. There are also potential risks if a focus on meeting targets
over-rides appropriate patient care.[110]
3.116
The Royal District Nursing Service held that the four hour treatment
target for emergency departments (ED) may have unintended consequences:
The recent promise of a 4-hour treatment period in EDs has
the potential to increase demand (and therefore delays) in EDs as it will
encourage people in recent years may have been discouraged to attend EDs
because of lengthy waiting times and/or offered more suitable alternatives, to
perhaps move back to a reliance on EDs for more minor ailments. This may be
particularly so where attendance at a public hospital ED is a free service and
alternatives may require a fee or co-payment.[111]
3.117
The RDAA raised concerns that the proposals for better access to after
hours care may interfere with existing arrangements for accessing after hours
care in rural and remote areas. The RDAA commented that:
The key issue for accessing after hours services in rural
areas does not centre on identifying who is providing after hours services and
where those services are located. Rather it is centred on the availability of
workforce (i.e. the number of rural doctors available in the community to
provide after hours care).[112]
3.118
However, in an answer to questions on notice, it seems that the 4 hour 'target'
is subject to substantial caveats:
Work will be undertaken to develop the national access target
in consultation within the clinical community, and with reference to national
guidelines on the circumstances in which it will be clinically appropriate to
hold someone for longer than four hours in an emergency department.[113]
3.119
Despite no previous mention of national guidelines, the committee is
advised of the following caveat where the clock on the 4-hour limit will be
reset:
There are two further caveats to the Four Hour Target. EDs
will retain the right to refer patients to a primary care setting, such as GP
clinics, again where it is clinically appropriate to do so. Should a patient
decline to be referred and exercise their right to be treated in the ED, this
could result in the 4-hour clock being reset to zero.[114]
3.120
Furthermore, for regional and rural communities, the 4-hour target would
appear to be all but abolished even before it is implemented. For remote areas,
it will definitely be business as usual as the target is designed around
existing inadequacies rather than ensuring these are addressed:
Also, application of the four hour target will be moderated
in remote and other areas of Australia where there is a significant undersupply
of GPs and significant impediments to accessing a GP (and therefore where
people are more likely to rely on doctors working in emergency departments for
GP-type care). Application of the target in these circumstances will be agreed
between the Commonwealth and individual jurisdictions and be subject to
periodic review.[115]
Diabetes measure
3.121
Submissions from medical professionals reflected a specific concern that
the diabetes measure undermined important aspects of the current Medicare
arrangements.
3.122
In evidence at the hearing, Dr Adrian Sheen from Doctors Action stated:
I am sure we have always heard that, but there was always a
whittling away at the service. Of course the reforms have changed the
fee-for-service practice, the same as the diabetic reforms, and that is just
the tip of the iceberg. They are also talking in the Bennett report about other
grants not only for diabetes but for lots of other things, such as bowel
cancer, breast cancer, respiratory disease and osteoporosis. In fact, the
government is just dipping its toe in the water with these diabetic reforms. To
say that you have a grant for looking after a patient; there are many questions
that need to be answered about this grant.[116]
3.123
The Dietitians Association of Australia commented that the diabetes
spending measure 'appears to be merely re-packaging of an existing portion of
the Medicare Chronic Disease Management program particularly in relation to the
allied health component'.[117]
It noted that if this initiative and existing arrangements are to co-exist,
there is room for confusion as a consequence.
3.124
The National Primary Health Care Partnership (NPHCP) also questioned the
funding for this measure and raised concerns regarding its adequacy. It stated:
It is unclear the extent to which the measure contains new
funding. The NPHCP understand that this measure will involve 'cashing out' MBS
items for patients who voluntarily enrol for this measure, including for PHC
services not directly related to their chronic condition. The NPHCP has
concerns that if the annual payment to general practices and for allied health
services are insufficient, the measure will fail to support better access to
team care: there will not be a sufficient business case for general practice to
enrol patients, particularly those with more complex care needs, and those who
are enrolled will be unlikely to have better access to team care if the real
amount of funding for these services has not increased.[118]
3.125
The AMA's Dr Pesce contended that there was no evidence that
demonstrated that people will get better care if they are 'stripped of their
Medicare entitlements and funded through an annual capped payment'. He asserted
that:
A systematic review of published evidence by the Cochrane Collaboration
concluded that there is no evidence of improved patient outcomes in care
provided through capitation payments compared to fee-for-service payments.[119]
3.126
The RDAA raised a number of concerns regarding the diabetes program,
stating that whilst it agreed with the Health Minister's contention that
diabetes patients who enrol with a medical practice are likely to achieve
better health outcomes, it does not 'support the use of a pure capitation model
to fund the program'.[120]
Of this, the RDAA stated:
A key concern is that a pure capitation model of funding may
result in fewer visits by diabetes patients to their GP, less continuity of
care and lower levels of compliance with the recommended best practice
treatment regimes for patients with diabetes.[121]
3.127
Given the potential negative outcomes, Mr Steve Sant, CEO of the RDAA
contended that the government modelling of changes in relation to the diabetes
capitation model 'may not be accurate'. Mr Sant argued that:
The RDA considers that the funding reforms announced in
themselves will not significantly improve access to healthcare in rural
Australia, nor significantly improve the health outcomes of people who live in
the bush.[122]
3.128
For those in rural and remote communities, moreover, the RDAA argued
that if a pure capitation model is adopted, enrolled GPs will be asked to
underwrite the financial risks associated with variations in demand for health
care from enrolled patients and that such variation may often be attributed to
factors outside the GP's control. It held that the management of these
financial risks is problematic, particularly if the pool of enrolled patients
for the general practice is not representative of the population average in
terms of health care needs and that in rural and remote areas, the option managing
this demand variation risk by referring complex patients to a specialist
service from the outset, or once the cost of providing care begins to exceed
the quantum of the capitation payment, is not likely to be available.[123]
3.129
The RDAA suggested an alternative encompassing a 'blended funding model'
or fee-for-service Medicare payments supplemented by specific support payments
for diabetes-related treatments with a rural loading which it argued would
better accommodate the economic and clinical elements of general practice.[124]
3.130
The Australian Diabetes Educators Association raised concerns regarding
accountability for services between the PHCOs and state governments stating
that:
...how services will be planned and coordinated across a
region, leaves the door open to exacerbating the current problems of
cost-shifting and decreasing access to diabetes care.[125]
3.131
The AMA supported additional funding for diabetes management but raised
concerns that the Commonwealth's diabetes management plan had been announced
without consultation with doctors and that as a consequence, there were many
elements of the plan that 'may not work as intended'.[126]
It also highlighted its opposition to the movement away from a fee-for-service
model to one that introduces fund-holding, fund capping and patient enrolment
because it:
...removes patient choice; limits access to services;
compromises the independence of doctors' clinical decision making (financial
considerations versus clinical need); creates perverse incentives that may
diminish access to, and the quality of care; and adds to the red-tap burden on
GPs. There is no evidence that supports the change from the current proven
model to a new approach and there are possible negative consequences for
patients and doctors.[127]
3.132
The Australian Diabetes Society (ADS) highlighted the importance of the
Diabetes Centres which, have 'made a massive difference to reducing patient
hospital admission for diabetes and continues to provide key support in
ambulatory patient care'.[128]
The ADS raised concerns that these centres are now 'under severe stress, with
increasing demand and very little increase in resources over the last 10 years,
and in some places, especially in NSW, reductions in staff'.[129]
The ADS emphasised that such centres require federal enhancement funds provided
directly to them to sustain their services.
3.133
The AMA questioned the focus on diabetes as opposed to all patients with
chronic and complex conditions, arguing that it had developed an alternative
which would provide coordinated multidisciplinary care to all patients with
chronic and complex conditions which would 'reduce the number of available
hospital admissions and generate long term savings for the health system'.[130]
Similarly, the Australian General Practice Network supported an extension to
other groups of people with chronic disease.[131]
GP treatment in aged care facilities
3.134
According to CHA, incentives alone are 'unlikely to fully address GP
access issues in aged care homes where there is an overall shortage of GPs in
the first place'.[132]
Drawing on its own survey findings, CHA held that the main restraint on GPs in
their interaction with residential care was that of time pressures. It
continued:
The most common issues raised include home visits difficult
to arrange; timeliness of visits; reluctance to take on new or difficult
patients; poor or inadequate documentation; inadequate after hours and
emergency access; rushed consultations; and poor communication and information
sharing.[133]
3.135
According to the AMA, the incentives, whilst attempting to address a
clear deficiency in current arrangements, 'are unlikely to be sufficient to
make a real difference'.[134]
The AMA recommended as an alternative, reforms in which aged care providers are
funded to develop service agreements with local doctors to provide medical care
to residents on an ongoing basis and an increase in the medical rebates to
better reflect the 'complexity and time of providing medical care to
residents'.[135]
3.136
The Royal Australian College of General Practitioners argued that whilst
it welcomed the initiative to increase financial incentives for GPs to provide
services to aged care facility residents, the budgetary provision was 'unlikely
to be sufficient'.[136]
The RACGP also commented on the difficulty of looking after aged care patients
in the community because the MBS item numbers do not recognise the complexity
and time that is required to look after people in their homes and in aged care
settings.[137]
3.137
The Dietitians Association of Australia raised its concern that whilst
there were incentives for GP participation, there were no similar incentives
for allied health, arguing that the maximum of five allied health visits per year
currently available under the Chronic Disease Management program was
inadequate. The association continued:
It is not possible to provide health care consistent with
current best practice for Australians with multiple chronic conditions within
the existing funding which has not been addressed in the reform.[138]
Term of reference (d): Top-up payments
3.138
The joint Commonwealth department submission noted that the top-up
payments reflect what is required, over and above the healthcare Specific
Purpose Payment and the fixed dedicated share of GST, to fund the
Commonwealth's 60 per cent hospital funding contribution outlined in provision
4 of the National Health and Hospitals Network Agreement and 100 per cent of GP
and primary health care services. It was noted that the top-up payments arise
because the new Commonwealth responsibilities are projected to grow more
rapidly than growth in the Healthcare SPP and the dedicated share of the GST.
3.139
The Commonwealth has guaranteed that the top-up payments will amount to
no less than $15.6 billion between 2014–15 and 2019–20. If the amount required
to fund the Commonwealth's hospital and primary care commitments is less than
$15.6 billion, then the residual funds will be paid into the National
Health and Hospitals Network Fund for distribution to the states and
territories.[139]
3.140
However, Ms Halton of the Department of Health and Ageing stated that it
was not possible to give a breakdown of the $15.6 billion:
To say that it is broken down at this point is not possible.
We can talk about the expenditure in each of these domains, but you cannot
break down the $15.6 billion at this point across each of those domains.[140]
3.141
The committee is waiting for more detailed information to be provided by
the Treasury.
3.142
The Australian Psychological Society stated that a significant portion
of these funds should be dedicated to primary health care and with GP services
as only one component of the expenditure.[141]
Term of reference (e): New statutory bodies, organisations or other
entities
Independent Hospital Pricing
Authority
3.143
Answers to questions on notice raise concerns about the degree of
independence of the Independent Hospital Pricing Authority. The Agreement
outlines that the Commonwealth will have a reserve power to over-ride the
determinations of the Authority. In answer to a question on notice, the committee
is advised that:
...the Commonwealth Health Minister and Treasurer will have
reserve powers that will only be used in exceptional circumstances.[142]
3.144
However, again there is no further detail as to what may constitute
'exceptional circumstances'.
3.145
The CHA stated that whilst it supports the establishment of an
independent statutory authority (or IHPA) to determine the 'efficient price' of
hospital services, it suggested that the actual price paid to a particular
Local Hospital Network would need to be based on a nationally struck price that
would be easily modified to account for a range of factors known to impact on
the cost of service provision but which are not within the immediate control of
a hospital. CHA commented that:
These factors include the size, scope and comprehensiveness
of the range of services provided by the hospital, demographic and
socio-economic characteristics of the patient cohort (in addition to the
co-morbidities inherent in the DRG system) and remoteness of location from major
metropolitan location.[143]
3.146
The AMA also raised questions about the development of a national
'efficient' price by an independent hospital pricing authority in relation to
activity based funding of hospital services particularly in relation to the
interjurisdictional differences in service delivery and cost. It articulated
that:
...the AMA has ongoing questions about how activity based
funding will be introduced, particularly since the Productivity Commission
reports of December 2009 and May this year highlighting the paucity of data
available on which to base an efficient price.[144]
3.147
Dr Andrew Pesce, President, AMA, commented further:
The AMA was very quick to point out that activity based
funding would not work well in all areas all the time, and there are some low
volume hospitals, remote and rural hospitals, hospitals with a very high
teaching component where activity based funding would put them at a significant
disadvantage, and we really need to be very careful to balance activity based
funding so that it provides good outcomes where it can and balance it with
other methods of funding to make sure that funds are delivered to places where
the volume is not right or there are special needs.[145]
3.148
Ms Jane Halton of the Department of Health and Ageing responded to concerns
about activity based funding by stating that:
Activity based funding as the advantage of being very clear
about what price should be paid for an efficiently delivered service. It has
the advantage of focusing the minds of service deliverers on how they deliver
those services, but it also has the capacity to be varied depending on
complexity of the service and geographical location of the service. It gives
you the advantage of driving efficiency, which we argue is important, but it
also gives you the capacity to acknowledge where a service can and should be
provided in order to meet the community's needs.[146]
3.149
Many submitters raised questions of aspects of the reforms in relation
to general practice and primary care. SARRAH, for example, held the view that:
...the proposed funding and administration arrangements are not
clear in the Agreement in regard to primary health care services which the
Commonwealth will become responsible for during 2011. Issues such as how
funding will be provided to deliver services and through which body will the
funds be administered and contracts monitored need to be resolved.[147]
3.150
The ACSA questioned the relationship between the IHPA and aged care
services noting that there was 'no relationship' suggested but that if
'appropriate price signals are to be sent across the care system, perhaps one
should be'.[148]
It had similar concerns regarding the Australian Commission on Safety and
Quality in Health Care and noted:
We are not suggesting that aged care services should
necessarily be part of the remit of these bodies – aged care is about more than
just health care – but the inter-relationship between health and aged care (and
other parts of the care system) in terms of performance, noted by the
Productivity Commission..., nonetheless need to be addressed. Consideration of
how these new bodies might relate to the aged care system is warranted.[149]
Australian Commission on Safety and
Quality in Health Care
3.151
Professor David Penington raised concerns regarding what he termed
'centralised reporting' and questioned whether, even if the ACSQHC could make
useful judgements on the basis of performance indicators, 'it is unclear how
these will translate into changes in individual hospitals'. He further noted
that:
The COAG Agreement refers to ACSQHC making assessments on
their data 'prior to reward payments being made'. There is, however, no
clear provision for such reward payments elsewhere in the documents or in the
systems governing funding transfers to institutional service providers.[150]
Medicare Locals
3.152
Concerns were raised in relation to a number of issues particularly the
coordination and accountability of the proposed Medicare Locals.[151]
The AMA noted that there remained unanswered questions pertaining to the
structure, management and coordination of the Medicare Locals. For example:
...what mechanisms will be put in place to ensure effective and
ongoing coordination with general practitioners, Divisions of General Practice,
Local Hospital Networks and aged care services?[152]
3.153
Ms Leanne Wells, Executive Director of the AGPN articulated a similar
concern when she commented:
At some points in the agreement there is a lack of clarity
about the level of government that will be responsible for and accountable for
some aspects of primary healthcare and how this will relate particularly to the
planning, coordination and funding responsibilities, and hence accountabilities
of primary health care organisations.[153]
3.154
Central to concerns regarding coordination and management was the lack
of clarity relating to responsibility and accountability for key aspects of
primary health care. The AGPN raised these concerns in relation to the
'apparent enhancement of the role of State Government's in primary health care
policy' which it argued may lead to additional bureaucracy and fragmentation of
services rather than greater coordination and service integration.[154]
The AGPN called for clarity of policy responsibility for primary health care,
particularly in relation to the role and function of the PHCOs and their
relationship to the LHNs.[155]
Ms Leanne Wells, Executive Director of the AGPN stated in this regard:
I guess our key point is that the dispersal of primary
healthcare responsibility and authority across PHCOs and LHNs may perpetuate
current problems. What we want to see in an ideal system is a close regional
relationship between local hospital networks and primary healthcare
organisations for joint planning, coordination and accountability.[156]
3.155
This view was supported by Catholic Health Australia which expressed
concern that as many of primary health services are currently provided by
hospitals, there was a risk of:
...increasing fragmentation and blame and accountability
shifting unless there is a close alignment and integration between Medicare
Locals and LHNs. The funding models will be critical in ensuring the new
arrangements lead to a more, rather than less, integrated system.[157]
3.156
Professor Philip Davies has raised further concerns of duplication in
regard to Medicare Locals by stating that:
Much of what Medicare Locals will be expected to do is
already core business for the better-performing Divisions of General Practice
but some important questions remain about the ownership and governance of the
new organisations. Divisions would certainly have to evolve quickly if they
were to become Medicare Locals.
More fundamentally, the interfaces between the established
National Health Call Centre, the new network of Medicare Locals and the
individual practices and GPs who'll be called upon to deliver services at night
and weekends will take some working out. Coupled with the fact that there are
already well-established and well-functioning after hours arrangements in many
parts of the country it would seem aspects of this measure may be more spin
that substance.[158]
3.157
The Victorian Healthcare Association commented on the need for
flexibility in the evolution of the Medicare Locals, noting that:
Primary healthcare has evolved in each State/Territory in a
unique way. The creation of new PHCOs should not be a “one-size-fits-all” approach for every State/Territory, but should build on the strengths of
current primary healthcare arrangements.[159]
3.158
Mr Sant of the RDAA raised the concern that many Medicare Locals may be
centred in large regional centres and that they will focus much of their
attention on those larger regional areas whilst the smaller towns will 'lose
out in that at the end of the day'. Of this concern, he stated:
That seems to be what has happened with many of the divisions
at the moment; they are focused mainly in their local area and the outlying
areas have been left out in the cold to some degree.[160]
3.159
Submitters and commentators pointed the lack of detail in relation to
Medicare Locals. Professor Mark Harris stated that there remain 'many
unanswered questions from the patch work of announcements about PHCOs'. He contended
that:
There is a high level [of] uncertainty among community health
staff who see their services being "absorbed" by these new
organisations but lack clarity about their place in these structures. Resolving
these issues is no doubt very difficult given the range of parties and
interests involved. However, it is important to resolve this uncertainty as
soon as possible.[161]
3.160
Mr Bo Li, Australian Health Care Reform Alliance, commented in a similar
vein:
...we do not know the operational details of these Medicare
Locals. For example, will they simply be rebranded divisions of general
practice, will they be fund holders or service providers or both? If they are
both, there does seem to be a fundamental conflict of interest in that you are
both receiving money and dispensing it at the same time. And what will happen
to the existing models of best practice in primary health care? For example, in
Victoria...there are some very robust and workable solutions at a local level
that are delivering good primary health care to consumers. We are concerned
that some of these national reforms may overshadow, if not eliminate, some of
those models of best practice that are already happening. The engagement of consumers
is also a concern of the alliance, particularly at the local hospital network
level and also at the Medicare Locals level.[162]
3.161
The Mental Health Council of Australia (MHCA) held a similar concern
regarding Medical Locals in relation to mental health, noting that there was
'too little detail of this initiative to determine its potential
effectiveness'.[163]
The MHCA noted that there were a number of challenges in accessing mental
health care through GPs trained to provide it including declining rates of bulk
billing and difficulties in identifying GPs with training in mental health
care. Moreover, mental health consumers undergoing a mental health crisis have
great difficulty in accessing GPs at short notice. The MHCA emphasised the
importance of the initiative working with clinicians and the primary care
services with focus on clinical care such as GPs and medical clinics and acute
hospital services as well as a whole range of community supports. The MHCA
noted that:
These include community services that provide assistance and
support with day to day living activities such as the Personal Helpers and
Mentors Program and Home and Community Care services, as well as providing
links to employment and accommodation services. People who do not have ready
access to GP services, such as those who are homeless or those in rural areas,
may also be more likely to be able to access Medicare Locals through these
other mechanisms.[164]
3.162
SARRAH warned that the PHCOs must be given sufficient authority and be
responsible for the health policy and planning of all communities including
those in rural and remote Australia.[165]
The Victorian Healthcare Association argued that the PHCOs must provide
evidence of service gaps to enable regional health service coordination and
development rather than operate as service providers per se whilst warning that
the creation of the PHCOs cannot involve a 'one-size-fits-all' approach across
the states and territories.[166]
3.163
The National Primary Health Care Partnership raised concerns that the
membership structure of the PHCOs was unclear by arguing that:
The NHHN agreement is silent regarding the preferred
membership structures for PHCOs. Membership structures will be critical not
only to the effective and efficient function of these new organisations but
also in determining health professional and service provider support of this
new primary health care system. It is critical that membership arrangements are
determined through broad consultation with stakeholders, including primary
health care professional and service provider organisations and health consumer
groups.[167]
3.164
Many stakeholders raised concerns with the name 'Medicare Locals'.[168]
The Dietitians Association of Australia (DAA) submission represented this
concern by noting that:
This name is strongly associated with Medicare Australia and
the current Medicare Benefits Schedule. DAA strongly contends that further
consultation with health professionals as well as consumers is required to
ensure that the name 'Medicare Locals' promotes a positive image and does not
confuse understanding of the role and function of these new organisations.[169]
3.165
The DAA argued that many of the services provided under the auspices of
the new PHCOs will not be part of any Medicare program particularly in relation
to allied health services and that:
It is likely the majority will fall under user pays (with or
without private insurance) and will also encompass DVA funded services. Calling
the new bodies 'Medicare Locals' is likely to raise the (false) expectation in
consumers that they will, or should, be received fully or partially subsidised services.[170]
3.166
Allied Health Professions Australia (AHPA) stated that there is an
underlying assumption that the Medicare Locals will be fund-holders and
therefore a critical point of referral and access by consumers to other
providers and services. AHPA highlighted that:
There is no recognition of or details on how consumers will
have equitable access to other primary health care providers and organisations
such as community health centres (where there is often no GP presence) or
private allied health providers.[171]
3.167
The National Primary Health Care Partnership raised concerns about the
role of the National Performance Authority in monitoring the performance of the
Medicare Locals based on healthy community reports and held that:
...this will not provide a reasonable measure of PHCO
performance unless they are given sufficient responsibility and resources to
impact on population health at regional levels.[172]
Term of reference (f): Involvement of non-signatory and part-signatory
states
3.168
The Consumers Health Forum of Australia argued that the states which
have not signed up, or have only partly signed up, to the COAG agreements
should not be disadvantaged. It contended that:
Those states which have not signed up or fully signed up
should be encouraged to adopt new national standards to increase national
consistency, as uniformity across states and territories will
benefit consumers.[173]
3.169
Others submitters, including the National Primary Health Care
Partnership, emphasised the importance of a nationally consistent approach
which it argued was 'more likely to support a high performing system monitored
through a consistent national performance and accountability framework'.[174]
The Australian General Practice Network shared this view and raised concerns
that, as Western Australia is not party to the National Health and Hospitals
Network Agreement, Public Health Care Organisations (PHCOs) may not be
established in the state whilst at the same time, funding to the existing
General Practice Network is due to cease on 1 July 2012.[175]
Term of reference (g) and (h): Local Hospital Networks and hospital funding
3.170
Submitters raised concerns that there was a lack of detail regarding how
the new system would operate. CHA, for example, stated that whilst it was
supportive of local governance of hospital networks and activity based funding
for appropriate hospitals, with 'so little known as to how the changes will
work', it is too early for CHA to form a view as to how the reforms will
contribute to improved patient care.[176]
3.171
The RDAA raised concerns regarding the states' role. RDAA CEO Mr Steve
Sant stated that the new arrangements 'proposed with the state governments to
continue to act as a filter for hospital funding also runs the risk of states
retaining much control over what services are to be funded'.[177]
Dr Pesce of the AMA contended that the fear was that the 'states will remain in
the drivers seat on the roll-out of these reforms and in many ways it could be
business as usual in our hospitals'.[178]
3.172
Professor David Penington also raised concerns regarding the funding
arrangements proposed by the Commonwealth:
Devolving national responsibility for hospital management all
the way to small Local Hospital Networks, with Australian Government
performance indicators and casemix funding of 60% of "efficient
costs", will leave many hospitals in dire straits in those states where
unit costs are far higher than in Victoria (the model for casemix funding).
States will have to pick up the tab for much more than the 40% envisaged in
order to keep many hospitals solvent. Even in Victoria, there are 40 regional
hospitals that have to operate on block grants because casemix cannot
adequately recognise services they need to provide for their communities.[179]
3.173
A number of concerns were raised in relation to national reporting.
Professor Penington, who argued that the COAG agreement will do 'little to
improve quality of healthcare in Australia's public hospitals, argued that it
imposes a 'centralised process for reporting on quality that will be expensive
and largely ineffective'.[180]
He contended that the Commonwealth's function in promoting quality healthcare
under the COAG agreement will be primarily restricted to setting national
standards against quarterly reports required from every public and private
hospital and every PHCO along with 'healthy community' reports. He noted that
these reports will be based on existing performance indicators associated with
the Australian Healthcare Agreement of 2008 and newly modified sets of
performance indicators approved by COAG on the advice of such bodies. Dr
Penington went on to state:
This massive commitment to central reporting is, in my view,
likely to have little effect on the way services are actually delivered to
people in hospitals or in the community.
Under similar sets of indicators, the Bundaberg Hospital in
Queensland, the Alfred Hospital in Victoria, and some NSW hospitals were
adequate performers on the usual budgetary or other numerical performance
indicators, despite manifest issues with quality that emerged.[181]
3.174
Mr Laverty of CHA also raised the question of whether the establishment
of nationally consistent reporting processes will avoid replication or serve as
another layer of bureaucracy.[182]
Local Hospital Networks
3.175
Central to the reforms announced by the Prime Minister and Minister
Roxon is the establishment of Local Hospital Networks (LHNs). The evidence
received by the Committee pointed to a number of concerns with this part of the
plan, in particular the lack of certainty around the number of LHNs. Commonwealth
agencies appearing before the inquiry failed to provide any certainty around
this number. [183]
3.176
On the question of final approval of the number and size of LHNs in each
state and territory, the Department of Health and Ageing did not provide a
specific response and simply referred the Committee to the wording of the
Intergovernmental agreement.[184]
3.177
The AGPN suggested that the public health care role for LHNs as
established in the National Health and Hospitals Network Agreement
'detracts from, rather than boosts' public health care capacity as well as
'risks duplication and poor coordination'. The AGPN further commented that:
History shows that systems run from hospitals put hospitals
first; reorienting the system towards primary health care requires the primary
health care sector to play the leadership role.[185]
3.178
CHA held that the right balance needed to be struck between 'local
decision-making and effective strategic level planning at a wider population
level – particularly in the provision of very expensive and complex services
such as organ transplant units'.[186]
Mr Laverty also contended that state and territory governments were likely to
pursue their own LHN construction in a different manner. He stated that:
It does not appear that there is likely to be a consistency
in how LHNs are established as to perhaps their size or even the service mix
that they will entail.[187]
Governance of LHNs
3.179
The AMA raised concerns regarding the governance structure, holding that
there are inconsistent descriptions of the role of local doctors in the LHNs in
government publications. The AMA contended that:
The IGA specifies that LNH governing councils will include
members with clinical expertise but this would be 'external to the LHN wherever
practical'. The AMA opposes a model that does not allow direct representation
of local practicing doctors.[188]
3.180
Dr Pesce further emphasised the need for local representation on the
governing councils, without which, 'they will be less effective in helping to
improve our hospitals'.[189]
He contended that:
Firstly, I believe that without good local input often
strategic decisions might be made which are not necessarily well founded.
Secondly, if doctors, nurses and other people working in the hospital system
are excluded from representation on the council, they will feel no ownership of
those decisions, no commitment to support those decisions and we all know how
good doctors can be at standing outside and just criticising. It is very
important, as a two-way process, for the councils to get proper input but also
for the clinicians to have ownership of those decisions so that they will feel
more committed to implementing them.[190]
3.181
The announcement of Lead Clinicians Groups shortly after concerns emerged
regarding the involvement of local clinicians does not provide certainty that local
clinicians will be involved decisions in LHNs.
3.182
CHA also raised concerns of management citing the example of a health
service trust in the United Kingdom where excess deaths and serious lapses in
patient care and hygiene resulted from the local board and hospital management
focusing more on meeting performance and cost cutting targets than on actual
patient care.[191]
3.183
Professor Penington also noted that there will need to be continuing
state health department roles to supplement the new federal health bureaucracy
in each state with LHNs responsible to both. Thus, he contended that:
The NHHRC thought it had ended the "blame game",
but with two tracks of funding and decision making on every issue, including
major equipment, hospital capital and maintenance, let alone separate tracks
for the many aspects of aged care, there is huge potential for blame shifting.[192]
3.184
Professor Penington further criticised the LHN structure because of its
failure to 'mandate structures involving medical practitioners and university
medical school and health science faculties in hospital clinical governance
shown to be necessary by international experience'.[193]
3.185
The AMA raised concerns regarding the fact that the states will be
responsible for negotiating service level agreements with each LHN. The AMA
stated:
The AMA considers that these service agreements will be a key
factor in the success or otherwise of much of the health reform initiatives
contained in the IGA. For example, if funding is insufficient due to
unrealistic prices or poorly estimated service volumes, no matter how efficient
the hospital and the potential number of services it could provide, performance
targets will not be met and/or quality standards may suffer.[194]
3.186
The AMA further questioned how the Commonwealth will ensure that the
states will set 'realistic, transparent and achievable hospital-level targets
and standards for LHNs and provide sufficient funding to achieve them'.[195]
3.187
Ms Halton also emphasised that all state Auditors-General will have a
role in investigating the data and behaviour of the LHNs.[196]
3.188
Concerns about limits on the ability of the Commonwealth Auditor-General
have been discussed in other fora, specifically in recent times in relation to
the Building the Education Revolution program.
3.189
In 2010 Budget Estimates hearings, the Auditor-General confirmed the
limits of his powers to undertake audits:
Also,
it is very clear when you look at the sections of our act that I may undertake
a performance audit of a 'Commonwealth entity'. It is very clear.[197]
3.190
The limits on the powers of the Auditor-General in relation to
undertaking performance audits of the LHNs being established under the ambit of
state and territory powers was further examined at hearings with the
Commonwealth Departments. The concerns of the Coalition Senators in relation to
the inability of the Auditor-General were confirmed by the Secretary of the
Department of Health and Ageing, Ms Halton:
I think the answer is, as I have already indicated, it is not
intended at this point to change the boundaries of the Auditor-General's
powers, but I think the Auditor-General does believe his powers extend slightly
more broadly than have been necessarily understood in the past, but that is a
matter for him to decide.[198]
3.191
The committee sought the advice of the Commonwealth Auditor-General. The
Auditor-General noted that the LHNs will be established under by State
governments as separate legal entities under State legislation and commented
'if this is the case, the Commonwealth Auditor-General would not have the
authority to audit the performance of LHNs, as the Auditor-General Act 1997 focuses
on the performance of Commonwealth entities'.
3.192
The Auditor-General went on to comment that there are provisions within
the NHHN Agreement for the establishment of a National Performance Authority
(NPA).The NPA is to be established from 1 July 2011 as an independent
Commonwealth statutory authority under the Financial Management and
Accountability Act 1997. As such, the NPA would fall within the Australian
National Audit Office's mandate to access data and information held by the NPA
and to conduct performance audits of its performance. But this does not extend
to the bodies reporting to the NPA when they are created under state
legislation (ie the LHNs).
3.193
There is also a question regarding the funding of LHNs. In answer to a
question about what would happen if an LHN exhausted its funding, the committee
is advised that governing councils of LHNs have an obligation to manage funds
available to them. However, this specific question was not directly answered.[199]
Committee comment
3.194
The committee acknowledges that the role of the Auditor-General relation
to the NPA provides some confidence as to the data regarding LHN performance.
As the Auditor-General noted:
...the ANAO could provide assurance in
relation to whether the NPA is fulfilling its role and, in doing so, is
providing performance information that allows the Commonwealth Government, over
time, to judge whether its policy directions are being implemented effectively.
3.195
However, the Committee is concerned by the scope of the powers of the
Auditor-General being limited to the NPA. The NPA is reliant on data from LHNs,
which are outside the direct scope of the Auditor-General's authority. The
Committee does not believe that reliance on State Auditors-General is an
appropriate mechanism to oversee the substantial amounts of Commonwealth
funding being directed to LHNs. This lack of oversight by the Commonwealth
Parliament and its key accountability agent is a significant flaw in the
package.
3.196
The Committee notes that there are parallel developments in the
education portfolio, through the Building the Education Revolution program,
which point to the new arrangements emerging in Federal public administration,
particularly those under the auspices of the Council of Australian Governments.
These new arrangements mean that the Parliament must also look to new ways to
safeguard its role in ensuring the accountability of the executive and the
scrutiny of the expenditure of taxpayers' money.
3.197
The ANAO has provided the Joint Committee of Public Accounts and Audit
with options to enhance external accountability arrangements in response to
these developments in Federal public administration. The Committee supports the
Auditor-General's contention that benefits would arise in 'extending the
Auditor-General's mandate to allow the ANAO to "follow the money trail"
in certain circumstances; particularly where, in the opinion of the
Auditor-General, flowing the money trail would be significant in the context of
an audit of a Commonwealth entity'.
Location and size of LHNs
3.198
Despite the terms of the Intergovernmental Agreement, there remains a
distinct lack of detail around key features of the package, such as basic
details such as the number and location of the LHNs. This was highlighted in Senate
Budget Estimates hearings on 25 May 2010:
Senator FIERRAVANTI-WELLS—I want to ask about the local
hospital networks. Could you go into some detail about how they work and how
many there will be. Did the Prime Minister actually work out how many there
would be before he announced that we would all go to these local networks?
Mr Rimmer—The exact number of local hospital networks is
something that will be resolved by the end of 2010. We have within the
Commonwealth a planning assumption that there will be something like 100, but
that is subject to ongoing development and refinement over the course of 2010.[200]
3.199
When pressed, it was apparent that substantial details remain to be
negotiated and developed:
Senator FIERRAVANTI-WELLS—In the provisional work plan,
appendix 4 of the future work plan, which was part of the agreement, it says that
the establishment of the local health networks will be set up as separate legal
entities under state or territory legislation. It is to commence 2010-11 and it
is to be undertaken by state governments. Then determining the size and
allocation has to be resolved as well. That is all going to happen by the end
of the year, is it?
Mr Rimmer—No, Senator. The plan is that, by the end of 2010,
the number and geographic boundaries of local hospital networks will be agreed
between the Prime Minister and each Premier or Chief Minister on a bilateral
basis. That agreement will also take into account the concurrent development of
boundaries for Medicare Locals so that we can arrive at a situation where
Medicare Locals and local hospital networks have as consistent geographic
boundaries as is possible in the circumstances. They will not always be
consistent, but consistency is the objective. That resolves one aspect of the
material that you referred to. The actual implementation of local hospital
networks will take some time. States and territories will commence implementing
those really from 1 July 2011, and the agreement that COAG has reached is that
all local hospital networks will be fully established before 1 July 2012, which
is when the activity based funding arrangements come into effect.[201]
3.200
The Committee could not ascertain further specific detail about the
number of LHNs. While Budget Paper No. 1 states that there will be 150 LHNs,[202]
the Secretary of the Department of Health and Ageing, Ms Jane Halton, contended,
however, that 'up to 150' LHNs would be a more accurate figure.[203]
In response to questions regarding this contention around the number of LHNs,
Ms Rosemary Huxtable, Deputy Secretary of the Department of Health and Ageing,
confirmed that the 'finalisation of the number of hospital networks would be a
matter that would continue to be discussed between the Commonwealth and the
states and territories'.[204]
3.201
The Consumers Health Forum of Australia (CHF) noted that there had been
reports which have suggested that the Northern Territory and Tasmania will be
served by single state-wide LHNs based in capital cities. CHF emphasised the
need for LHNs to be able to engage with local communities and stated:
CHF would not support Local Hospital Networks that cover
whole states and are run from metropolitan areas, as these are highly unlikely
to be able to adequately address the needs of local communities, or to engage
with local consumers.[205]
3.202
The Committee is profoundly concerned at the prospect of state and
territory-wide LHNs in Tasmania and the Northern territory respectively.
3.203
CHA commented that, at least at this stage, there has been a 'lost
opportunity' to allow cross border LHNs which may have 'addressed some of the
difficult issues of cost and service dysfunction near the boundaries of
state/territory borders'.[206]
The RDAA held a similar view, arguing that the boundaries of the LHNs need to
be located where there are 'synergies between patient flows and communities'
which may be located in different states.[207]
The RDAA went on to comment that:
State boundaries should not prevent the creation of the most
appropriate configuration of a LHN. If LHNs are unable to span State
boundaries, disputes will arise between States over the funding of patient care
where patients are referred across State boundaries for hospital-related care.[208]
3.204
CHA also commented that the Budget Papers indicated that approximately
150 LHNs would be established and this would translate into each LHN serving a
population base of around 150,000. CHA suggested that this size of LHN may
result in poor provision of services:
This is well short of the population bases of similar
networks in overseas countries and many health policy commentators have
expressed concern that networks of this size would fall short of providing a
critical mass of services and would also lead to a considerable increase in
bureaucracy – with each network having its own administrative underpinning.
There is much commentary in the literature to suggest a population base of at
least twice the number originally envisaged would be more efficient, effective
and importantly address equity concerns.[209]
Relationship with the private
sector
3.205
The committee notes comments by Minister Roxon that the LHN will be able
to purchase services from another public hospital or a private hospital if a
patient does not undergo elective surgery within the clinically indicated
timeframe. There is concern that the LHN would prefer to purchase from a public
hospital as the funding would stay with the State. This reflects the scant
detail within the package regarding the role of the private sector.
3.206
CHA also raised the question of the role of private hospitals noting
that they provide 40 per cent of total hospital episodes (including 60 per cent
of surgery).[210]
Of this, CHA stated that:
Ideally, the Commonwealth will move to enunciate a clear role
for private hospitals in Local Hospital Networks, whereby their ability to
deliver hospital services to private patients at no direct cost to government
is better recognised.[211]
3.207
CHA also raised particular concerns regarding the role of Catholic
hospitals within the LHN system given that they operate within a 'moral
framework that preclude them from providing some services'.[212]
Mr Martin Laverty, CEO, CHA commented on these concerns:
There are a few fundamentals that we have put to the
government and COAG that are relevant in the design and implementation of this
system. The first is that the governance of those existing Catholic hospitals
must be respected and able to continue into the future. As I have said,
Catholic hospitals operate very much like local hospital networks at present.
Some of those hospitals must be able to be affirmed as local hospital networks
into the future. Where it is not appropriate for them to be classified as LHNs
in their own right, because of their scale and size, we are hopeful that within
the design of LHNs the independence of those Catholic hospitals is retained
and, most importantly, that, in the operation of those LHNs, they not be in any
way disadvantaged or thought of last. The key to that is that in the
establishment of both the LHNs and the national governance oversight there is a
real commitment to transparency around how funds are allocated and how they are
administered so that we can have confidence that through LHNs public hospital
funding is administered equitably, and just because a hospital within an LHN
happens to be Catholic it is not somehow disadvantaged.[213]
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