Shuffling hospital deckchairs
Public hospitals will remain afflicted by the blurred accountabilities, buck- passing and unresponsive bureaucracy if the Federal Government's health reform package is approved at today's COAG meeting.
The proposal that the Commonwealth becomes the majority funder of public hospitals, responsible for 60 per cent of the cost of services provided, leaves the states and territories with a not inconsiderable 40 per cent share.
States would continue to own hospitals, choose their location, and manage capital planning requirements.
The states will also be left responsible for managing industrial relations matters in the public hospital sector. Given that labour costs account for a significant share of the overall costs of running hospitals, the Commonwealth will become financially exposed to inflationary wage increases approved at the state level.
The shift in funding proportions is a recipe for ongoing uncertainty for all involved in the health system.
What if public hospitals continue to underperform in the eyes of patients and taxpayers? Who will be made responsible for this: Kevin Rudd, the majority funder, or the state premiers, the service deliverers?
It is envisaged that the distribution of Commonwealth funding will be determined by a casemix-style system based on the cost of treating individual patient cases. An independent regulatory body will be established to calculate a standard efficient cost for each treatment.
This proposal builds in potentially another avenue for political blame- shifting. If hospitals lacking economies of scale reduce the number of procedures offered, or even close, as a result of the Government's own funding policy, it may seek to lay blame for these outcomes on the independent body.
The public hospital system increasingly operates for the convenience of bureaucrats. The number of administrators has grown by close to 50 per cent nationally over the past decade, exceeding that of the general hospital workforce.
This has occurred at the same time as patients languish in emergency departments and on surgical waiting lists.
State government area health organisations in jurisdictions such as NSW have been identified in numerous reports both as a key repository for a burgeoning health bureaucracy, as well as a source of top-down administrative inflexibilities imposed on doctors and nurses at the hospital coalface.
Instead of forcing states to abolish area health services and reintroduce individual hospital governance boards, the Rudd plan will simply add another layer of administration in the form of hospital group networks.
These networks across Australia would turn against each other for a share of resources. Frictions could also emerge if services are eventually relocated to larger hospitals in a given network.
Questions surrounding appropriate funding amounts will not go away if the federal reform plan becomes a reality.
It is proposed that the Commonwealth will finance its injection of funds by acquiring 30 per cent of GST revenue that already goes to the states. This is a recipe for dramatically weakening Australia's federal system of government, as Commonwealth preferences over the use of the 30 per cent GST share will necessarily override those of the states.
The Commonwealth and states would possibly continue to accuse each other of starving public hospitals of funds if waiting lists or patient adverse events persist. Such political point-scoring could create an impetus for the centralisation of additional revenues into the future.
A future prime minister could look to forcibly obtain more state revenue sources, such as mining royalties, under the pretext of funding public hospitals in the face of an ageing population. Former NSW premier Bob Carr's vision of part-time state parliaments would indeed become a reality.
A heavier funding role in health for the Federal Government is also likely to come with the political desire for a greater say in how public hospitals operate around the country.
Given the regularity of service delivery failings by the Commonwealth ranging from defence procurement to housing insulation, a federal health department as an eventual monopoly funder, provider and regulator of public hospitals would not augur well for patients hoping for fast, effective treatments.
A slippery slope toward hospital centralisation in Australia will also come at the expense of the benefits of diversity inherent in the current state provision of services.
That we already know that Victoria, with its casemix funding and local hospital boards, provides relatively efficient hospital services compared to the bureaucratised NSW and Queensland systems represents valuable policy intelligence that simply cannot be gleaned from a centralised, one-size- fits-all system run by Canberra.
The problems associated with public hospitals do not amount to a lack of money. Over the decade to 2007-08, real funding increased from $19 billion to $31 billion, an increase of 60 per cent. State government funding rose over the period by 68 per cent.
Ultimately nothing short of a separation of health and state will be necessary to treat a growing number of patients without blowing out government budgets. Scant regard has been given to the need for greater private sector involvement in hospital and health care over the next few decades.
The Rudd Government's proposed shuffling of the hospital funding and policy deckchairs will not improve the Australian health-care system, and will in many respects worsen it.
State premiers would do well to reject the plan at the intergovernmental heads meeting.