The AHA believes our current system of funding and delivering health services is far from optimum if we want to achieve good value for money.
The specific problems that reduce the efficiency and the effectiveness of our system include:
1. Inefficiencies, due to cost-shifting and funding duplication between the federal and state governments;
2. A lack of accountability for health funding, due in large part to the federal/state division of responsibilities; and
3. Gaps in service provision due to cost-shifting and deficiencies in integration across jurisdictions.
These problems arise from underlying structures and are not simply organisational or management issues.
Principles for a new system
The AHA believes that Australia needs a new health funding system and we have developed seven principles to guide such a reform process. They are:
1. Clear political accountability for adequate funding of healthcare;
2. Clear accountability of healthcare providers to funders;
3. Clear accountability for safety and quality across all settings;
4. Incentives to ensure that care is given in the most appropriate setting by the most appropriate provider;
5. Integrated planning across jurisdictions, healthcare settings and professional groups;
6. Consumer and community involvement in priority setting;
7. Removal of incentives for cost-shifting; and
8. Increased funding for areas of need.
Meeting these criteria would require major structural reform to our current system.
There are a number of options that could be considered.
These include having one level of Government taking over responsibility for all public health services. This could be the Commonwealth or, on the other hand, could involve devolving responsibility for all health services to the states. Within these two extreme points on the reform spectrum, there are a number of different degrees of change and variations on how they could be achieved.
Proposed model
There are a number of funding models that could be designed to meet the above criteria. The AHA’s preferred model is to have the Commonwealth Government as the single funding body for core healthcare services, including acute hospital care, primary care, pharmaceuticals, residential aged care, dental care and home and community care.
The Commonwealth would provide funding directly to service providers, which could include regional agencies and/or state/territory governments (particularly in smaller states and territories).
This model will support better integration and coordination of services; in particular it will facilitate:
- Establishment of systems that provide coordinated and integrated care across the interfaces between the acute care hospital sector and:
- Aged care (including residential, respite, and community-based care) to ensure quality of life and a positive ageing experience, care is provided in the most appropriate setting;
- Primary health care (including general practice) in order to take the pressure off emergency departments. Joint Federal-state/territory funding will be provided for general practice clinics designed to provide services to ambulatory care (primary care type) patients, particularly after hours. There is an outstanding community need for an effective primary healthcare strategy that recognises the key role of primary health care in improving health outcomes and better integrates primary health care within the health care system.
Through a regional structure, the focus would be on the needs of the population, providing integrated treatment and care across the spectrum from primary to tertiary services as well as including strategies for early intervention, illness prevention and health promotion. Services should reflect broad community needs and priorities, locating access closer to ‘home’ and delivering the most appropriate combination for individuals and the community. The result should be greater equity and less inefficiency.
A region-wide mechanism for inter-agency functions should be developed to ensure overall coordination of service delivery and referrals/transfers, quality improvement and practice standards.
Regions should encompass a large enough population to ensure safe clinical services (eg sufficient throughput to maintain professional expertise in procedures/treatments undertaken) and economies of scale. Development of a health services role delineation model would ensure use of facilities are maximised within the region.
Governance should be provided by regional health authorities with a strong commitment, leadership and direction to pursue the population needs of the region. Clear, unambiguous lines of accountability and role delineation from Minister to CEOs is critical for proper functioning of the regional authority and facilitates timely and effective decision making at appropriate levels.
Regional planning processes facilitate more integrated delivery of a range of health services, give more responsibility for financial management at the regional level and encourage more local input to decision making.
Each region should have access to expertise and support in planning and budgeting for population needs and ensuring integration across health and other relevant portfolios.
Clinical governance should be part of mainstream corporate governance. Clinical governance has been defined as “A framework through which organisations are accountable for continually improving the quality of their services and safeguarding high standards of care creating an environment in which excellence in clinical care will flourish”.
The term Clinical Governance refers to the involvement of health professionals and managers in the governance processes and their role in ensuring the care system is adequate to provide a safe level of quality care. This definition is intended to embody three key attributes: recognisably high standards of care, transparent responsibility and accountability for those standards, and continuous improvement. The concept of ‘integrated governance’ has emerged to refer jointly to the corporate governance and clinical governance duties of healthcare organisations.
Clinical leadership groups at both regional and state levels should be established to support service planning, clinical services and decision making as well as promote a high level of safety and quality.
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Allocation of resources should be provided according to the relative needs of the population by region, adjusting for socio-economic factors, area, distance and ethnicity. Funding to each area should be adequate to reflect population needs and promote population health, ensuring clinical self-sufficiency for a specified range of services.
AHA believes the Federal Government should:
- Match its funding increases to the private sector with a similar increase to public hospitals;
- Encourage, subject to equality of funding, complementary and supporting roles between the public and private industry sectors to ensure smooth integration of treatment services and to avoid duplication of resources, including:
- Role delineation of hospitals based on networking of services and the needs of the population for access to elective and emergency services, preventative services, health education and health promotion; and
- Authorisation of selected private sector facilities for use by public sector providers and consumers to prevent duplication of capital infrastructure.
Alternative models
AHA acknowledges there are a range of different views within the health sector as to how the reform agenda should be progressed. Reforming the entire health system, all at once, is probably neither politically nor practically achievable. Therefore, a more incremental approach to health care reform needs to be considered.
Consequently, it is important all these options are explored through a transparent and consultative process, before any decisions are made about how to proceed.
Suggested models for a more limited reform of the current system, including governance of public hospitals, include:
1. A National Partnership
A National Partnership is fundamental to successful health system reform in Australia, and should provide access to healthcare services for Australians irrespective of borders or payers. All Australian Governments should adopt a nation-wide approach to health policy and service delivery.
The services should provide culturally appropriate services, and ensure equity of access for all sectors of Australia’s culturally diverse and Indigenous populations on the basis of clinical need regardless of their geographical location, and income.
A National Partnership will require significant and immediate investment and innovation to ensure long-term cost effectiveness and should incorporate:
- Planning on a nation-wide basis by all Governments working together to prevent duplication and service gaps and to overcome competitiveness and cost-shifting;
- Sufficient resourcing through cost-share agreements to ensure services have the capacity to be safe and sustainable;
- National standards governing delivery of services to ensure consistency in quality, confidentiality, outcomes and data;
- Integration and coordination across state/territory borders, program boundaries and care delivery settings (home, residential facility or hospital);
- Nation-wide evaluation of outcomes facilitated by data collections from all levels of Government that are timely and based on consistent protocols and formats; and
- Enhanced health service networking and coordinated administration.
In this context, the Australian Healthcare Agreements 2008-13 should govern all public sector health programs and services administered by all Australian Governments in partnership. Strategies for the 2008-13 Australian Health Care Agreements should include:
- Flexible funding agreements at the service delivery level facilitated by:
- Pooling of health program funds and sharing the financial risk resulting from changes in healthcare needs and service requirements.
- Purchasing of healthcare services through State/Territory-wide or regionally based government/non-government agencies.
- Sufficient resourcing facilitated by:
- Accurate estimates of growth to meet healthcare needs and service requirements, national health priorities and implementation of a national reform agenda;
- An indexation formula that properly reflects costs in the health sector;
- The development and implementation of holistic population based funding models that accurately achieve geographical equity in funds distribution.
- Agreement on national healthcare safety and quality standards and national standards for information management and technology.
- Incentives for a patient/consumer-centred health system through better integration/coordination of services.
Funding and strategies to address:
- Infrastructure issues;
- Workforce issues;
- Teaching and research functions.
- Nation-wide evaluation of utilisation and performance through collection of timely data on:
- Volumes of services across all types (not just hospital separations);
- Access to services (for example, by region);
- Basic minimum standards for high priority service types;
- Health outcome, status and effectiveness indicators.
2. A population group:
A particular population group could be selected and one level of Government given responsibility for the funding of all care for this group. This is similar to the existing Veterans Health Program, administered by the Commonwealth.
Older Australians would be a natural population group in which to trial this model, as the gains in better coordinating and managing their complex care needs would be considerable.
3. A geographical area:
A different approach would be to select a designated region for a small scale trial of pooling all health, aged and community care funding. This could be an entire state or a large regional area. The pooled funding could be administered by either the state or federal Government or through a regional health authority. This would provide a comprehensive picture of the impact of changes across all population groups and areas of health and community care.
4. A stream of care:
Another option involves selecting a single stream of care for trialling a pooled funding model. For example, ambulatory care is currently funded by state Governments when it is provided in hospitals and the federal Government when it is provided in the community. Handing funding and responsibility for all ambulatory care to a single level of Government would remove perverse incentives in the existing system and enable care to be provided in the most cost-effective and clinically appropriate setting, taking into account the needs of consumers.
5. A health program:
Another option is to focus on a health program that is currently split between federal and state Governments and to hand over funding and management responsibility for it to one level of Government. For example, funding for pharmaceuticals is currently split between the federal and state Governments depending on whether patients receive medication in hospitals or in the community. Pooling funding for the pharmaceuticals program would help achieve greater efficiencies and provide consumers with their medication in the most convenient setting for them.
