Issues and challenges in delivering an integrated health care system - Australian Fabians Former Site - For Page Transfers

Issues and challenges in delivering an integrated health care system


Fiona Armstrong
05 November 2008
Health and Aging
by: Fiona Armstrong

Author: Fiona Armstrong is Chair of the Australian Health Care Reform Alliance


I would like to thank the Australian Fabians for inviting me here to speak tonight. There is a proud history of championing equity and fairness in our health system among the Fabians, and this is a topic dear to my heart and that of the many people who belong to those organisations that constitute the Australian Health Care Reform Alliance. I am honoured to address this group, and particularly so since I know some iconic people, like John Deeble, the architect of Medicare, have also spoken here. It is also a historic day today, and one whose date will certainly be burned into my memory for a long time to come. The outcome of the US election is so new as to seem surreal, but it does feel like the world shifted on its axis just a little bit today.

But before I begin I would like to acknowledge the traditional owners of the land on which we meet, thank them for their custodianship of this land, and acknowledge their extraordinary history and enduring struggle for reconciliation.

Opportunity knocks

The health care sector in Australia, I believe, is facing its most significant opportunity for reform since the introduction of Medicare in the 1970s. The need for reform has never been more apparent; there is a significant level of consensus in the sector and the community about not only the need for reform but also the directions for that reform; and the election of the Rudd Government has injected a level of sincerity and commitment into the reform debate that we have not seen for some time.

In moving to our discussion on the health care system, its current challenges and the priorities for reform, I would begin by saying there is a quick summary of one of the biggest challenges in delivering an integrated health system in Australia. So brief that it can be reduced to one word: Federalism.

What’s preventing integration?

The current system of health care in Australia is so influenced by the nature of federal/state relations that it could be said that our current system of government (in terms of the way responsibilities are split between the federal and state/territory governments) is actually harming our health. But I will talk more about that later.

There are, of course, other issues that interfere with system integration and the effectiveness of our health care system, and they are related to the history of the evolution of our health system; the role of the medical profession and its power and influence; the nature of ideology that has led first to the establishment of Medicare and then it’s progressive deconstruction through the recent period of conservative government.

Add to that the increasing reliance on the private sector in our two-tiered system of care, the increasing out of pocket costs for general practice and specialist services, too few subsidies for the services of the other health professionals and an untidy picture of the health sector begins to emerge – a system that is outdated, that was created at a very different time for a different population and in a different social, political and economic climate.

Our so-called system of health care in Australia is in fact not a system at all. It is a series of disconnected programs that are funded by different governments through different mechanisms; some of which overlap with or duplicate the services provided by another. Many health care institutions and professionals are overburdened by the obligation to manage and administer payments from so many different sources that it is limiting their capacity to deliver services.

Witness for example the rural hospital in Victoria with 37 separate funding sources – a common scenario, and one which means resources are being wasted on administration to ensure a flow of funds to keep vital, but disparate, programs afloat while actually diminishing the total available resources to deliver health care.

The outcomes of our dysfunctional “system” are that we have an increasing gap between the haves and have-nots in relation to access to health care (the availability of health services in Australia declines according to socioeconomic circumstances and geographical location); poorly integrated services; and too little in the way of evaluation of system performance and effectiveness.

The priorities of the system are no longer appropriate – take for example the prioritisation of the acute sector. Too often political leaders think only of hospitals when it comes to health care. Australia has one of the highest numbers of acute beds per head of population than any other country. Initiatives for health promotion and illness prevention are neglected and poorly supported, turning what should be a “wellness” system, where health is optimised and promoted, into an “illness” system.

At a time when many other countries are recognising the importance of keeping people well and out of hospital, our system of primary health care is limited and rendered inadequate by a failure to support multidisciplinary models of care that deliver comprehensive services and help people avoid illness, maximise their health, and stay out of hospital. Our health workforce is depleted and demoralised, with severe skills shortages in many health professions. The views of consumers are overlooked, both in terms of decision-making about their own care but also with regard to community input into priority setting in health policy. Vested interests wield greater power and therefore dictate policy direction. Aboriginal and Torres Strait Islander health is a national disgrace. And rural and remote Australians suffer poorer health outcomes than their urban counterparts.

It is something of an indictment on our priorities as a nation that we have allowed, in such as wealthy country as ours, a situation to develop that means up to 40 per cent of people do not get the health care that they need and many people get care that is not needed or is harmful. Conservative estimates suggest that up to 10 per cent of people admitted to hospital suffer harm directly related to their health care; up to 40 per cent of people are at risk of adverse events (that means they suffer a complication or injury in hospital that is unrelated to their reason for admission. The safety and quality of our health care is such that almost 200 people are dying every week as a direct result of the health care they receive.

I don’t mean to suggest Australia is any sort of international outlier – unfortunately this is not at all unusual; these sorts of statistics are shared by other developed nations. But that does not mean we should not be trying to do better. There are moral and economic imperatives to do so.

Improving the equitable distribution of resources must also be a priority. But more than just equitable access to health care services, we need to try to deliver equitable outcomes of care and in some cases, in particularly disadvantaged groups (such as Indigenous Australians for example) this means the disproportionate allocation of resources in order to achieve equitable health outcomes. This is what a committment to fairness means in our system.

Health care should be available on the basis of need, not the ability to pay, regardless of: socio-economic status, race, cultural background, intellectual or other disability, mental illness, age, gender or geographic location. People need not only to have access to services; they must also have access to appropriate services, in appropriate locations.

We need to also ensure the existing Australian blend of public and private health services promotes equitable access to services based on need. Access to health care should be considered a fundamental a human right. Therefore access to comprehensive, universally available health care services should be the right of all Australians.

It is not however the case in our current system. In recent years, over 30 per cent of people have failed to access essential health care because of cost. This means they had a health problem but have failed to consult a health professional, complete a recommended test, or follow up care, or to fill a necessary prescription. For dental care the incidence is even higher: over 40 per cent of Australians are failing to see a dentist because they can’t afford it. As already stated, the relative disadvantage is even greater depending on the distance you live in Australia from a capital city; for Indigenous Australians it is even worse.

It is well established that universal public health insurance is the most effective and efficient method of achieving access to health care. It is vital therefore that this important social objective is enshrined in whatever health system reforms we see in the future, and if possible to see the right to health care included in a future national bill of rights. This would build upon the important right currently articulated in article 12 of the International Covenant on Economic, Social and Cultural Rights, to the highest attainable standard of health, a covenant to which Australia is a signatory.


Achieving equitable access and equitable outcomes however will require the application of improved accountability and transparency in the distribution of health care funding, to ensure efficiency in the distribution of health care resources.

There are structural obstacles at present however to achieving this. As I referred to earlier the current governance of health care (and the associated division of responsibilities) is impeding the delivery of integrated and coordinated health care services.

The current distribution of responsibilities across the jurisdictions and the federal government means allocative and technical inefficiencies plague our system of health funding, preventing accountability and transparency, and creating a blame game in which costs and blame are shifted from one level of government to another. There are multiple funding streams, leading to duplication of services, and wastage of billions of dollars each year. The health system is fragmented and this leads to poor continuity of care throughout the patient’s journey.

Broadly speaking, the federal government is responsible for funding the services of GPs, medical specialists and the care of our aged, while the states and territories are responsible for hospitals, community care, and public health programs (immunisation, prevention, drug and alcohol etc). There is some overlap with home and community care services, with both levels of governments funding different programs. Essentially however, health is funded though various silos, which impedes the integration of each with other parts of the system, and creates incentives for cost and blame shifting.

For example, when people move from one part of the “system” to another, there is substantial incentive for each level of government to shift costs (and blame when services fail community expectations) to the other. We have seen this repeatedly when (state/territory funded) emergency departments are overrun by people who are unable to get an appointment to see a (federally funded) GP.

Or when elderly people, unable to access a (federally funded) aged care bed, are forced to languish in a (far more expensive, but state/territory funded) hospital bed. People are discharged home from (state/territory funded public) hospital with only a few days worth of medications, so they are obliged to shift the cost to the (federally funded) Pharmaceutical Benefits Scheme when they fill a prescription at a pharmacy when they get home. This fragmentation across the Commonwealth and the states is also manifest in the lack of an overall policy framework, which results in serious anomalies where people simply cannot get the services they need: in dental care; access to primary health care for Indigenous people; health services in the bush; and allied health services like psychology, physiotherapy, podiatry etc.

This travelling between systems means that very often vital information and records of people’s care do not travel with them. The lack of coordination and failure to transfer vital information not only risks the safety and quality of care to individuals, but it also costs money when tests and investigations are repeated, medications reordered, and so on. It is also means that no single provider clearly takes responsibility for the patient – leading to poor continuity of care and money and resources being wasted.

There is also poor integration between private and public services, with different levels of accountability, and competition between the public and private systems for a finite and already depleted health workforce.

Priorities for reform

So what needs to be done?

Addressing the jurisdictional inefficiencies associated with the divided health care responsibilities of our State and Federal governments is a priority. Reform of the funding and governance of the health care system is one of the central structural reforms necessary for improving the efficiency, effectiveness and integration of all health care services.

This will either require the development of a considerably strengthened framework of cooperation than that which has existed between our governments over recent decades or, it could be that in order to achieve truly effective reform, we first need constitutional reform. The system we created in 1901 may no longer be appropriate to meet the needs of a nation needing national frameworks and standards in an increasingly connected global community.

Certainly we need a framework for cooperation between our nine governments that will extend beyond the current players. We cannot allow health to become hostage to the acrimonious political environment that has characterised federal/state relations in our recent past.

Recent Roundtable discussions regarding the need for constitutional reform in Australia concluded that “current Federal- State arrangements are not consistent with the intentions of the original drafters of the Constitution, nor do they meet public expectations for the appropriate and effective delivery of government programs”. Participants acknowledged that “improved architecture around intergovernmental agreements” was needed. According to Professor George Williams, a constitutional amendment is needed to establish a “suitable framework for agreements”.

Also pertinent to this line of thinking is the recommendation from the governance section the 2020 Summit which recommended a three stage process to review the roles, responsibilities, functions, structures and financial arrangements at all levels of governance: the establishment of a expert commission to propose a new mix of responsibilities; a people’s convention using deliberative processes to reach consensus; and implementation of change through referendum.

What else is needed?

Equitable access to health care and equitable health outcomes are best achieved by ensuring people to have universal access to health care as a right, in a timely fashion, to an appropriate service, available equally to all on the basis of health needs, not ability to pay. While this was enshrined in the intent of Medicare, it is no longer the reality for many people who struggle to access or afford basic health services.

The unique and distinct blend of public and private health care in Australia means that the availability of publicly funded health care is subject to market mechanisms which create perverse incentives in health care and lead to a maldistribution of health care resources.

This situation is exacerbating socio-economic divisions, affecting national productivity and compromising our future national economic well-being. It is heartening to see this recognised just last week in a paper put out by the Business Council of Australia acknowledging that reform is not only necessary but it must be significant, saying: “if Australia is to achieve the substantial adaptation necessary [to achieve the economic and social goals of health reform], incremental change will be inefficient and insufficient”.

A fair balance of public and private resources and a fairer distribution of resources is needed. This is particularly urgent in the case of Aboriginal and Torres Strait Islander Australians whose health outcomes must be drastically improved until they match those of other Australians.

We need to do better in the promotion of health and wellbeing, while balancing it with our duty of care to those already unwell. This will require a much greater emphasis on care in the community and on primary health care, to bring a greater system focus on prevention and early diagnosis to minimise the development of chronic disease, and assist people to remain as well as possible.

We need to improve the accountability and transparency associated with expenditure and delivery of health services ; and of our governments by evaluating the effectiveness of resource allocation. We must do more to ensure our health services are appropriate, safe and of high quality. All of this requires a much greater commitment to reporting health outcomes at both an individual and population level as opposed to outputs (actual services delivered), and we need meaningful tools and indicators to demonstrate measurement of health outcomes.

The health workforce must be valued and appropriately supported. We are losing to many of our talented health professionals to other careers when the dysfunctional health system becomes as intolerable workplace. And we need to train more: Australia should not only be training the health professionals we need for our own community, but as a wealthy developed nation contributing to the wellbeing of our neighbours by sharing skills and knowledge in health.

Given that the Prime Minister has given assurance of a root-and-branch review of the health system and for the implementation of evidence based policy, it is also necessary to consider the effectiveness (or otherwise) of the policy of using public funds to subsidise private health insurance.

The recent changes made by the Rudd Government in relation to the Medicare levy surcharge demonstrates a willingness to test the popularity of this policy with the electorate in preparation perhaps for some reform. This may be a test of the degree to which the federal government is willing to subsidise private health insurance companies, a policy which has so far failed to achieve its stated aims of relieving pressure on public hospitals. This was supposedly to be achieved by providing incentives for people to take out private health insurance which would mean they would not to rely on the public health system.

The evidence is fairly conclusive that this doesn’t work – when people with private insurance have an acute injury or illness (as is their right) they will attend a publicly funded hospital for care, where they may or may not disclose their PHI status.

The introduction of these measures in the 1990s was accompanied by a concurrent reduction in the level of expenditure provided by the federal government to public hospitals. The loss of $1 billion each year has pushed public hospitals to crisis in most states and territories, and the net contribution of private health insurance to the private sector has actually decreased, while premiums have continued to rise and the demand on the public sector has increased.

It is estimated that this subsidy will cost Australian taxpayers $4.8 billion in 2007-08. It is also estimated that if all government subsidies to the private health sector were redirected to public hospitals, an additional 1.5 million cases could be treated in Australia’s public hospitals.

So a review of the policy is vital in the context of determining priorities for health expenditure and distributing funds on the basis of evidence of effectiveness.

Achieving changes in health policy that are legitimate, sustainable and reflective of community values requires a commitment to a more participatory democracy than we currently enjoy. Not only do we need health care services to be focussed on the needs of patients, families and carers; we also need health care policy to be grounded in and measured against community values. A significant national citizen engagement exercise should be undertaken in relation to determining the community’s priorities for the health system.

What are our chances?

As I said earlier there is clearly an appetite for reform in this federal government.

There is plenty of work being done: current initiatives include a national Taskforce on Preventative Health; the development of a National Primary Health Care Strategy; a National Health Workforce Taskforce; an authority to develop consistent national standards for e-health; the development of Indigenous Health Equality Targets ; work is underway on a number of initiatives by the Australian Commission on Safety and Quality in Health Care, a National Registration and Accreditation body for health professionals; and a COAG (Council of Australian Governments) working group on health.

Of considerable interest to the health care reform alliance is the establishment of the National Health and Hospitals Reform Commission. That Commission however has been established for 18 months only and is advisory only, and will provide a final report in July 2009.

By next July, the government should have the outcomes and/or recommendations from many, if not all, of these various initiatives, putting it in a position to make some bold decisions about reform.

What will be the outcome of any or all of these initiatives is yet to be determined. How they will coordinate with each other is also unclear, although there are apparently efforts to communicate between the workforce taskforce, the safety and quality commission and the health reform commission. However without a national body to implement and drive reform it is hard to imagine how nationally coordinated systems and solutions can emerge.

The need for a Commission

A consistent thread among the advocacy for health reform has the call for a National Health Reform Commission or Council to not only help drive reform, but to coordinate and implement national health policy. So while we have the current (but temporary) health reform Commission, the calls for a permanent body continue. Such a Commission was established when Medicare was introduced; there is a precedent. The types of reforms that are needed to bring about necessary change in our health system will require skilful guidance from an institution whose only mandate is to develop and implement (and subsequently evaluate) nationally consistent evidence based policy to improve access, equity, and efficiency in the health system.

It will also be necessary to develop different methods of funding our health care services, and for the distribution of those resources to be reflective of the community’s health care needs and their priorities.

Overcoming the siloed nature of health funding to improve the integration (and effectiveness) of services may be to shift responsibility for decision making about the distribution of health care resources to the community, so that they can (using health needs data to support their claims) advocate for the resources required to meet the entire health needs of the community.

This would give much greater power to communities, and therefore consumers of health services to demand, and help deliver, an integrated system. Localising this function would allow for greater recognition of a particular community’s health needs and create a health system that is flexible enough to be responsive to address them.

How any or all of these reforms will play out is as yet unclear. The health reform alliance is however committed to the generation of ideas for reform, and that will continue.

The current global economic climate will no doubt play a role: it may well be (in the face of abject market failure and an increasing recognition of the vagaries of the prevailing ideology) that the case for bigger government/ increased regulation/a greater role for government in terms of service provision is stronger and more palatable. There is plenty of examples to demonstrate the market failure in some areas of health care and the risks associated with a profit motive in health care provision. Certainly the global recession must lead to more considered thinking about the way funds for health care are used and the mechanisms used to deliver those funds.

I am very pleased to contribute to the debate and discussion at the Fabian Society in an atmosphere that appreciates and encourages ideas and debate. This process is essential to the creation of legitimate and sustainable public policy and I hope the discussions tonight and into the future will assist in achieving the aim of a fairer, safer, more efficient and more equitable, health system.

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