DOCTORS REFORM SOCIETY Submission to Australian Health and Hospitals Reform Commission. DOCTORS REFORM SOCIETY 1 June 2008 The Doctors’ Reform Society was formed in 1973 to support a proposal by the then Labor Government for a publicly-funded universal health insurance system. Medibank (now Medicare) was successfully created despite opposition from the Australian Medical Association. The DRS has continued to lobby for the maintenance and strengthening of a strong public health system in the face of continued efforts by significant sections of the medical profession and the major political parties to move back to a more costly and less accessible private health system. We thank you for the opportunity to contribute to the crucial debate about how our health system should be reformed in both the short and long term. Whilst ideological debate about the direction of our health system abounds, we believe that there are two ways to minimize the influence of ideology on this debate. The first is to look at the evidence for policy positions. Such evidence is frequently imperfect, but what there is we have used in our comments. Better evidence is required to enable judgement of the effectiveness of policies, and the call for indicators is to be commended. Much more evidence however, needs to be collected to minimize the ongoing ideological debates. The second means of addressing such debates is to ask the citizens what they want. The proposed principles are not universally supported, particularly the belief in equity. Many in our society resist the idea that the most disadvantaged in our community should receive more health care than the rich, even though that’s what is needed to redress inequity. If however, there is overwhelming evidence that the citizens support equity and universality, it will make future debate on these issues so much easier (but never easy), as has occurred in Canada following the Romanow Commission. We thus strongly support the concept of citizen engagement as outlined for example by the Australian Health Care Reform Alliance. Because most of the principles detailed would be widely accepted by the community and by all sides of politics, our comments regarding the work of the Commission are therefore directed more specifically to those areas where controversy may exist, either with respect to the principle itself or to the manner in which it guides policy implementation. We have made some very specific comments about the principles and the indicators at the end of this paper. There is little dispute about many of the inefficiencies in our health system, particularly in regard to the State/ Federal divide. Estimates of the costs of this inefficiency range from $2-9 billion yearly. Whatever the figure, it is very large. That’s just the direct financial costs. But with improved efficiency there will be better treatment which of itself will lead to financial gains through increased productivity of both patients and carers. Then there are the unmeasurable benefits of lives saved, lives improved, and suffering reduced. Inequity however, is the poor cousin of efficiency. Its presence in our health system is summed up by the inverse care law: those who need the least receive the most, those who need the most receive the least. The problems are structural and systemic and are never adequately addressed by programs and ‘safety nets’. The recognition of the ‘broader environmental influences shaping our health’ (Principle 12) is to be commended and fits with the proposed socially inclusive agenda of the new Federal Government. Safety nets and the structural barriers to equity discussed below are socially exclusive and in direct conflict with this agenda and the principle mentioned. The most fundamental of these barriers is the system of Medicare rebates and the Pharmaceutical Benefits Scheme PBS) which constitute 34% of total Federal and State Government health expenditure. Of this spending $432 per person is spent in capital cites, $417 in outer metro areas, $350 in rural and remote areas, and a paltry $240 on Aborigines and Torres Strait Islanders (1). This is the inequity flaw built into the structure of the Medicare system. If there is no doctor in an area then there is no funding through Medicare rebates and the PBS. If there are plenty of doctors, the area gets huge funding. In the last few years the Federal Government has quite rightly recognised the importance of practice nurses, allied health professionals, and psychologists but they have funded them in the same way, through fee for service linked to a doctor. Again, the most needy miss out because doctors distribute themselves to areas of least need and the money follows. Additionally, the capacity to charge copayments is a further attraction to doctors to work in areas where such payments can be afforded. Many programs have been introduced to correct these inequities, some have helped a little, some have failed, but the inverse care law still applies because the fee for service/ copayment model ensures inequity. Copayments have been used by governments to save money for years. Labor introduced a copayment for prescription drugs for pensioners 20 years ago and tried to introduce a mandatory copayment for GP visits in 1990. All the evidence collected in Australia, North America, and elsewhere over 30 years indicates that copayments save money in the short term by disproportionately limiting access for the most disadvantaged in the community (2-5). Poor people stop buying, even though their needs are greater. According to the Commonwealth Fund survey from 2005, 22% of sick Australians fail to fill out prescriptions because of copayments, and 34% fail to access care when they think they need it due to these Government imposed financial barriers to access(6). The ultimate inequity, although small in amount, is the Medicare Safety Net. It cuts in if out of pocket costs for doctor based services exceed a certain level. But if there’s no doctor, there’s no service and no money is spent in the area. Last year the distribution of Safety Net funds showed that in the highest socio-economic rating electorate of Bradfield, $74 per voter was paid out. In nearby Fowler, the lowest socio-economic rating electorate, only $12 per voter was paid. Another striking example of inequity is access to hospital care for non life threatening conditions. Waiting times for joint replacement surgery in the public system for example, are often 1-2 years compared to weeks in the adjacent private hospital, clearly establishing that the private system is more attractive to doctors than the public system as recent Victorian figures have demonstrated. Thus our patients wait, struggling around the house on walkers, sometimes crawling, constipated by the narcotic pain relievers they need, putting their lives and the lives of their families on hold whilst the richer neighbour is out and about within weeks of needing the same operation. It is inequitable, but when one looks at the financing of public and pseudo private hospitals, then the evidence based approach to policy with a ‘root and branch analysis’ which the Prime Minister has promised, must address this economically bizarre $3.7 billion Private Health Insurance rebates/ Medicare Levy Surcharge exemption. A rich Australian on $250,000 per year can take out a $3000 PHI policy, receive a rebate of $900 and an exemption from the Medicare Levy of $2500, be $600 better off, and then have a taxpayer funded procedure in a private hospital, and avoid the public queue. That’s inequitable, but it gets worse. The private hospital procedure costs the taxpayer as much as the public hospital procedure, as documented by Harper et al in 2000 (7). There were no replies to this study from the private hospital or private health insurance industry, suggesting they could not fault the methodology and wished to avoid discussion which might demonstrate clearly how inequitable the taxpayer support of the publicly funded pseudo private industry is. In addition to that injustice however, we must look at the economics of taxpayer support for the private health insurance industry and the private health industry. Even the OECD has marvelled at the appalling economics of this policy. But if we are to look at evidence, one question which needs to be asked is whether the health outcomes per dollar spent in the private system are equivalent to or better than in the public system. Since 1999 there has been a huge expansion in the private hospital industry and the number of operations performed. Health outcomes have not been measured in any meaningful way. Costs have, and Harper’s study showed that private hospital charges for a patient to have coronary angioplasty/ stenting were twice that in the adjacent public hospital(7). A further study looked across the health system at technical efficiency which measures cost per throughput rather than health outcome and found that even this favoured public hospitals(8). In addition, Robertson et al reported on the marked differences in investigative procedural rates in private vs public hospitals(9). This data suggests overservicing in private hospitals as would be expected in an uncapped fee for service environment. There does exist some limited information on health outcomes in Australia in private and public hospitals (10, 11). Both studies show a better outcome in private hospitals and both suggest that the reason for this is probably better access to drug and other intervention therapy partly reflecting the ridiculous situation which exists in public hospitals that access to approved subsidised PBS drugs is limited by hospital budgets whilst access in private is limited only by PBS restrictions. These studies were, however, not adequately risk-adjusted, the authors of the cancer colon trial indicate that they were unable to allow accurately for comorbidity which is recognised as more prevalent in public hospital patients and could explain the difference noted. The authors of the AMI trial agree that they also could not accurately allow for severity of infarct or risk factors such as obesity and smoking, thus casting significant doubt regarding the results of the trial. In the absence of useful Australian evidence on health outcomes appropriately case adjusted, we can look overseas for comparisons of public and private hospital mortality. In North America, the overwhelming evidence is that mortality and morbidity, adjusted for the complexity of the case, is higher in for profit private hospitals and community based dialysis services than in public hospitals and dialysis services(12). In Australia, about 50% of private hospital beds are run as for profit businesses, answerable primarily to shareholders. Similarly impressive and of concern is the evidence that private hospital and community based care is more expensive than public care, even when that private care is taxpayer subsidised(13,14). The evidence that private health care is more expensive, less technically efficient, delivers worse health outcomes when associated with for profit organisations, and currently costs taxpayers as much or more than public care, must be considered as the Government looks to ‘maximising a productive relationship between public and private sectors’ The evidence that it is inequitable is irrefutable. The emphasis on primary and preventive care and the increased funding for Aged Care places are evidence based initiatives to address problems in our public hospitals. It is of concern that the $2 billion shortfall in Federal funding under the Australian Health Care Agreements has not been corrected. However it is also encouraging that there is a much greater emphasis on measurement of health system performance. It is crucial that such measurement emphasises health outcomes rather than processes, that the measurements apply to private hospitals as well, that the cost of achieving those outcomes is measured and that the data be properly risk adjusted, to allow valid comparisons and correction for the generally low-risk nature of the private caseload. This will give the most accurate measure of efficiency which can form the basis for evidence based policy rather than ideological arguments about private and public. Reform Responsibilities Primary Care Firstly, to reduce inequitable access to services, funding must be distributed to regions on the basis of need. This does not mean that fee for service for acute care needs is precluded. To distribute funding on the basis of need, audits of current spending and need are required. The coverage of such funding may include all health costs including hospitals, such as in the New Zealand model. Including hospitals does make integration of hospital and community care easier, but the whole process is more complicated. Alternatively, the coverage could be restricted to primary care. It is a simpler model however, and may be implemented more easily (see attached paper on proposal for primary care). This approach is currently functioning in various Indigenous communities, such as Katherine. All funds, Federal, State, and Local, can be pooled and supplemented according to the needs of the community or region. This should include dental funding which is an area of gross inequity. Targeted programs as currently proposed, will simply improve dental care towards the inequitable situation we currently have for general health care. At the regional level there must be a body to distribute funds. At the national level, the amount of funding should be determined and standards for accessibility, quality, safety etc must be determined. The regional body must have a governance structure which reflects community interests and is not controlled by any particular stakeholder group. There is extensive European and Scandinavian experience with various models but there are advantages and disadvantages with all models and whatever is chosen here would need to take account of the current structures. This approach supports the principle of equity, and makes it much more likely that the system will have a patient focus. Having funds distributed nationally or at state level for particular purposes means that the funding is disease focused, rather than patient focused. Currently a patient may arrive with a problem, but fail to fit into the designated category, so there is no funding eg for speech pathology. (See attached paper on GP Superclinic proposal). Similarly, national disease focused packages may work well in improving care for a limited group, but do nothing for equally needy patients who don’t belong in the chosen group. Allowing more local determination of what should be funded avoids these problems and also promotes flexibility in approaches to the local problems. Integration of services with multiple providers (GPs, allied health, dentists etc) will be facilitated by salaried funding. (which can be set to provide an income equivalent to the experienced provider’s previous fee-for-service income). Fee for service funding works against team building as each provider guards his/ her own time and perceived skill area. Great providers can and do overcome such difficulties, but most of us are good providers most of the time, not great providers all of the time. We want a system which promotes integration rather than one which adds further challenges for providers. Although some preventive care can be effectively funded through fee for service provision with incentives, such a mechanism is likely to leave the most difficult and needy preventive care challenges unaddressed. Salaried care/ capitation models are much more likely to result in equity in this regard. Pooled funding with regional disbursement and representative governance bodies sets the scene for
It thus addresses both equity and efficiency. Hospitals What is required is a rebuilding of the public system using the funds now wasted in the private system. This clearly is not immediately feasible for both political and practical reasons, but must be a proposal for the long term. In the short term, correcting the historical Federal underfunding and requiring the Federal Government to fund hospital patients waiting for Aged Care places would be an immediate boost to the public hospital system. We strongly support assessment of performance in both the hospital and community sectors, as the lack of evidence of the quality of health policy settings is part of the reason that arguments end up in ideological debate. All comparisons of patient outcomes must be properly risk-adjusted, as there is good evidence that this dramatically changes performance on inter-hospital comparisons of outcome. Without such adjustment, one is not comparing apples with apples and the generally lower risk nature of the private patient population will lead to an incorrect assessment of system performance. This difference in risk profile is due in part to “cherry picking” of the low risk and lucrative patients by the private system, in addition to differences in socio-economic profile, in part due to the inequities of the current funding system. Assessment of performance must also take into account cost and financial barriers to optimum performance imposed on the public hospitals. We ask the Commission to look at the current evidence, particularly relating to equity, but also in relation to efficiency in terms of health outcomes, and take bold steps to address these issues Dr Tim Woodruff 1. Department of Health and Ageing, Annual Report 2002-03. 2. Lohr KN, Brook RH, Kamberg CJ, et al. Use of medical care in the Rand Health Insurance 3. Blustein J. Medicare coverage, supplemental insurance, and the use of mammography by older women. N Engl J Med 1995;332:1138-43. 4. Wong MD, Anderson R, Sherbourne CD, Hays RD, Shapiro MF. Effects of cost sharing 5. Huskamp HA, Deverka PA, Epstein AM, Epstein RS, McGuigan KA, Frank RG. The effect of incentive-based formularies on prescription- drug utilization and spending. N Engl J Med 2003;349:2224-32. 6. Commonwealth Fund Taking The Pulse Of Health Care Systems: Experiences Of 7. Harper RW, Sampson KD, See PL, Kealey JL, Meredith IT. Costs, charges and revenues of elective coronary angioplasty and stenting: the public versus the private system. Med J Aust 2000 Sep 18;173(6):296-300 8. Duckett SJ, Jackson TJ. The new health insurance rebate: an inefficient way of assisting public hospitals Med J Aust. 2000 May 1;172(9):439-42 9. Robertson IK, Richardson JR Coronary angiography and coronary artery revascularisation rates in public and private hospital patients after acute myocardial infarction. Med J Aust 2000 Sep 18;173(6):291-5 10. Morris M, Iacopetta B, Platell C. Comparing survival outcomes for patients with colorectal cancer treated in public and private hospitals. Med J Aust. 2007 Mar 19;186(6):296-300 11. Jensen P H et al Hospital Type and Patient Outcomes: An Empirical Examination Using AMI Re-admission and Mortality Records. Melbourne Institute of Applied Economic and Social Research The University of Melbourne Melbourne Institute Working Paper No. 31/07 12. Devereaux P.J., Choi, Peter T.L. et al A systematic review and metaanalysis of studies comparing mortality rates of private for-profit and private not-for-profit hospitals CMAJ • MAY 28, 2002; 166 (11) 13. Devereaux P.J., Heels-Ansdell D et al Payments for care at private for-profit and private not-for-profit hospitals: a systematic review and meta-analysis. CMAJ • JUNE 8, 2004; 170 (12) 14. Woolhandler S , Himmelstein DU Competition in a publicly funded healthcare system BMJ 2007;335;1126-11292. Comments on Principles These principles cover quite well what we believe should be the basis for our health system. Equity: Health care in Australia should be accessible to all based on health needs not ability to pay. The multiple dimensions of inequality should be addressed, whether related to geographic location, socio-economic status, language, culture or indigenous status. A key underpinning for equity is the principle of universality as expressed in the design of Medicare, the Pharmaceutical Benefits Scheme and public hospital care. Addressing inequality in health access and outcomes requires an examination of the inequity inherent in the implementation of these three programs, as well as action beyond these three programs, including through engagement with other policy sectors (such as the education system, and employment). Shared responsibility, Comment: Whilst there has been much talk recently about the degree to which lifestyle ‘choices’ are responsible for preventable disease in the community, we are deeply concerned that this heralds a move to blaming people for their illnesses. This simplistic approach to illness producing behaviour ignores the reality of people’s lives and is likely to have its greatest negative effects on the most needy and most desperate, whilst favouring those who need the least. It also ignores the influence of societal factors on that behaviour, factors which have their greatest effect on those whose lives are unstable and insecure. Any policy settings which do not take into account this complexity will exacerbate inequity rather than improving health. We suggest Shared responsibility: All Australians share responsibility for our health and the success of the health system. We each make choices about our life-style and personal risk behaviours, shaped by our physical and social circumstances, life opportunities and environment, which impact our health risks and outcomes.. As a community we fund the health system. As consumers or patients we make decisions about how we will use the health system and work with the professionals who care for us. It is crucial however, to recognize that the capacity to exercise choice is extremely variable and for some it is extremely limited. Responsible spending on health: Good management should ensure that resources flow effectively to the front line of care, with accountability requirements efficiently implemented and red tape and wastage minimised. Funding mechanisms should reward best practice models of care, rather than models of care being inappropriately driven by funding mechanisms. Funding systems should be designed to promote continuity of care with common eligibility and access requirements to avoid program silos or ‘cracks’ in the health system. There should be a balanced and effective use of both public and private resources based upon the best available evidence for effectiveness which addresses both costs and health outcomes, taking into account equity considerations. Public voice, Comment: We believe that citizen engagement is crucial both in establishing the principles which should underpin our health system (as in Romanow Commission in Canada), and in ongoing priority setting and decision making. When citizens are properly engaged we believe they can make decisions for the community rather than for themselves. With citizen support, Governments can then make decisions even against the wishes of powerful vested interests and lobby groups. We thus strongly support the suggestions put forward by the Australian Health Care Alliance regarding this issue. 12. Public voice: Public participation is important to ensuring a viable, responsive and effective health care system. Participation can and should occur at multiple levels, reflecting the different roles that individuals play at different times in their lives. This includes participation as a ‘patient’ or family member in using health care services, participation as a citizen and community member in shaping decisions about the principles underpinning our health system, and the organisation of health services, and participation as a taxpayer, voter, and, in some cases, shareholder in holding governments and corporations accountable for improving the health system. Comments on Beyond the Blame Game: Performance Measures We congratulate the Commission on a list of performance measures which moves away from the throughput measures which have categorized most assessment to date. We strongly support Point 10, applying equity measures to as many of the other measures as possible. Re 6.1. These all require inclusion of waiting time to Outpatient appointment, otherwise there are ripe for gaming (as already happens) and are currently an indicator of the best ‘gamers’ Suggest adding 8.4 Improving assessment of quality of hospital care: Case adjusted mortality rates This is already done in UK so tools exist, can be used internally/externally, at a hospital or regional level). Should be applied to private hospitals as well with assessment of cost taken into account. This would then permit some assessment of relative efficiency of the public vs private sector. 13. Improving Aged Care and reducing access block Patients waiting for Aged Care places are reported to take up up to 10% of public hospital beds, resulting in access block at huge cost to the States. Unless a measure of this kind is used, States will continue to be unfairly blamed for problems they cannot solve.
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