A huge undertaking, but is it about improving outcomes or cutting costs?

Dean of Medicine at the University of Sydney, Bruce Robinson, is leading the Medicare Benefits Schedule (MBS) Review Taskforce in its examination of how more than 5500 listed services can be aligned with contemporary clinical evidence and improve health outcomes for patients.1

It would be informative if the federal government had the Department of Finance provide a figure indicating how much money it wants to save. Disguising a rationing exercise by saying it is about improving outcomes will cut little ice unless the level of rationing is acceptable to the medical profession.

Pricing MBS items is a cost-accounting exercise. Trying to evaluate whether a particular service, based on the Medicare price, improves health outcomes could lead the taskforce into a paper chase seeking clinical evidence, when the intent of the exercise is all about increasing cost efficiencies.

Advances in technology improve efficiency. Pathology services were an early target because the original MBS items were based on tests undertaken manually. Once tests became automated, throughput increased and pathology service providers made substantial windfall gains before the MBS prices were adjusted.

On the other hand, the pricing for cataract removal has been largely immune from any recognition of the advances in technology that have occurred since the first medical benefits table for each Australian state was established in the early 1970s.2 When ophthalmologists protested strongly and publicly about a proposed cut in the fee for the Medicare benefit in 2010, the cut never eventuated; a compromise was reached in the government price.3

Determining fees for benefits

Trying to alter the relativities between the different medical tribes is thus a challenge. In determining the original MBS, advice was sought from the various groups on what were considered “fair and reasonable” fees. Because of the way they assessed their original fees, ophthalmologists have always been considered as being at the top of the relativity scale.

In the early years, the Australian Medical Association (AMA) and the federal government participated in regular enquiries into medical fees for medical benefits. This had the effect of reinforcing the acceptance of relativities between the services provided by different groups and specialties, because each submitted data to the AMA. As the AMA bore the cost of making the submission, it certainly was in its interests not to question the accepted relativities unless there were obvious shifts, as occurred with pathology services. The AMA was successful in having the prices for the services raised with every successive enquiry. The submissions were argued from an industrial perspective. There was no attempt to try to evaluate the effectiveness of individual procedures or consultations. With every enquiry, there was a sense within the AMA that the results were not as successful as the enquiry before. The last enquiry into medical fees for medical benefits was held in 1984.

Since the end of those periodic enquiries, and with increasing specialisation, the AMA’s role in the area of medical fees for medical benefits has diminished. The AMA releases a list of recommended fees annually, but the formula has not been updated. It is the MBS pricing that counts. Specialty groups sought recognition of the cost of advances in their fields in the Medicare benefits item descriptors. With no unifying force, it became a time when specialties strove for their own gain.

One example was in radiotherapy (radiation oncology). When the relativities were first determined, most radiotherapists, as they were then known, were salaried and their equipment was the most expensive item. There was little private radiotherapy. However, by the mid-1980s, there was considerable interest in providing a private service. In radiotherapy, it was crucial to recognise and differentiate the service price into three components: professional, technical and capital.

In terms of pricing, the professional component always dominated. The AMA had always asserted that all procedural pricing should embody the professional component of the price, taking into account office and car costs. Hospitals paid the cost of the technical staff and the imputed capital costs of using the facility. This resulted in cost shifting onto the state governments or private hospitals.

Radiation oncologists who saw a future in private practice knew that the price for the service was totally inadequate. There was no mechanism to handle the capital expenditure required, which depended on the international value of the Australian dollar. The technical component, comprising the staff and other non-capital costs, was measurable. The professional component was essentially a normative distillation of time to undertake the service (which is measurable) and the required level of skill and knowledge, often defined as complexity (a matter of opinion).

The end result, after long negotiation, was that radiation oncology in private practice was rendered viable. Based on detailed costing, the government separated the capital component of the Medicare benefit into a specific payment for major equipment that could be updated regularly to reflect actual costs.4

At the same time, calculations to establish the new radiation oncology benefits also identified the most efficient number of linear accelerators per site. Unless there were two to three linear accelerators per facility, services were inefficient, but that did not stop the states paying for stand-alone facilities in regional Australia. The states tried to justify this by repeatedly reviewing the viability of stand-alone radiation oncology facilities. In the end, communities that wanted a single linear accelerator got it, which may have been good politics, but was bad economics.5

Thus, the MBS establishes the most efficient use of time and equipment; in other words, it establishes service capacity. Having determined capacity, what is a reasonable daily throughput of services? Getting the throughput figure wrong either enables the situation that occurred in the early days of pathology service pricing, or makes unreal demands so that the only viable option is a publicly provided service with consequent rationing; namely, waiting lists. At the same time, all jurisdictions add multiple layers of extra requirements for many medical services in the name of quality, regulation and reporting, all of which add complexity and cost, but receive scant recognition in the pricing formulae.

Whether it be radiotherapy or general practice, the same rules apply. The MBS has grown enormously since the radiation oncology example. In the absence of countervailing forces, the government can just set the prices; it can ration, irrespective of any outside advice. Look at the Relative Value Study of the MBS, which ran for a number of years up to 2000;6 for what outcome? It was widely acknowledged that the time taken to complete the Relative Value Study delayed MBS fee increases by several years and saved the government a considerable amount of money.

The taskforce faces no easy task

The MBS Review Taskforce must consider clinical outcomes. Improvements in technology have influenced Medicare pricing, but whether technology improves clinical outcomes may be the subject for a different forum. Adam Elshaug, a member of the Taskforce and Director of the Value in Health Care Division at the Menzies Centre for Health Policy, may well be the person to chair such a forum. He seems to know what he is talking about, having led a study that identified at least 150 health care procedures of low value.7

Bruce Robinson, you are not alone in dealing with the Medicare behemoth; it is just that the medical profession would like to be considered. They would like a dividend, be it financial, organisational or social. Without this, doctors may well keep increasing their fees, which will become increasingly distant from the government price, the so-called fee for Medicare benefit paid for the same item of service.

Being marooned with a ration of hard tack is not politically palatable, especially for a patient with cataracts, a dodgy hip and a heart in search of a pacemaker.

Medicare Locals (MLs) were one of the shortest-lived features of the Australian health care landscape, existing for just 4 years. In 2011, the federal government established 61 MLs. The major reasons for their establishment were to strengthen the multidisciplinary aspects of primary health care (PHC) and to improve population health planning — features identified as important in recent proposals for Australian health reform.1 Contractual requirements for MLs included population health planning; needs assessments; and working with general practices, other health providers, and state and territory health networks. A 2014 review of MLs criticised their performance, noting that they “failed to appropriately involve and engage GPs” and that there was “lack of clarity in what many Medicare Locals are trying to achieve” and “variability in both the scope and delivery of activities”.2 The government responded by replacing MLs with a smaller number of Primary Health Networks (PHNs) that commenced operating in July 2015.

Inter-organisational networks are increasingly recognised in the literature as a useful approach for complex problems, and for sharing knowledge and resources.3,4 Such networks require leadership, careful planning, time and resources, and their value is more evident in the longer than in the shorter term.3,5

Local Health Networks (LHNs) are state-based entities partially funded by the federal government under the 2011 National Health Reform Agreement.6 One area emphasised in this agreement was the partnership between LHNs and MLs in delivering coordinated services.6–8 Despite the emphasis on collaboration, little is known about how MLs have negotiated with LHNs in population health planning. An evaluation of nine MLs across Australia revealed examples of specific links, such as ML representatives being appointed to LHN governing councils. This evaluation identified a need for a framework that ensured that the funding and governance of LHNs did not undermine the goals of MLs.9 To enable high-quality and coordinated PHC, further efforts to make ML and LHN policies and protocols more consistent were recommended.10

This article examines whether MLs made any significant contributions to improving PHC services, with a specific focus on the effectiveness of their partnerships with state-funded LHNs in population health planning. Here, we report on partnerships between South Australian MLs and LHNs. We examined factors that facilitated or constrained collaborations, with the aim of providing lessons and recommendations for LHNs and the new PHNs.

Methods

We conducted interviews with between two and five key informants from each of the five South Australian MLs and the five South Australian LHNs (a total of 34 people) between March and July 2014 (Box 1). Chief executive officers were asked to nominate key executive or program leader staff for interviewing. With the exception of the Women’s and Children’s Health Network, which is a statewide network, the other LHNs cover specific geographical areas.

The interviews explored population health planning processes, examples of successful collaboration, and participants’ perceptions of political and contextual factors that facilitated or constrained collaboration between MLs and LHNs. We specifically discussed needs assessment and population health planning processes in MLs, the scope and areas of collaboration between MLs and LHNs, features that made the collaborations work, and factors that would contribute to effective and sustainable working relationships between PHNs and LHNs in the future.

Interviews were audio-recorded and transcribed. We developed a coding structure, and three interviews were double-coded by two researchers to establish the usefulness of the coding structure in terms of concept validity and coding consistency.

Ethics approval was granted by the Southern Adelaide Clinical Human Research Ethics Committee.

Results

Quotes in this section have been included to illustrate our findings; we have identified the participants by number (P1–P34) and health care role.

Considerable work in needs assessment and population health planning has been undertaken by MLs

We found that all MLs in this study had completed a comprehensive needs assessment and instituted population health planning processes (including collecting, collating and synthesising health and social data), engaged with local stakeholders (including community engagement to identify needs), set priorities according to the needs assessment data and, to a lesser extent, undertaken program and outcome evaluations.

The process was also reported as a capacity-building process for the ML workforce that brought together a variety of skills (eg, health informatics, statistics, population health planning) to synthesise data.

Population health planning and program implementation facilitated positive collaborations between MLs and LHNs

The participants described a range of interactions between MLs and LHNs, including data sharing, joint community consultation sessions, program evaluation, and joint training activities. These were undertaken in different contexts, including steering committees, working groups and informal relationships. Having to deal with five MLs was seen as more difficult for the statewide Women’s and Children’s LHN. Box 2 lists areas and examples of collaboration between MLs and LHNs.

Participants noted the establishment of the Southern Adelaide Health Alliance (SAHA) — drawing together the Southern Adelaide–Fleurieu–Kangaroo Island ML, the Southern Adelaide LHN, the Health Consumers Alliance of SA and the SA Ambulance Service in southern Adelaide — as an example of a strategic partnership that generated opportunities to enhance collaborative planning and fostered trust and reciprocity between the key stakeholders.

The focus of LHNs on hospital services constrains engagement in broader population health planning

Participants described the importance of the ML–LHN partnership in population health planning. Participants from both organisation types noted, however, that the focus of LHNs on hospital management and the associated pressures of dealing with acute care demands limited their opportunity for stronger engagement in the population health planning work of the MLs.

The new funding model was reported as a factor moving LHNs away from population health activities. For example, the shift to activity-based funding (ie, funding allocated to specific, mainly clinical activities) within the LHNs raised concerns that LHNs were becoming less involved in population and preventive care.

The withdrawal of funding for most health promotion programs and the reorientation of state-funded PHC services towards chronic disease management in South Australia in recent years11 resulted in LHNs and state-funded PHC services moving further away from a population health approach.

MLs were successful in engaging with a broad range of local PHC stakeholders

One of the major strengths of MLs mentioned by all study participants was their strong focus on engagement with a wide range of stakeholders, including general practitioners, allied health professionals, pharmacies, local community members, non-government organisations, local governments and state-funded PHC services. This engagement assisted in identifying local health needs, and in prioritising and determining strategies that focused on those needs. The time and effort invested by MLs in establishing working relationships with local stakeholders was particularly appreciated by people working in LHNs. Most participants saw the broader community focus, multidisciplinary work and better integration of allied health services into the PHC system as a major accomplishment of MLs that further distinguished them from the previous Divisions of General Practice.

Health promotion and social determinants of health attracted little attention in action and collaborations between MLs and LHNs

We found no specific examples of collaboration between MLs and LHNs that were directed towards social determinants of health. Although some MLs had strategies that focused on such factors (eg, links with the transport and education sectors, employment of outreach workers), there was considerable variability in terms of funding, resources and capabilities that affected the capacity of MLs to attend to social determinants of health.

In the current policy environment, there is much confusion about who is responsible for health promotion in the PHC sector. Recent state policy changes have led to an emphasis on acute and intermediate care, with extensive cuts to funding of health promotion and community-based programs in LHNs. Most ML participants believed that they had neither the capacity nor the funding to fill the gaps in health promotion.

Strong leadership and systematic support are required to initiate and sustain collaboration

There was general consensus among participants that, in most cases, opportunities for collaboration between MLs and LHNs relied on individual leadership rather than on systemic support and organisational structures. Both ML and LHN staff felt the lack of formalised collaboration strategies was particularly challenging, given that state and federal governments had different strategy directions and priorities.

Continual policy changes and uncertainty in the PHC landscape constrained collaboration

Continual policy changes, restructuring, and uncertainty in both the state and federal PHC landscapes were frequently mentioned by ML and LHN participants as a barrier to collaboration.

One ML participant noted that workforce movement caused by the restructuring of PHC hindered retaining expertise and maintaining collaborations.

Discussion

During the short period of their existence, MLs in South Australia were successful in identifying local needs and building good relationships with a range of stakeholders and health providers, particularly GPs and allied health professionals. Our study reports examples of such collaborations, and provides some lessons that may assist PHNs during and after their establishment (Box 3).

The findings of this study in South Australia may not be generalisable to other Australian states and territories. We acknowledge that the extent of implementation and the sustainability of some of our examples are unknown. Moreover, our study is unable to compare the relative achievements of MLs in developing partnerships and those of the previous Divisions of General Practice.

The Public Health Association of Australia and the Australian Healthcare and Hospitals Association convened a series of PHC roadshows to identify opportunities, challenges and recommendations for the new PHNs. Some of our findings are consistent with the points raised in their report, including that “community needs assessment data should be utilised effectively”, “partnerships should be formalised”, and “PHNs must play a role as a change agent for health promotion, working with enabling organisations”.12

It is essential that the good work of MLs in establishing trust and working relationships is not lost, especially given the possible cost to the Australian Government of dismantling the MLs has been estimated by the Opposition as being more than $200 million.13 Effective and sustainable collaboration is more likely when supported by strategic planning, strong leadership, stable organisational structures and effective networks that draw on strong personal relationships. Individual networking opportunities and the importance of personal working relationships must also be exploited to boost effective partnerships. Inter-organisational networks have shown early promise in facilitating collaboration (eg, the SAHA) but need evaluation and long-term commitment to ensure the sustainability that will increase their chances of contributing to improved health outcomes.3,14

Health promotion and action on the social determinants of health are integral components of comprehensive PHC.15,16 Reviews of the health system in Australia have reinforced the importance of health promotion in reducing the impact of chronic diseases and mental illnesses, as well as demands on hospital services and the costs of the health system.17–20 The World Health Organization Commission on Social Determinants of Health has also emphasised the role of PHC in taking action on social determinants of health at a local level.21 Despite strategies in some South Australian MLs to support this area of activity, they were patchy and financially not well supported. The PHNs do not appear to regard health promotion and disease prevention as being within their area of responsibility, but our study suggests that it is important that they do.

Finally, planning for population health, building trust and relationships, implementing programs and evaluating outcomes all require long-term investment, support and commitment that should be explicitly clarified in the objectives, contractual requirements and outcome measurement strategies of PHC organisations. As PHC operates in an unstable environment in which it is affected by constant policy changes, political influences and repeated restructuring of the health system, it is difficult to achieve its long-term objectives of improving health equity and population health.

The short lifespan of the MLs has prevented evaluation of their long-term impact and effectiveness. As noted in the Public Health Association of Australia and Australian Healthcare and Hospitals Association report,12 “stability is required in the system”. Fostering networks of the kind that MLs established in the past few years is a complex and time-consuming venture. A further round of reorganisation risks paralysing activity because of continuing uncertainty about the form and function of population health planning and the fear that the new structures may again be transitory. In this case, the gains and investments made will be lost to our health systems. This underlines the need for rigorous evaluation of any health care reforms, and for assessing the extent to which the reforms have helped to improve levels of equity, effectiveness, efficiency, quality and sustainability.