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About AusHSICost EffectivenessHealth System Reform

Servicing the health machine – Response to the Health Budget 2015

By May 15, 2015 No Comments

Think of the health care system as a really complicated machine, belching smoke, leaking oil and often making horrible grinding noises. It produces a bewildering range of different services, but the real products are improvements in health measured by longevity and quality of life. Some parts work well and bestow a lot of health using very few resources. Other parts of it are inefficient using many resources for modest health benefits, and others parts are simply broken and waste resources.

The machine is controlled by different groups, there is no single fat controller. Private enterprise wants it to make money for their shareholders, doctors want it to provide benefit for their patients and an interesting career for them, bureaucrats want it to provide them with a secure and well-paid job, and politicians want it to win votes for them. We really need a fat controller, but that is for another blog.

The most important feature of this machine is that even in its most efficient configuration it will still be starved of resources relative to the demands populations place on it. It already takes up 10% of the power generated by the Australian economy. It is a complex dynamic system and tinkering with one part of it can lead to another part failing (for example, failing to oil the preventive healthcare cogs may increase chronic costs down the line). This health care machine cannot be fixed, only serviced and hopefully made to run a little better, and the annual budget is one opportunity to do this.

How well did this year’s service go?

After last year’s attempt at changing a lot of big parts, a process that skinned the knuckles of the government, this year’s maintenance was meagre. There were no major reductions in the Pharmaceutical Benefits Scheme (PBS) as predicted. Instead the cuts to PBS were modest, but not misplaced. A number of agents have been rorting the health system for years under the guise of pharmaceutical benefits; and they know who they are. Sufferers of melanoma and breast cancer, asthma and multiple sclerosis will have more drugs funded, likely at very high cost relative to the health gain. This will provide a good return for big pharma shareholders.

Improvements to vaccinations are a small part of the machine, but likely to make it work better by protecting against shingles among older people and getting better coverage for children at low cost. The savings from doing less prevention and not building GP super clinics are likely to reduce health benefits, but it is impossible to predict by how much. Spending $475M on sorting out the personal

health record has potential to make the machine work much better (remember the old mechincal phones?). Good data that’s available for researchers on how the machine currently works will enable improvements to be made in the future. But actually pulling off the IT magic trick of the century will be difficult.

A smaller version of the Medical Research Future Fund (MRFF) was announced, but how the $400 million is used is important. I would like to see much of it focussed on identifying the broken and inefficient parts of the machine; and maybe this will happen with a major overhaul of the Medicare Benefits Scheme just announced. This review should aim to stop funding expensive and low value health services. Using the MRFF to “cure cancer” might not be smart. We probably won’t eradicate cancer with the $400M, and even if we find out how to cure more cancer than we already do, we likely couldn’t afford to

scale it up. So let’s get our current known technologies and services working really well before we discover new ones we can’t afford to pay for.

Last year’s decision to cut funding to the states and territories requires a lot of re-engineering in the next few years. The health departments will have to make the machine produce at least the same health benefits with fewer resources and this requires leadership, innovation and tough decisions. AusHSI is well placed to identify opportunities for improvements as it works with health care professionals, has a focus on efficiency and is now moving into a phase of implementing improvements.

Nick Graves

AusHSI Academic Driector