The Australian

By Katie Lahey

Chief Executive, Business Council of Australia

As we assess the federal government’s policy response to the challenges facing our health system it is worth considering first what are the objectives of health reform.

Too much of the present debate about healthcare reform focuses on the burgeoning cost of health care and concerns about the sustainability of ever-increasing public contributions. Originating in Intergenerational Reports that linked the cost increases to population ageing juxtaposed against a shrinking tax base, the debate is only now turning to the real issue: how to get better health outcomes and better value for the dollars we all pay in taxes or fees.

But what does “better value” mean in health system reform and why is it the objective we should be most focused on? The answer lies in delivering better outcomes, increasing greater accountability, reducing risk, and ultimately improving the effectiveness of the health sector by shifting the focus to patient needs.

The Prime Minister’s announcement yesterday is an important step in shaping a better system to meet Australians’ healthcare needs into the future. This is a major piece of the health reform puzzle.

It must now form the basis for a broader reform agenda that supports better governance of the entire health sector. Health must be seen as a critical area for microeconomic reform alongside other areas such as regulation and infrastructure.

Part of the challenge for would-be health reformers is that the Australian healthcare system is seen as one of the best in the world.
Over the past 30 years our life expectancy on average has increased significantly and the number of preventable deaths has fallen. We have managed these outcomes with expenditures that rank in the middle of the OECD field. But as many have argued, “good” is the enemy of “great”.

We can do better and will need to do better if we are to maintain the advances we have achieved and spread them to those groups in Australia that have not shared in them.

It is not just that we will run out of money to fund a universal healthcare system.

It is more that the system is not well suited to the changing pattern of disease, and staffing shortages alone will dictate that we do things differently.

The demand for health care will continue to rise but the resources to supply the requisite services are finite, in terms of dollars and people.

Since 2009, the Business Council of Australia has identified healthcare reform as one of the essential areas of micro-economic reform to be tackled by Australian governments as part of their productivity agenda. Improving the health status of Australians and the cost-effectiveness – the value proposition for citizens and patients alike – of the healthcare sector are integral to improving Australia’s productivity and achieving the economic and social prosperity we all seek.

The micro-economic reform agendas of past decades have left this sector relatively untouched. Not surprisingly, new ways of operating or providing appropriate care have been slow to evolve in a systemic sense.

Some have suggested that at least 15 per cent of present resources could be released, to address unmet demand or taken as savings.

But this cannot be achieved through blunt cost-cutting measures or budget limits.

The effects of such measures in the past have left us with a legacy of skills shortages and overcrowded, understaffed and stressed public hospitals.

What we need is a systemic and systematic view of reform for health care.

The approach must take account of the changing patterns of disease and best-practice treatment models, adopt more business-like administrative systems and harness the advances in information and communication technologies to those needs.

The battle for scarce resources means that all assets, people, information and capital, need to be used as efficiently and effectively as possible so that unnecessary duplication is eradicated. All of these are likely to be achieved if services are designed around the needs of the patient.

A simple contrast: when a guest checks into a hotel, they are provided with one “file” and account. All departments of the hotel enter their information and services on to that one file.

When you check out you get a single bill that incorporates every service and product you have purchased during your stay. But if you “check in” to a hospital today, you receive multiple bills from your hospital stay. Patients face the risk of injury or inconvenience as information must be passed through multiple departments and professionals before treatment is provided. From a business and administrative perspective alone, there is ample opportunity to improve the experience of patients and reduce waste and risk. The lessons learned from many other sectors stand to provide some guideposts.

Most importantly, we need to recognise that the health workforce itself is ageing. Despite the recent increases in training numbers and international recruitment, the offsetting reduction in hours means that on present projections and treatment models, there will be insufficient people to staff the system as it is currently configured. Mounting stress in parts of the system is exacerbating turnover rates. The issues are linked.

The real implication of the Intergenerational Report is not about rising expenditures on the federal budget. It is much more about how we will optimise our human resources as the composition of our population changes, and how we ensure that all can participate and contribute to their potential. Through this we maximise our economic and social prosperity.