Chapter 2


Chapter 2

Health Portfolio

Department of Health

2.1        This chapter outlines key issues discussed during the 2014–2015 budget estimates hearings for the Health portfolio.

2.2        The committee heard evidence from the department on Monday 2 June and Tuesday 3 June 2014. Areas of the portfolio and agencies were called in the following order:

  • Whole of Portfolio/Corporate Matters
  • Acute Care
  • Independent Hospital Pricing Authority
  • Access to Pharmaceutical Services
  • Access to Medical and Dental Services
  • Primary Health Care
  • National Mental Health Commission
  • Medicare Locals
  • GP Superclinics
  • Health System Capacity and Quality
  • Australian Organ and Tissue Donation and Transplantation Authority
  • National Blood Authority
  • Therapeutic Goods Administration
  • Food Standards Australia New Zealand (FSANZ)
  • National Industrial Chemicals Notification and Assessment Scheme (NICNAS)
  • Healthcare Workforce Capacity
  • Health Workforce Australia (HWA)
  • General Practice Education and Training Ltd
  • Private Health
  • Private Health Insurance Administration Council (PHIAC)
  • Private Health Insurance Ombudsman (PHIO)
  • Population Health
  • Australian National Preventive Health Agency (ANPHA)
  • National Health and Medical Research Council
  • Australian Institute of Health and Welfare
  • Cancer Australia
  • Australian Commission on Safety and Quality in Health Care
  • Biosecurity and Emergency Response
  • Sport and Recreation
  • Australian Sports Anti-Doping Authority (ASADA)
  • Australian Sports Commission (ASC)

Whole of Portfolio/Corporate Matters[1]

2.3        The committee began by discussing the proposed Medical Research Future Fund (MRFF). The department explained that the current Health and Hospital Fund (HHF), totalling $900 million, will comprise the initial seed capital for the MRFF. Officers explained that the MRFF will be a capital preserved fund with disbursements made from the investment earnings. The committee discussed the requirement for legislation to establish the fund and how priorities for medical research funding will be determined.[2]

2.4        There was a general discussion on staffing in the department, including questions about the movement of staff from proposed abolished agencies such as ANPHA and HWA.[3] Changes for flexible grant recipients were also canvassed.[4]

Acute Care[5]

2.5        This outcome commenced with a discussion about the discontinuation of the National Health Reform Agreement from 2016–17 and the removal of top-up funding.[6] Senator McLucas asked questions about the rationale behind basing hospital funding indexation on population growth and CPI.[7] Senator Di Natale continued this line of questioning asking why incentive based funding was not already an incentive to reduce inefficiencies. Secretary Halton explained:

You could draw a parallel to the efficiency dividend, which we have been delivering for as many years as I can remember. Let me tell you, that drives efficiency. Every day, we look at efficiencies. You ask division heads in my department about how they are required to drive efficiency to deliver the government's business in a more effective and efficient way. It focuses the mind in a very particular way.[8]

The committee also discussed national reward funding under the National Emergency Access Target[9] and capital funding for the Palmerston hospital.[10]

Independent Hospital Pricing Authority (IHPA)[11]

2.6        Senator Smith questioned the authority on nationally efficient pricing and the role this plays in benchmarking and realising efficiency gains. Chief Executive Officer IHPA, Dr Tony Sherbon, explained that the most expensive hospital network in the country operates at 23 per cent above the national average cost.[12] Further questions focused on the national elective surgery and emergency department targets. The committee noted that there was generally poor compliance against the targets despite the incentive payments.[13]

Access to Pharmaceutical Services[14]

2.7        Officers explained the proposed 13% increase in the Pharmaceutical Benefits Scheme (PBS) co-payment. The department confirmed that no modelling had been conducted on the impact of the co-payment on patient behaviour and pharmacies. The committee discussed the interaction of these changes on the PBS Safety Net.[15] Senator Di Natale questioned the department about the likelihood of the co-payment leading to a reduction in patients accessing prescribed medicines due to cost implications. The department suggested that 0.3% of concessional patients were unlikely to fill scripts as a result.[16]

2.8        Senator Xenophon raised concerns about perceived delays in the registration process for a medicine used to treat cystic fibrosis. The department explained that pharmaceutical companies are also responsible for providing a proposal to be listed under the PBS.[17] Senator Smith raised questions about the history of PBS co-payments.[18]

Access to Medical and Dental Services[19]

2.9        The committee examined the proposed co-payments on General Practitioner visits, and out of hospital radiology and pathology items on the Medicare Benefits Schedule (MBS). Questions were asked about where the co-payment will be applied, who will be exempt and changes to bulk billing incentives. Officers explained that the co-payment will only apply for the first ten visits per year for concession card holders.[20] The committee canvassed several examples with departmental officials of how the co-payment will impact on different health care providers including Aboriginal Medical Services[21] and Family Planning[22].    

Primary Health Care[23]

2.10      Questions commenced on the funding and service delivery within the Mental Health Nurse Incentive Programme.[24] Senator Wright raised the issue of the increasing suicide rate. The committee then discussed a number of current programmes that target this issue including the National Suicide Prevention Programme and the Taking Action to Tackle Suicide Programme. Increased funding is made available in the budget for an expansion of the Headspace Programme and the Centre of Excellence in Youth Mental Health. The department confirmed that there has been no disproportionate decrease in mental health policy staff within the department.[25]

National Mental Health Commission (NMHC)[26]

2.11       The review of mental health services and programmes was discussed by the committee. Officers explained that the review is examining expenditure, evidence of outcomes, and evidence of objective review processes and conclusions for current mental health programmes.[27] Senator McLucas had questions about methodologies for assessing the effectiveness of programme delivery at a commonwealth and state level. NMHC Chief Executive Officer, Mr David Butt, explained using an example:

We are getting economic modelling done on such things as what happens to a 14 year old girl with eating disorders through the course of her life, what is the likely trajectory, and taking into account that trajectory, what are the likely costs to the system. We then multiply that out on a population basis and say whereabouts throughout that life course could you have interventions that would make a difference to the outcomes for the person and the costs to the system—so if you invest upstream, what do you save downstream.[28]

Medicare Locals[29]

2.12      The key recommendations of the review into Medicare Locals were discussed including a reduction in the overall number as a means to reduce administrative costs. The Medicare Locals programme will cease in mid-2015 and transition to a Primary Healthcare Network (PHN) programme. Questions were asked about the tender process for the new PHN.

GP Superclinics[30]

2.13      The committee discussed the termination of three GP Superclinic projects in Darwin, Rockingham, and Wynnum.[31]

Health System and Capacity[32]

2.14      The department confirmed that the PCEHR has 1.66 million Australians registered. The committee discussed the breakdown of statistics and the review of the project. Staffing and on-going funding were also discussed.[33] The progress and delivery of new regional cancer centres was canvassed[34], as were changes to the delivery of services by the National Rural and Remote Health Infrastructure Programme to include a co-contribution from recipients.[35] Officers confirmed that current commitments from the Health and Hospital Fund would be met prior to the transfer of the monies in this fund to the MRFF.[36]

Australian Organ and Tissue Donation and Transplantation Authority (AOTDTA) and National Blood Authority (NBA) [37]

2.15      Officers explained the AOTDTA's role in assisting with the Paired Kidney Exchange Programme. The most recent exchange involved thirteen pairs and has resulted in successful transplants where the use of a kidney from a deceased person would have failed. The committee discussed the increased trend in transplants before moving to the proposed merging of the AOTDTA with the NBA. The department explained that this would result in some back-office savings but would not affect service delivery.[38]

Therapeutic Goods Administration[39]

2.16      Discussion on the regulatory process for devices used for hip joint replacements then moved to on-going complaints within the community around the performance of some of these devices. The committee then discussed the emerging issue of oxycodone abuse. The agency advised that this is a complex issue. An example was presented where removal of a certain substance or formula from the market has led to an increase in abuse and overdose on other more dangerous therapeutic and illegal substances.[40]

Food Standards Australia New Zealand (FSANZ)[41]

2.17      The committee discussed the role of FSANZ in regulating foods that may pose a risk to human health. Questions were also asked about FSANZ’s interaction with the Department of Agriculture and other state and corporate entities. Senator Xenophon followed up some answers to written questions from the previous round of estimates hearings relating to maximum residue levels in food. [42]

National Industrial Chemicals Notification and Assessment Scheme (NICNAS)[43]

2.18      Senator McLucas questioned the agency on the national assessment of chemicals used in Coal Seam Gas (CSG) production and the expected report. Director of NICNAS, Dr Brian Richards, explained the key focus  of the report:

As Paracelsus, the father of toxicology in the Renaissance, said: 'The dose makes the poison.' Even with a commonly used, benign chemical like hydrogen oxide, often named water, you can die from an overdose. It comes down to the dose in humans, either the general public or workers in that industry, or to the environment. So we look at the hazard, the exposure and the use and then we work out the risks. That would be the primary output from us to the environment department.[44]

Senator Rhiannon asked a range of questions about animal testing for local assessment of new ingredients in a range of medicinal, food and industrial products.[45] Senator Xenophon finished the session with some questions relating to recent media reports on the use and regulation of Benzidine-based dyes in clothing.[46]

Healthcare Workforce Capacity[47]

2.19      This outcome commenced with examination of the Voluntary Dental Graduate Year Programme. The committee discussed whether graduates were located in  rural or metropolitan areas.[48] Discussion then turned to medical interns in private hospitals. Senator McLucas asked questions on the breakdown of international and domestic students involved in the programme and whether all domestic graduates were finding placements. The department assured the committee that this was the case.[49]

2.20      Senator McDonald questioned the department about the impact on service delivery at the Burdekin Centre for Rural Health with the opening of the Townsville-Mackay Medicare Locals.[50] A proposal from Curtin University to establish a new medical school was canvassed by the committee[51], in addition to changes to nursing and allied scholarship programmes[52] and placement of medical students[53]. 

Health Workforce Australia (HWA)[54]

2.21      The proposed abolition of HWA and arrangements to transition the functions of HWA into the department were discussed by the committee.[55] The future of a number of programmes co-ordinated by HWA was also discussed including the Clinical Training Funding Programme[56], the Simulated Learning Environments Programme[57], and the Expanded Scope of Practice Programme.[58]

General Practice Education and Training Ltd (GPET)[59]

2.22      The committee discussed the proposed abolition of GPET with the transitional arrangements for transfer of functions to the Department of Health. Senator McLucas questioned the agency on the purpose and efficacy of the Prevocational General Practice Placements Programme. Officers explained that a recent report found that other programmes were more cost-effective and ultimately provided more training places with approximately 50% of these places in rural and regional areas.[60]

Private Health[61]

2.23      Questions under this outcome initially focused on the Medibank Private Trial covering GP services. The committee discussed whether other medical services are proposed to be covered by an extension of this trial. Questions were then raised on the impact this may have on private health insurance premiums.[62] The committee then examined the number and nature of complaints received from participants in the trial.[63] The committee also discussed a range of issues including general statistics on private health insurance holders, the premium setting process, and the impact of freezing the threshold on the rebate.[64]

Private Health Insurance Administration Council (PHIAC)[65]

2.24      The committee discussed the merger of PHIAC with the Australian Prudential Regulatory Authority. Senator McLucas questioned the rationale on this merger. Dr Bartlett explained:

The Private Health Insurance Administrative Council has a key role in terms of looking at the solvency and viability of private health insurers. There has been a long held view that there is a very close alignment between significant parts of its activity specifically focused on private health insurance and the broader activities that APRA does for the insurance sector more broadly.[66]  

Officers further explained that it is likely that amendments will be required to the Private Health Insurance Act 2007 (Cth) for this merger to take place.[67]

Private Health Insurance Ombudsman (PHIO)[68]

2.25      Arrangements for the proposed transfer of PHIO into the Commonwealth Ombudsman's offices were discussed. Senator McLucas questioned the department on a range of issues including method of receipt for complaints and number of complaints.[69]

Population Health[70]

2.26      The committee then moved to discussing the termination of the National Partnership Agreement on Preventive Health. The department explained the rationale behind the decision using a recent review that identified a number of issues relating to duplication and lack of commonwealth control of state objectives and programmes.[71] Further discussion was held on the removal of funding for a number of programmes including the Healthy Worker and Children Initiative, Tobacco Cessation, and the Food and Health Dialogue.[72] Senator Di Natale raised a number of questions on the government's alternative strategy for preventive health.[73]

2.27      Senator Brown asked questions about funding for sexually transmitted infections and blood-borne disease programmes. The department explained that this funding is on-going and aligns with national strategies for disease control. However, these programmes are subject to changes to their indexation.[74] Senator Whish-Wilson asked a range of questions about the department's litigation with tobacco companies on plain packaging. The department did not want to elaborate on their strategy, funding and progress due to the on-going nature of this legal process.[75]

Australian National Preventive Health Agency (ANPHA)[76]

2.28      The proposed abolition of ANPHA and the transitional arrangements for transfer of functions, programmes and staff to the Department of Health were discussed by the committee.[77] A number of preventive health programmes operated by the agency were also discussed including the My Quit Buddy Application (App), the Alcohol Sponsorship Replacement Programme[78], the Women's Weekly Recipe Booklet[79] and the Health Star Rating System[80].

National Health and Medical Research Council (NHMRC)[81]

2.29      The committee discussed the proposed Medical Research Future Fund (MRFF) and changes to the operation of the NHMRC. The department explained that the NHMRC would not be affected by the establishment of the MRFF, but that research objectives would be decided by the MRFF.[82] Senator McLucas had questions about the proportion of funding for mental health research[83] before moving to an update on clinical trial processes. NHMRC Chief Executive Officer, Professor Warwick Anderson, explained that the strong guidelines for ethics in Australia have attracted medical research to Australia from low-cost research countries.[84] The discussion finished with the efficiency dividend, staffing breakdown and Professor Anderson's contract arrangements.[85]

Australian Institute of Health and Welfare[86]

2.30      The committee discussed the proposed merger of the institute into a proposed Health Productivity and Performance Commission[87] before moving to questions about funding. Officials explained that currently 70% of the institute's funding is sourced from fee-for-service and 30% from direct appropriation.[88] The committee then moved to a series of questions around accommodation, staff numbers and qualifications.[89]

Cancer Australia[90]

2.31      Senator Moore inquired into the Jeannie Ferris Cancer Australia Recognition Awards.[91] The committee then discussed Cancer Australia's role in supporting regional cancer centres through the multi-disciplinary care information web hubs.[92], Cancer Australia Chief Executive Officer, Professor Helen Zorbas, spoke about bringing together a number of key organisations to form the Priority-driven Collaborative Cancer Research Scheme (PdCCRS) resulting in a larger funding pool and more targeted cancer research.[93] Discussion finished on the efficiency dividend and staffing statistics.[94]

Australian Commission on Safety and Quality in Healthcare[95]

2.32      The committee discussed the proposed merging of the commission's functions into a new Health Productivity and Performance Commission.[96] The commission then discussed recent achievements in implementing a national healthcare safety standards and a decrease in septicaemia rates. The commission reported that it is also establishing a national surveillance unit for anti-microbial resistance.[97] The commission's Chief Executive Officer, Professor Debora Picone highlighted the commission's on-going role in presenting data to medical and allied health professions to assist in performance benchmarking.[98]

Biosecurity and Emergency Response[99]

2.33      Officers discussed on-going efforts relating to tuberculosis in the Torres Strait and the threat from Dengue Fever in northern Australia. Chief Medical Officer, Professor Baggoley agreed with Senator McLucas that the vector, Aedes aegyptii, is endemic; however, stated that the disease is not endemic due to strategic control measures.[100]  The agency touched on the emerging threat of Middle East Respiratory Syndrome (MERS)[101] and measures aimed at reducing antibiotic resistance.[102]

Sports and Recreation[103]

2.34      Senator Xenophon questioned the department on the bid for the 2020 soccer World Cup. The department discussed the total cost of the bid but was unable to answer questions on possible appeals or refunds from that process in the event it was deemed corrupt.[104]

Australian Sports Anti-Doping Authority[105]

2.35      The committee welcomed the new CEO, Mr Ben McDevitt. Officers explained some of the changes to the authority in light of the new World Anti-Doping Agency (WADA) code. Mr McDevitt explained further:

Our realignment in terms of structure and focus will be moving to a model which is more focused on intelligence and investigations, with less reliance on testing, particularly the number of tests. That is not to say that tests will not be a very important part of ASADA's armoury; they will be. But, as Mr [Andrew] Godkin [First Assistant Secretary, National Integrity of Sport Unit] mentioned, there is the addition of two new offences, and you will find that primarily those offences will not be proved through testing of athletes' urine or blood. Those offences are proved through intelligence and investigations. [106]

Senator Seselja asked a range of questions about the on-going investigation, Operation Cobia, into NRL and AFL players. The authority explained that it is moving to finalising this investigation and preparing to issue a number of show cause notices.[107]

Australian Sports Commission[108]

The committee then discussed the impact of budget measures on funding for a number of individual programmes co-ordinated by the commission. Officers confirmed that efficiency savings would primarily be found in the corporate operations. Senator Peris inquired into the representation of women on boards of sporting organisations. The department confirmed that the trend overall is improving and that the commission is working with those that lag. The committee examined the After School Communities programme and the Sporting Schools Initiatives discussing funding and grant processes and statistics.[109]

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