22nd Feb 2011
The Government is to be congratulated on reaching agreement this week with the states and territories to break the impasse that arose following the previous ‘agreement’ in April 2010.
The new agreement provides for a phased growth in Commonwealth funding for hospitals to reach 50% by about 2014 (from its current level of around 40%) and to remain at that level, including for growth.
Commonwealth and state/territory contributions will be paid into pooled accounts and funds will be distributed from those accounts by an independent agency based on ‘efficient’ price for services in larger hospitals and block funds for smaller institutions.
The price, too, will be set independently. The agreement includes targets of a maximum waiting time of four hours for service in emergency departments and 95% of elective surgery being undertaken within the clinically indicated times.
The MyHospital website will continue and report data on individual hospital performance.
The agreement is in principle only at this stage, with more detail to be discussed by officials on technical implementation issues.
There is some concern that the detail will be the Achilles heel that will ultimately bring the whole edifice down but presumable a spirit of cooperation and the national interest will prevail.
Is the agreement a good outcome?
The agreement achieves a key objective of getting hospital funding arrangements between governments on to a clear footing for the next decade.
The move to casemix as the basis of funding and the Commonwealth’s commitment to match 50% of costs, including growth, should remove some of the traditional argy-bargy, although the ‘blame game’ will continue.
The transparency of the funding arrangements is a strong point, although likely to provide many ‘sticking points’ for assiduous bureaucrats. The targets for ED and elective surgery will no doubt result in gaming and distortions, but what’s new? Improved performance can be expected over time with the public reporting of hospital level data.
Overall, it is a good outcome from that limited set of perspectives.
Does the agreement constitute a landmark health reform? Are there any gaps still left? The strength of the agreement is that it clears the decks for a few years around vexed questions of hospital funding.
However, it does not provide a long-term answer to the question of how we cope with rising hospital costs; at best it buys us time to work through that issue in a more considered way.
Inevitably the states’ and territories’ capacities to cover half hospital operating costs plus invest in new capacity will be all-consuming. We need to start planning for that now and asking ourselves how we will tackle that problem.
While the agreement includes some initiatives in relation to primary health care, that area needs much more attention and that is where more comprehensive health reform is needed.
The agreement takes a step back from the previous commitment that the Commonwealth would become the sole funder of primary health care and so the current fragmented system will continue. Reform now needs to focus on how the fragmentation can be overcome within the multiple-funder environments.
The sharp end of this reform now seems to be with the Medicare Locals, which have been given a boost through the new agreement, with a bringing forward of their establishment and a plan to have more of them.
Fortunately, the agreement spells out in more detail than has previously been available just what the Medicare Locals will be expected to do. Key elements of their role will be to:
• Identify local service gaps with the funding flexibility to do something to address them;
• A specific focus on improving access to after-hours care;
• Clear reporting and accountability against a national performance framework; and
• Improve coordination of primary healthcare across various providers.
So the challenge for us all now is to get the primary health reform process happening within this framework.
Robert Wells
Director, Menzies Centre for Health Policy
