Challenges for the Australian Health System and Reform Options

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Challenges for the Australian Health System and
Reform Options

• Delia Hendrie
• School of Population Health

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Objectives of this lecture.

• Examine current pressures on health system
  expenditure
• Provide a rationale for the capacity to improve
  health system performance
• Discuss selective health system reform options

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PRESSURES ON HEALTH SYSTEM EXPENDITURE
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Pressures on Health System Expenditure

• Community expectations of the health services
  they require
• Advances in health technologies and their cost
• Demographic changes
• Ageing population
• Low or negative population growth

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Community Expectations

• Growth in economy
• Increase in GDP between 1992/93 and 2002/03 of
  3.9 pa in constant terms
• Growth in average health expenditure per person
• Increase in health expenditure between 1992/93
  and 2002/03 of 3.3 pa in constant terms
• 2,545 per person in 1992/933,506 per person in
  2002/03

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Advances in Health Technologies

• Include . the drugs, devices and medical and
  surgical procedures used in health care, (and the
  organisational and supportive systems within
  which such care is provided)
• Provide benefits to patients
• Prevention and treatment of disease and
  disability
• Contributing to improvements in survival and
  quality of life
• Cost-enhancing rather than cost saving

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Demographic Changes

• Ageing population
• Percentage of population aged 65 years and above
• 2001, 12 2021, 18 2041, 25
• Dependency ratio (ie ratio of the popn 65 years
  to 18 to 64 years)
• 2001, 0.2 2021, 0.3 2041, 0.5
• On average older people use significantly more
  health services per person than other Australians
• Costs per person in the PBS average costs for a
  male 65 to 74 years more than 18 times those for
  a male aged 15 to 24

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CAPACITY TO IMPROVE??
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Population Health Status

• Population health status been improving steadily
  over time
• Life expectancy average increase of 8.6 years
  from 1960 to 2000 in developed countries
• Infant mortality declined
• 36.4 deaths per 1000 live births in 1960
• 7.0 deaths per 1000 live births in 2000
• Level of premature death
• Cut by half (measured by years of life lost
  before age 70)

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Variation in Health Outcomes

• Big differences across countries in life
  expectancy and other indicators of health
• Sweden and Japan have infant mortality rates of
  3.4 per 1000 live births New Zealand, 7.2
  United States, 7.7
• Life expectancy at birth in Japan, 81.2 years
  United States, 76.8 years
• Also differences within countries

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Variation in Health Outcomes Australia
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Variation in Health Outcomes Australia
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Improvements/Differences in Health Status

• Significant differences in health outcomes
  between
• Countries
• Groups within countries
• Multiple determinants of health
• Some countries/groups doing better
• Suggests further gains are possible

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HEALTH SYSTEM REFORM OPTIONS
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Framework for Financing and Organising Health
Systems
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Health System Reform Options

• Revenue collection and risk pooling
• equity and access macro-economic efficiency
• Purchasing health care
• allocative efficiency provider autonomy
• Provision of health care
• technical efficiency quality of care
• Benefit package
• equity and cost control consumer choice

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Revenue Collection and Risk Pooling

• Increasing funding sources
• Several policies implemented to promote
  membership of private health funds
• Tax penalty for high income individuals without
  private cover
• 30 rebate on PHI premiums
• Lifetime health cover to discourage people
  delaying purchase of insurance
• Reflects belief that health system should be
  based on a mixed system of insurance and provision

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Assessment of PHI in Australia

• Private health cover
• Enhances choice over providers and access to
  timely elective care
• Helps finance the development of private hospital
  facilities
• But .
• Private funds have not actively engaged in cost
  controls
• Subsidies to private health cover pose
  considerable pressures on public finances
• Supported the development of a two-tiered health
  system

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Purchasing Health Care

• Performance related purchasing (e.g. of more
  active purchasing)
• Use of contracts to improve efficiency through
  higher accountability in use of resources
• Require providers to cooperate with certain
  utilisation reviews and quality assurance
  promote standard treatment protocols (i.e.
  clinical practice guidelines)
• Maintain profiles of individual providers for
  monitoring and providing feedback on treatment,
  referral and prescribing practices

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Daily Telegraph 6 March 2004

• Eight GPs accused by the Health Insurance
  Commission of churning through up to 140
  patients a day
• Breached Medicare rules ? cannot treat more than
  80 patients a day on more than 20 days of the
  year
• 48 weeks x 5 days x 80 x 25.70 (level B consult)
  approx 500 000 per year

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Performance Related Purchasing

• Remuneration methods of health professionals and
  institutions
• Example of doctors Main alternatives are..
• Fee per head (capitation)
• Fee for service provided
• Salary
• Also mixed payment system
• Different type of fee provides different
  incentives that affects efficiency with which
  health care is provided
• Reform payment mechanisms to provide preferred
  incentives (e.g. reduce over-servicing)
• In Australia ? introduction of some capitated and
  practice based payments

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Provision of Health Care

• Increasing efficiency
• Quality of health care significant shortcomings
  in health care quality
• Inappropriate use of procedures
• Under-use of accepted services
• Medical errors
• Systemic causes of health care quality problems
• Health and economic impact of health care quality
  problems

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Quality of Health Care

• Health and economic impact of health care quality
  problems
• Unnecessary diagnostic tests and procedures
• Expose patients to unnecessary health risks
• Tools/strategies for health care quality
  improvement
• Development of indicator frameworks to benchmark
  providers
• Creation of new institutions to monitor and
  improve quality
• Better data and information systems needed to
  drive/support improvement

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Provision of Health Care

• Increasing efficiency
• Reduce role of government ownership/ provision
• Contracting out of service provision to private
  providers
• Advantages
• Remove administrative and political constraints
  of publicly provided services
• Exposes providers to the discipline of
  competitive markets, etc
• Disadvantages
• Equity implications
• Objectives of private providers
• Short term focus of private providers

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Increasing Efficiency

• Reduce role of government ownership/ provision of
  health services
• Public financing but private provision and
  sometimes ownership
• Example of Joondalup Health Campus
• Public hospital services funded by HDWA but
  provided by Mayne Health/Affinity/ Ramsay Health
  Care
• Evidence not available to support or weaken case
  for privatisation of provision of services

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Benefit package

• Redefine the benefit
• Change the eligibility for public financing/
  subsidies
• In the AHCS, public financing/subsidising of
• Hospital treatment
• Medical services
• Pharmaceuticals
• Public health
• Aged care

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Redefining the Benefit Package

• Changes to access to
• the Medicare safety net
• Medicare safety net was a key issue in last
  years federal elections
• Under the safety net scheme the government pays
  80 of out-of-pocket payments above a certain
  threshold
• Increase in the safety net threshold from 300 to
  500 for low income earners and 700 to 1000 for
  high income earners
• Blow out from 444 million to around 1 billion
  in first year

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Redefining the Benefit Package

• Limit the number of subsidised IVF treatments
• Medicare subsidises about half the 8000 cost of
  each IVF cycle
• Restricting
• Women under the age of 42 to a max of three
  subsidised treatments each year
• Women over 42 to a total of three IVF cycles with
  a rebate
• Approx 6,000 IVF births a year and cost
• Save 7 million a year

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• Prioritising Treatment for Individual Patients
• Making decisions at point of service delivery gt
  rationing?
• What principles to apply?
• Seeking a fair or equitable system
• Horizontal equity i.e. people with equal need
  should have access to equal health care
• Vertical equity i.e. people with unequal need
  should have access to unequal health care
• How to define Need? Equal need? Appropriate
  levels of positive discrimination to compensate
  for additional need?

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• Prioritising Treatment for Individual Patients
• Factors to use as basis for rationing
• Immediate need i.e. urgency
• Capacity to benefit or chance of a positive
  outcome
• Age/life expectancy
• Quality of remaining life
• Cost
• Ethical issues such as self inflicted disease,
  potential contribution of the person to society,
  presence of dependent children

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System Planning

• Major structural change
• Managed care or health funding based on
  capitation
• Decentralisation of health care resource
  allocation and delivery of services
• Information systems
• Electronic medical records
• Scientific research
• Promote evidence base

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Concluding Remarks

• Emphases in the ideal health system
• Equity of outcomes community-based programs
  quality of care consumer choice and
  accountability efficiency
• Change is always difficult
• Distinctive features about policy change in the
  health system
• Managing the transition
• Some aspects straightforward (eg achieving
  technical efficiency) other aspects more
  difficult (eg may be a lack of an evidence base)