AS THE health care system prepares for an unprecedented test of its resilience, it is useful to begin to reflect on some of the lessons that may be learned and that may influence future reform of the health care system. While many think we have one of the best health care systems in the world, others suggest that it is not a system at all and that it could be much more integrated. Although the fault lines are deep, they usually remain ignored or forgotten about, or just seem too hard to change, until there is a crisis that opens them up for all to see.

Within the Australian health care system, there are two major fault lines that have emerged because of the coronavirus crisis which are receiving short term patches but actually require long term solutions.

The first is the funding of GPs in primary care. The fee-for-service funding model being used is one straight from the 19th century, but with a nod to the Middle Ages. It is clear that the funding model has been unable to cope as GPs’ groups with an old but curable condition called “Medicare-item-it-is” clamour for additional Medicare Benefit Schedule items to be able to conduct online or telephone consultations to help stop the spread and support general practices to stay open. Although this is just being announced as a temporary measure, it has taken months to get this in place and the measure is very late.

The cure is a more resilient funding model where GPs are able to consult with patients however they see fit when circumstances deem this necessary, and under careful but light regulation so that online services are not exploited by the corporate sector. The best types of funding models are blended models where fee-for-service is blended with a fixed payment per patient per year (called a capitation payment). This is being trialled in the Health Care Homes program for patients with chronic disease, but should be introduced for the whole population.

The second fault line is the division between public and private hospitals. Governments have announced that all non-urgent elective surgeries would be cancelled in both the public and private sector, and private hospitals have already begun to lay off nursing staff and talk about closures at a time when skilled staff are needed most. While public hospitals are preparing to bear the brunt of COVID-19, only on 1 April was an agreement reached that the Commonwealth will provide 50% of funding to back the direct funding of private hospitals through agreements with each jurisdiction.  Even though public hospitals are always busy and at capacity, it seems obvious that patients displaced from them should be treated using the excess capacity of private hospitals. Fewer patients in private hospitals funded by private health insurance (PHI) means increased profits for private health insurers who won’t have to pay for all that care not taking place. They have already announced that they will postpone the premium rises, which were due to go into effect on 1 April, so they are going to take a hit to their income that this will nicely help them to replace.

The longer term impact of the virus on the private health sector is unclear. A different funding model for both public and private hospitals may have made the whole sector more resilient, encouraged cooperation across the divide, and enabled resources to be moved quickly between sectors to respond to the pandemic. Repurposing PHI subsidies was suggested in 2015 but shelved – even though some insurers quietly agreed. The current agreement to directly fund private hospitals (rather than via PHI) could be a test bed for existing PHI subsidies to be redirected to directly pay private hospitals. At the moment this will require additional funding, whereas if direct funding was happening anyway this might have mitigated the current situation and meant that funding issues did not get in the way of an effective and coordinated response to the pandemic.

Resilience is a system’s capacity for flexibility, robustness, and adaptability in response to changing circumstances so that performance is maintained. This has usually been defined with reference to the resilience focused on micro-level resilience; for example, patient safety on the front lines, resilience of health care workers or the use of IT by clinicians, rather than how the system fits together or not. The ideas of resilient health care need to be applied to how we design the health system overall, including how we view payment models and funding mechanisms, and how the different parts of the system relate to each other.

Mostly, the system exhibits high levels of resilience, especially on the front lines of care, where clinicians and clinical teams have always worked around complex patient problems and bridged the many gaps in the system to bring about good care for the majority.

Yet paradoxically, at the same time, health care in Australia is at present too fragmented in the way it is funded and organised, adding to complexity and the degree of difficulty in delivering safe, high quality care. Longer term reforms would help in future times of crisis as well as in more usual times. We need a health system where patients don’t fall through the cracks and the provision of appropriate care is supported and not hindered by the way the system is financed and organised.

COVID-19 is teaching us many things, but we know one standout lesson for the future. This is not the last coronavirus-type event. These are challenging times that without doubt will occur again, in tandem with major climate events, as future bushfires, floods and new previously unknown bacterial and viral infections descend on us. They will place enormous pressure on health care services and frontline health care workers who are risking their lives yet finding their hands are tied by a disjointed system that reduces the speed and agility of response.

Professor Anthony Scott leads the Health and Healthcare research theme at the Melbourne Institute: Applied Economic and Social Research at the University of Melbourne. He is the immediate past President of the Australian Health Economics Society, a member of the Board of the International Health Economics Association, and an elected Fellow of the Academy of Social Sciences of Australia. He leads the “Medicine in Australia: Balancing Employment and Life (MABEL)” longitudinal survey of 10 000 doctors and is a Research Lead investigator of the National Health and Medical Research Council Partnerships Centre for Health System Sustainability.

Professor Jeffrey Braithwaite is Founding Director of the Australian Institute of Health Innovation, Director of the Centre for Healthcare Resilience and Implementation Science and Professor of Health Systems Research at Macquarie University. Professor Braithwaite is President-Elect of the International Society for Quality in Health Care.

Scott and Braithwaite collaborate in the NHMRC Partnership Centre for Health System Sustainability, a flagship, Australia-wide research collaboration underpinning the system with world-class research so that it is resilient and built to last. 



The statements or opinions expressed in this article reflect the views of the authors and do not represent the official policy of the AMA, the MJA or InSight+ unless so stated.


Doctors and nurses over the age of 65 years should only be treating non-COVID patients during this emergency
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10 thoughts on “COVID-19 is opening up fault lines in the health care system

  1. Anonymous says:

    Annonymous again. Sorry Peter, nationalisation is like pregnancy, you either are or are not. If you seriously imagine the ‘cradle to grave’ socialists would ever allow a co-payment then you are not of this world mate.
    The NHS along with Walmart, the Red Army and the Indian Railways historically were the four largest single employers in the world and the paper shuffling management massively outnumbered doctors and nurses. It had the worst health outcomes of the developed European states of the EU and actively restricted GP practices via directives and even rationed the procedures they were able to undertake.
    Pertinent to the Covid 19 crisis it also has the lowest ICU bed numbers/1000 population compared with other developed states. Be careful what you wish for. The RACGP has let practitioners down here by allowing itself to be the government health bureaucrats tame stalking horse and failing dismally to get militant about decades of stagnant rebates leading to the current situation.

  2. Peter Bradley says:

    In reply to anonymous, who says…”Socialism produces nothing but massive queues. I have worked for the NHS in the UK.”
    I would suggest that it is not socialism per se that’s the tissue, but the way it is implemented. The obsession in the UK that the service be completely free is what has brought about the parlous state you highlight. In my view a totally free at point of service is not the way to do it, but the over-use and abuse of the free service, (just as it is abused by bulk-billing here), could be controlled by there being a non-fee-for-service, up front, user pays charge towards running costs, but this separate from the source of the staff salaries, including the GPs.

    That way, the staff can all do what they do best, unfettered by meeting the specific requirements of these rigid Medicare Items, giving the time and expertise to where it is needed, by the medical person most suited to providing it, thereby making best use of the multi-disciplinary team.

    This would then ensure those serving the less well off areas are not penalised for doing so as well. And…coming to this specific crisis, when the pandemic has exposed horribly how inappropriate the current method of funding primary care is, even with the telehealth items, and doubling the woeful bulk-billing incentive, many practises are close to, and in some cases already have, collapsed financially. If a salaried service, the govt could keep primary care well-funded, just like it is keeping the politicians and the rest of the public service well-funded.

  3. Anonymous says:

    It really is time for these two gentlemen to revisit the text of the Medibank Agreement of the 1970s and to carefully note that virtually all doctors in this country (those directly government employed excluded) are not mendicant employees of the ‘health system’ to be bundled up and re-assigned their function at the whim of some QANGO but are independently contracted individuals who are rebated by the government for their personal service. This sort of polemic at this time is just appalling. Nationalisation of health care by stealth, nothing more. Socialism produces nothing but massive queues. I have worked for the NHS in the UK.

  4. Cate Swannell says:

    FROM the editor: They do provide evidence Philip. That statement is hyperlinked to the following article … … you just need to click on it to find the evidence

  5. Philip Morris says:

    The authors claim that “The best types of funding models are blended models where fee-for-service is blended with a fixed payment per patient per year (called a capitation payment)”. But they provide no evidence. This is an opinion based on an ideology that capitation rather than fee for service serves the public best. It has been good to see the government adopt fee for service for telehealth consultations. When the covid 19 emergency has abated I hope the telehealth items persist, but with sufficient light regulation to prevent abuse by unscrupulous practitioners and corporates.

  6. Anonymous says:

    risk minimisation and not risk avoid strategy.
    Older healthcare staff should be helping when the pools of younger staff <65 yo has diminished

  7. Peter Bradley says:

    In reply to Aniello Iannuzzi, I would just say, don’t be disappointed, Aniello, but rather think of it as an attempt (by the AMA, and now others), to try and make sure the painful lessons we learn re the shortcomings in the health system this pandemic is highlighting are not forgotten, or just brushed under the carpet once the heat is off, but actually are used to launch real and determined efforts to IMPROVE the system for the better, and for the future, and in a permanent way, and don’t just result in a bit of ‘nibbling around the edges’ of the problem. That way we may see some real gain for all the pain..!

  8. Peter Bradley says:

    Re the funding of primary care issue.

    A recent headline article extract from Medical Republic online said…

    If COVID-19 is the biggest crisis facing our community and our economy in all our lifetimes, the current implementation and approach from government towards general practice, and telehealth, is potentially nothing short of an extinction event for general practice as we know it.

    Suggesting maybe parlous state of GP finances might be the trigger to bring about the idea of GP being a salaried service..? My deduction.

    I have long been an advocate of the concept of GP being a salaried service as the best and fairest way to remunerate the myriad of stuff we do, and the myriad of different conditions we do it in. However, I never ever foresaw the possibility that it might take a pandemic to bring this about. But, in light of the article about the severe threat to the viability now of GP, one tends to suspect it might be the only way to address the issue that works.

  9. Aniello Iannuzzi says:

    This is a disappointing article at such a time. Pushing political agendas whilst everyone is busy and overwhelmed.

  10. Lynette Reece says:

    The closure of private hospitals would be a disaster. The putting off of skilled staff in the time of a medical crisis is ridiculous. The nursing staff need to be redeployed and utilised rather than the few carrying the burden as no planning for needing more people does not seem to be happening. Many Surgeons are also not being used or upskilled/reskilled.
    Those that work in theatre are used to PPE, use the current resources rather than calling on those not skilled ie student nurses and medical students. There are currently many idle trained hands waiting to help, just ask

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