H EA L T H C A R E R EF O R M
The Rudd hospital plan — many pitfalls to avoid on the way to a better health system Kathy Eagar
We are waiting for the details — without these the plan will fail
T
he Rudd hospital reform plan1 could be better. That said, it does have the potential to be a significant improvement over what we have now. No doubt it would be better to have one level of government assume 100% of health funding. But that was never going to happen. So it’s time to accept that and move on. As others have observed, the devil will be in the detail. It is vital that the detail is right, even if it takes longer than planned. The first bit of detail to get right is what we call a hospital. A hospital is no longer the big white building that sits at the top of the hill. Hospital-in-the-home care is now the norm for many conditions, and the proposed new model won’t work if the new Local Hospital Networks (LHNs) only include the big white buildings rather than the associated community and home care that many patients require. Not everything that happens outside the walls of a hospital can be neatly packaged as “primary care”. Community mental health and palliative care at home are two examples. What we really need are “local health networks”, not networks of white And those networks need to be organised in The buildings. Medical Journal of Australia ISSN: 0025support of,3 and 729X May include, 2010 192 primary 9 515-516care. If we don’t improve at ©Thechronic Medical Journal of Australia 1899 managing disease, providing required rehabilitation and www.mja.com.au preventing complex conditions from becoming worse, then the healthHealth systemcare willreform continue to lurch from crisis to crisis, regardless of who manages it or how it is funded. Effective systems to establish the right balance of investment between acute, subacute and primary care are critical. The second bit to get right is how we plan for the growing and changing health needs of our population and how we achieve more equitable health funding across and within states and territories. The Rudd plan is weak on this point — paying for what’s on offer by the LHNs isn’t good enough. While the LHNs can do the micro-planning, the Rudd plan is silent on who will be responsible for making sure that each community and region across Australia will get its fair share of the pie. There are problems with the New South Wales health system. However, the commitment of successive NSW governments to improving population equity (through the Resource Distribution Formula2) is without doubt one of the strengths of that state. We need something similar on a national basis. Under the Rudd plan, while states and territories will be responsible for “local activity targets, service mix and provision for highly specialised services” as well as “capital planning management”,1 there is no requirement for them to improve equity of access. And the plan is silent on whether the Rudd Government will try to improve funding equity across, as well as within, states and territories. If it is going to, it might want to look in its own backyard and address the current inequity of access to Medicare. eMJA Rapid Online Publication 24 March 2010
Efficiency is discussed at length in the Rudd plan, but it is just one side of the equation. Equity is the other. The principle of population equity needs to be, with efficiency, front and centre in the detail of the Rudd plan. If it is, it will no doubt go a long way to alleviating the current anxiety about the future of rural and remote health care. The catchment size of each LHN will be critical to the equity question. Rather than planning around the number of hospitals (one to four is the current plan1), it would make more sense for LHNs to be planned based on the number of people living in the local catchment area. Each LHN needs to be responsible for meeting the basic health and hospital needs of the people who live locally, with teaching hospitals being responsible for providing more specialised care when needed. For the bush, that implies LHNs servicing populations of 50 000 to 250 000. Regional and urban networks need to be larger, covering typical populations of 250 000 to 500 000, although some densely populated capital cities need LHNs to service populations of up to 800 000. And that leads to the next bit of detail that it is vital to get right. The efficient price at one type of hospital isn’t the efficient price at another. Rural and remote hospitals cost more, not because they are inefficient but because of cost factors beyond their control. Likewise, hospitals in a major expansion phase cost more than those doing the same as what they did last year. The key point is that the pricing model will have to be sophisticated and have the capacity to be adapted to local circumstances. We certainly shouldn’t be rewarding the inefficient. But, on the other hand, we shouldn’t be punishing hospitals for factors beyond their control. Just as we need equity between communities, we also need equity between providers. And there’s more to an equitable funding model than simplistic measures of technical efficiency. It won’t require the wisdom of Solomon, but it will require expert planning and competent technical work. The federal government has no experience in funding or managing hospitals and certainly lacks the technical expertise. At the state and territory level, the expertise is patchy. The state with the most experience in activity-based funding, Victoria, is in many ways the easiest health system to run. With its small geographical size and population concentration in Melbourne, it has no experience in the challenges of funding or running hospitals in remote communities.3,4 It also has one of the smallest Indigenous populations in the country5 and, compared with other states, has little experience in either pricing or delivering Indigenous health care. For these and other reasons, the national efficient pricing model will need to be considerably more sophisticated than the current Victorian approach. Finally, despite all the rhetoric, the plan as proposed so far is a long way from ending the blame game. Instead, the Australian Government will call all the shots, while the states and territories
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will be blamed for all the problems. While no doubt appealing to federal politicians, this won’t create the sustainable health system needed in the years ahead. The detail we are all waiting for needs to include effective systems for joint decision making and shared responsibility and financial risk sharing between the federal, state and territory governments. Without that, the Rudd plan is bound to fail.
3 Australian Bureau of Statistics. Australia's environment: issues and trends, Jan 2010. Canberra: ABS, 2010. (ABS Cat. No. 4613.0.) http:// www.abs.gov.au/AUSSTATS/
[email protected]/Lookup/4613.0Chapter20Jan +2010 (accessed Mar 2010). 4 Australian Institute of Health and Welfare. Australian hospital statistics 2007–08. Health Services Series no. 33. Canberra: AIHW, 2009. (AIHW Cat. No. HSE 71.) 5 Australian Bureau of Statistics. Population distribution, Aboriginal and Torres Strait Islander Australians, 2006. Canberra: ABS, 2007. (ABS Cat. No. 4705.0.) http://www.abs.gov.au/AUSSTATS/
[email protected]/Lookup/4705.0 Main+Features12006?OpenDocument (accessed Mar 2010).
References 1 Australian Government Department of Health and Ageing. A National Health and Hospitals Network for Australia’s future. Canberra: Commonwealth of Australia, 2010. http://www.health.gov.au/internet/main/publishing.nsf/Content/nhhn-report/$FILE/NHHN%20-%20Full%20 report.pdf (accessed Mar 2010). 2 NSW Health. Resource distribution formula. Technical paper, 2005 revision. Sydney: NSW Health, 2005. http://www.health.nsw.gov.au/pubs/ 2005/rdf_paper.html (accessed Mar 2010).
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Author details Kathy Eagar, MA, PhD, FAFRM(Hon), Professor of Health Services Research and Director Centre for Health Service Development, University of Wollongong, Wollongong, NSW. Correspondence:
[email protected] (Received 9 Mar 2010, accepted 17 Mar 2010)
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