ELENA DOUGLAS
Health spending needs reform
PUBLISHED: 1 HOUR 44 MINUTES AGO | UPDATE: 1 HOUR 36 MINUTES AGO
Western Australia is netting significant savings by privatising public hospitals, with other states to follow. Photo: Sylvia Liber
The reform of any system requires three things: incentive, clarity of authority and responsibility. Australia’s health system lacks all three, yet significant change is necessary to curb government health spending that, in the past 10 years, has increased by an unsustainable 80 per cent.
Firstly, take incentive to reform. States run the lions-share of health. Under current GST arrangements, states don’t benefit fiscally from their reform efforts. The Business Council of Australia’s proposal for GST by population would close this incentive gap.
Incentive is necessary because hard decisions are required, like private provision of public care. A 2009 Productivity Commission study compared government-owned and non-government-owned hospitals and found that on average, across the country, NGOs delivered services at lower cost, with better infection control. Internationally, post-ideological Sweden embraces the purchaser-provider split – 20 per cent of public hospital-care is delivered privately and 30 per cent of public primary-care.
Western Australia is actively privatising public hospitals: St John of God runs the Midland Health Campus, netting significant savings: $1.3 billion to date. Queensland is following suit: private providers will build and run Sunshine Coast University Hospital – to be Australia’s largest publicly owned, non-government-run teaching hospital. NSW is commissioning a non-government-designed, built and managed solution for the new Northern Beaches Hospital.
AUTHORITY SHOULD BE DEVOLVED
The second question is authority. The consensus is authority should be devolved as much as possible, to the local hospital, service delivery level. However to make meaningful change, local managers need the authority to hire and fire clinical staff on flexible terms, circumventing state-wide employment conditions restricting hospital productivity. This is the states’ reform task.
In Kevin Rudd and Tony Abbott we have two contenders who are both natural centralists. Rudd is running a scare campaign on Abbott’s “cuts to health”. In 2010 it was then health minister Nicola Roxon running a scare campaign on Rudd in an infamous Sky News interview when she recalled how, “with four days’ notice”, Rudd wanted to “take over the entire health system” without any materials for Cabinet or legal advice. Now that’s scary.
As a former federal health minister, Abbott’s instincts are centralist but he’s changing his tune. In the sanitised, updated 2013 edition of Battlelines Abbott says: “John Howard was right to express scepticism about whether Commonwealth bureaucrats would be better at running hospitals than their state counterparts, but wrong to imply that a Commonwealth assumption of responsibility for public hospitals would just swap one lot of bureaucrats for another.”
Shadow health minister Peter Dutton on the other hand is a fan of devolution. Dutton will close the “12 new health bureaucracies” in Canberra and “bolster front-line services by redirecting resources from bureaucratic structures that don’t provide patient care”. The Coalition will have local boards managing hospital budgets and appointing chief executives.
RESPONSIBILITY BUCK STOPS WITH US ALL
On the final issue: responsibility, where does the buck stop? The answer’s obvious: with each of us. When it comes to health spending, transparency and individual funding are paramount to engage citizens in spending health dollars wisely, putting a value on health and the behaviours which support it. Change must come. Incentive for reform is essential; authority should be clear and personal responsibility for health must be taken by each of us.
Make no mistake, there are votes in health. It has polled highest as “very important” to federal voting intentions in every Newspoll for six years bar one.
Elena Douglas is an economic and social policy commentator based in Perth.
The Australian Financial Review
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