Warning bell sounded on broken hospital funding models

Australia urgently needs to reframe how it views health care spending and treatment, with health advocates saying the system is too focused on treating poor health outcomes in hospital rather than preventing them.

In a speech to the National Press Club in Canberra, the Australian Medical Association President, Professor Steve Robson, said that Australia’s spending on health as a proportion of gross domestic product is modest compared to other OECD countries.

“Our current approach to investing in and managing health is focused very much on treating poor health outcomes not preventing them, which leads to a sickcare [system] rather than healthcare system,” Professor Robson said.

“We need to reframe our thinking and focus more on how the money we invest in health care can improve health outcomes and support economic growth because the evidence is clear; keeping people healthy reduces the costs and burden on our health care system and drives economic growth and productivity.”

Public hospitals “in a mess”

“On public hospitals, our Cycle of Crisis report highlighted the inadequacy of the current funding agreement, an agreement that needs a total refresh to deal with the pandemic legacy that’s left our hospitals in such a mess,” Professor Robson told the National Press Club.

“The current agreement does little to improve performance, it ignores quality, and it has no focus on preventing avoidable admissions — perhaps the biggest problem of all.”

In a submission to Treasury, the AMA argues for Australian economic policy “to recognise that costs associated with inadequate prevention and delayed healthcare”.

Whole of system approach needed

The Grattan Institute, a Melbourne-based thinktank, has also put a similar case to the Australian Government, calling for the policy emphasis to shift from hospital care to keeping people healthy.

“Many people have to manage multiple chronic diseases over decades, so instead of planning and funding individual, fragmented healthcare interventions, the system needs to join up and fit around people’s needs,” said the Grattan Institute’s submission to the National Health Reform Agreement.

The Institute fears that the next version of the agreement may “reinforce the status quo”, instead of emphasising the need for a whole-of-system approach.

“Neither the federal nor state governments can achieve these changes alone,” their submission reads.

“Service systems run by different levels of government – such as public hospitals and GP clinics – need to work together.

“The configuration of the system, from the workforce, to infrastructure, to digital systems, needs to be planned as a whole, not in silos.

“And how funding is divided should be based on population health needs, and the results that services will achieve, not based on turf, precedent, and cost-shifting.”

About the National Health Reform Agreement

The funding and delivery of public hospital services in Australia is governed by the National Health Reform Agreement.

A midterm review is currently underway into the current five-year agreement, which spans 2020 to 2025, and determines public hospital funding between the Australian Government and all states and territories.

The Minister for Health, Mark Butler MP, appointed two former senior public servants earlier this year, Rosemary Huxtable PSM and Michael Walsh PSM, to lead the independent review into the agreement.

In a statement, the Minister said the Review would “consider whether the objectives of the agreement are being met, including: 

• the impact of external factors (such as the COVID-19 pandemic) on the demand for hospital services and the flow-on effects 
• the performance of small rural and small regional hospitals 
• the implementation of the long-term reforms and other governance and funding arrangements, and 
• any unintended consequences such as cost-shifting, perverse incentives or other inefficiencies that impact on patient outcomes.”

Looking long-term

The issue of cost-shifting was raised by the Royal Australian College of General Practitioners (RACGP) in its submission, saying patient outcomes are negatively affected by “cost-shifting between primary and secondary care, as well as fragmentation between health, disability, and aged care systems”.

“Too often we have seen health spending committed to isolated projects targeting specific diseases and reacting to demand rather than investing in cost-effective sectors that will deliver system-wide long-term benefits,” the RACGP’s submission reads.  

One of its recommendations is to improve communication between general practices, hospitals and other health services: “Support hospitals and other health services to use standardised, secure, interoperable digital systems for data sharing, referral and discharge between general practices and hospitals and facilitate fast and easy clinician-to-clinician communication to facilitate referral and discharge and discuss patient care.”

Continued innovative thinking is required to help overcome the challenges faced in the health system, said AMA President Professor Robson, who pointed to the whole-of-system response to the COVID-19 pandemic.

“While COVID-19 laid bare some shortcomings in our health care system it also clearly demonstrated the opportunities for innovation in how we deliver health care and how remarkable things can be achieved when governments, healthcare professionals and the community work together,” he said.

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