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Steering without navigation equipment: the lamentable state of Australian health policy reform

Steering without navigation equipment: the lamentable state of Australian health policy reform Background: Commentary on health policy reform in Australia often commences with an unstated logical error: Australians' health is good, therefore the Australian Health System is good. This possibly explains the disconnect between the options discussed, the areas needing reform and the generally self-congratulatory tone of the discussion: a good system needs (relatively) minor improvement. Results: This paper comments on some issues of particular concern to Australian health policy makers and some areas needing urgent reform. The two sets of issues do not overlap. It is suggested that there are two fundamental reasons for this. The first is the failure to develop governance structures which promote the identification and resolution of problems according to their importance. The second and related failure is the failure to equip the health services industry with satisfactory navigation equipment - independent research capacity, independent reporting and evaluation - on a scale commensurate with the needs of the country's largest industry. These two failures together deprive the health system - as a system - of the chief driver of progress in every successful industry in the 20th Century. Conclusion: Concluding comment is made on the National Health and Hospitals Reform Commission (NHHRC). This continued the tradition of largely evidence free argument and decision making. It failed to identify and properly analyse major system failures, the reasons for them and the form of governance which would maximise the likelihood of future error leaning. The NHHRC itself failed to error learn from past policy failures, a key lesson from which is that a major - and possibly the major - obstacle to reform, is government itself. The Commission virtually ignored the issue of governance. The endorsement of a monopolised system, driven by benevolent managers will miss the major lesson of history which is illustrated by Australia's own failures. Background ingly, the pharmaceutical industry, the public health Concerns which have dominated national debate and lobby and 'government economic rationalists'. government attention have commonly reflected vested interests and ideologies rather than the evidence-based One ideology concerns the unsubstantiated superiority of magnitude of problems. The different interest groups varying levels of private ownership, control and financing include, as they have always done, the medical profession, in the health sector. Another ideological belief is that private health insurance (PHI), private hospitals, increas- health spending should be dedicated only to health max- Page 1 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 imisation (ignoring some notions of freedom and fair- lethargic policy response. This again raises the question of ness). Then there is the ideology of many government how this could occur. departments - especially those heavily influenced by econ- omists - that small government is an end in itself and that In the remainder of the article it is argued that the answer minimum resource cost per unit of measured output is to these questions is, in large part, that the health system always desirable. In the health sector this latter ideology has poor governance and has failed to invest adequately in does not reflect population values [1]. research and experimentation. This is symptomatic of a more fundamental problem, namely the near monopoli- In contrast with these views, there is a strong argument for sation of each part of the system by conservative and public spending to be based upon evidence, including evi- defensive government agencies and the belief that defi- dence relating to public values. This, of course, requires ciencies may be corrected by (occasional) one-off tinker- information, but currently much of the information ing with the system rather than by the creation of a system needed to achieve this apparently obvious goal does not based upon the production and diffusion of evidence, exist, that is, the health system is being steered without health services research commensurate with size and satisfactory navigation equipment. importance of the health sector and upon error learning rather than error suppression. Some principles for achiev- In the present paper I initially comment upon three of the ing this are discussed. prominent issues in the health debate, each of which is associated with a powerful constituency namely, private Issues of Exaggerated Importance health insurance (PHI), ageing and hospital queues. Pri- Private Health Insurance (PHI) vatisation could be added as a fourth. The theme of this To put PHI in perspective there are two dominating facts. brief discussion is that the quality of the analysis has been First, the imperfect evidence available suggests that many poor to the extent that it borders, at times, upon disinfor- Australians wish to have PHI. National statistics on the mation. This raises the question of how this could occur. redistributive mechanisms in Australia and the resultant In the following sections I outline evidence of more signif- levels of poverty suggest that Australia is one of the least icant system failure - the regulation and diffusion of tech- egalitarian and the least generous nations in the devel- nology, the fairness of the system and the quality of care. oped world (see Table 1 and Additional File 1). Results Relative to their importance these issues have been largely from the Monash Health and Ethics Survey [2] reveal ignored in the health debate and attracted, at best, a overwhelming support for the proposition that people Table 1: How Australia compares The rank order of Australia compared with 18 other OECD* countries: selected statistics Year Rank No. of countries Australia's ranking % population in absolute poverty 1995 10 = highest 10 10 Social security transfer (% GDP) 1990-1999 17 = lowest 17 17 % elderly in poverty Late 1990s 16 = highest 16 16 Income of elderly (above 65). ÷ Income 18-64 Mid 1990s 16 = lowest 16 16 th th Income at 90 /income at 10 percentile Late 1990s 17 = highest inequality 17 13 % population with income below 50% of median income Late 1990s 16 = highest 16 15 % children in poverty - single mother mid 1990s 15 = highest 15 13 - two parents 15 = highest 15 13 Official Aid/GDP 2000 18 = lowest 18 15 Total tax/GDP (%) 2000 1 = highest tax 18 15 * All OECD countries with a population above 3 million Source: [42] Page 2 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 should be allowed to spend additional monies on their imperfect analogy would be a policy to increase the own health. Many Australians like to jump queues and uptake of fire insurance for houses by randomly burning support multi-tier access to health services. down houses, increasing people's fear of being a victim and thereby inducing them to take out fire insurance. The second dominating fact is that, in terms of its impor- tance for the sustainability of the health sector, PHI is Under these circumstances it is difficult to determine the quantitatively trivial. In 2007/08 it raised $7.86 billion of underlying demand for (legitimately subsidised) PHI, but the total national health expenditure of $103.56 billion or survey results cited above indicate a rejection of the about 7.6 percent. Even in the hospital sector where its notion that individuals should not be permitted to spend funds are concentrated, it raised only 11 percent of reve- more of their own income to receive better access to better nues [3]. The highly publicised statistic that PHI under- services. pins private hospitals which, in turn, carry out over 50 percent of elective surgery is one of the many examples of Perversely, the subsidy for those taking PHI which is the disinformation, or perhaps more accurately, 'spin', on the most criticised policy is the most justifiable in terms of statistics. Health funds and private hospitals are the land- social and normal economic policy. It is justified, how- lords providing beds and equipment. The Government, ever, not as a device to increase membership per se, or not PHI, provides the overwhelming proportion of the health care revenue but in terms of (one notion of) equity insurance against the medical costs in these hospitals. to those who are paying more for their health care. This argument depends upon PHI having no adverse effects It would be feasible (as distinct from necessarily desira- upon others by, for example, diverting a disproportionate ble), for private hospitals to be nationalised overnight number of doctors from public hospitals). It is untrue, as with 57 percent of their contribution to hospitals being some advocates from the public health lobby have argued met from the government subsidy to premiums and the that the subsidy is bad economic policy or that the remaining revenues raised by PHI met by an approximate resources are wasted. Rather, a subsidy is the normal 1.1 percent increase in taxation. This would not be an eco- device for promoting a social policy and resources are nomic cost to the nation but a redistribution from non transferred not wasted. But throughout the health care contributors to PHI to those who are currently members. debate issues of social values are routinely misrepresented This course of action is neither advocated nor criticised as issues of economic (in) efficiency. here. The key point is that, financially, PHI is an inessen- tial part of the health sector. The Australian health scheme Ageing cannot be held to ransom by the self evidently false claim The belief that there is a looming crisis because of the age- that it depends upon PHI. ing of the population and booming demands of those who thoughtlessly chose to be born after 1945 appears to Finally, it is difficult to even measure the underlying sup- be a function of bad arithmetic. It reflects the well known port for PHI as the measures taken to support it have dis- error of reasoning in percentages and disregarding abso- torted the relationship between preferences for PHI and lute values. Exaggerating somewhat, the percentage of purchasing decisions. Legislation in the last decade has centurions may well increase by 600 percent in the next 20 driven Australians into PHI with policies which deserve to years, a frightening prospect until translated into an abso- be enshrined in the Guinness Book of Records - as the lute increase from 100 to 700, a figure too low to have a most bizarre micro-economic policy in a developed coun- detectable impact on health expenditures. try in the last half century. Importantly, and unremarked in reports, a much higher The levy on the wealthy who fail to purchase PHI has the rate of taxation driven by a much higher growth rate of same economic logic as promoting the Australian auto- health expenditures is consistent with a rising material mobile industry with a punitive tax surcharge on the standard of living. This may be verified by anyone capable income of wealthy Australians who fail to buy an Austral- of calculating compound growth rates. Figure 1 illustrates ian car. Lifetime tables are even more perverse. Insurance, the effect of health expenditures rising at twice the rate per which is usually envisaged as a mechanism for reducing annum as GDP. The bar diagram on the left depicts the risks has, by legislation, been forced to increase risk. The GDP visually as an index of 100 and the proportion of this uncertainty associated with illness over the next 20-30 devoted to health services. The bar on the right illustrates years is clearly much greater than the uncertainty associ- the effect upon resource use and availability in 40 years ated with the next 2 to 3 years. Those making a decision time if health services grow at 4 percent per annum and with a respect to the purchase of insurance are now faced GDP at half this rate. GDP would rise by a factor of 2.208. with greater anxiety and fear because of the longer deci- Health expenditures would increase from 10 to 22 percent sion period, and fear drives people to insurance. An of this. However, resources left for other expenditures Page 3 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 Th Figure 1 e magnitude of health and GDP 2009-2049 The magnitude of health and GDP 2009-2049. would increase by 90 percent. This is the simple arithme- of the GDP. But there is no economic or social reason why tic result of a larger magnitude (GDP) growing more in the composition should not change, especially if it absolute terms than a lesser magnitude (health) despite increases wellbeing. Historically, the economy has been rising less in percentage terms. The key message is rela- flexible. The agricultural sector, for example has tively insensitive to the numbers used in the example; viz, 'imploded' in percentage terms without adverse effects. it is almost inconceivable that rising health expenditures The service sector, including health, has expanded to our could significantly contribute to a reduction in the GDP/ advantage (and possibly to the benefit of the environ- capita. ment). Even the use of GDP/capita as a benchmark is largely a The Intergenerational Reports and Productivity Commis- product of history and intellectual inertia as the available sion have carried out analyses in which the loss of per- evidence shows no relationship between GDP/capita and spective results in serious disinformation [6,7]. Figure 2, individual wellbeing [4,5]. Policy, however, appears to be taken from the beginning of the 2007 Intergenerational driven by a fear of changes in the percentage composition Report and reproduced widely, encapsulates one of the Disinforma Figure 2 tion: Intergenerational Report 2007, budget deficit as % of GDP Disinformation: Intergenerational Report 2007, budget deficit as % of GDP. Source: [6]. Page 4 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 widely cited headline 'messages' from the report. This is cifically technological change. The result indicates that that the budget deficit as a percent of GDP will rise alarm- ageing effects have been absorbed into general expendi- ingly to the year 2046-47 and in a way that is directly ture growth. Historically, the inextricable link between attributable to increased health expenditures. The ageing and health expenditures as a percent of GDP increased government health expenditures are shown to implied by government reports and the press is simply exactly match the increased deficit. However the report disinformation. does not make clear - at least in its headlines - that its pro- jections are based upon the assumption that past trends The final assumption underlying these defective analyses will continue inflexibly and that taxation is pegged at the is that taxation will remain fixed as a percentage of GDP. level necessary to support service use in 2007. The Produc- Tax rates in Australia are amongst the lowest in the West- tivity Commission reaches similar headline conclusions ern World (Table 1) and could rise by 50 to 60 percent albeit with qualifications deep in the body of the report. before reaching the levels of countries whose rates of eco- The National Health and Hospitals Reform Commission nomic growth and standards of living have been unaf- has clearly accepted this message and warns that health fected by their higher tax rates. expenditures could so dominate State budgets that there would be no money left for roads or education [8]. Policy analysis may have been driven by bad arithmetic. A less benign interpretation is that economic advisors are In fact these results are entirely attributable to a set of presenting data to achieve a covert objective suggested by assumptions which are tenuous at best and wrong at bad neoclassical economic theory. There is an arcane worst. In the light of recent macro-economic experience belief in this discipline that additional taxation carries an economic prediction to the year 2046-47 should be 'excess burden' for human wellbeing. I have described it as undertaken only in satire. However four points should be arcane because there is no empirical evidence for this obvious: belief and the logic behind it is wrong. It assumes that with less tax people work harder and are thereby better off 1. The economic burden of health spending depends (or else why would they have worked harder?) The under- upon the rate of growth of GDP. lying assumption is that the undistorted balance between work, leisure and all other elements relevant for human 2. Ageing per se in the absence of new health technol- wellbeing is in an optimal state before the distortion of ogy but with economic growth would have a minimal marginal taxation. The assumptions behind this evidence- effect on the burden of health expenditures. Even with free belief are so absurd they will not be repeated here. zero GDP growth and no other changes age driven expenditure would rise between 1997 and 2051 from It is worth noting, however, that while the excess burden 7.5 to 11 percent of GDP [9]. 'doctrine' teaches that each dollar of tax has a dispropor- tionate cost, economic theory has not suggested a way of 3. Extrapolations are based upon assumptions. In the demonstrating the excess or deficit value of most of the present case the effect of ageing has been obtained by Government activity funded from these taxes. It is implic- adding technology driven trend health expenditures to itly assumed in the GDP accounts that health, education, the ageing effect, not by an ageing effect per se. How- law and defence contribute to wellbeing an amount equal ever, the impact of technology over a longer period of to their dollar cost (and therefore less than the 'cost' of time is far more difficult to predict than relatively inex- taxation). Transfer payments to the disadvantaged also do orable changes in the medium term population struc- not generate net benefits but only redistribute them as, ture. according to orthodox theory, we cannot compare the utility benefits of one person with another. Transfers may, 4. Technologies may be cost enhancing (as at present) however, distort work incentives and, for the same arcane or cost reducing (as with the introduction of antibiot- reason as above this is harmful. Consequently, and with- ics and possibly products arising from the present bio- out evidence, tax based transfers become a net cost. The tech revolution). Unlike population, technology can benefits must be treated on a dollar for dollar basis; the be regulated in such a way that increased expenditures taxes inflict more than a dollar for dollar cost when taken should be welcomed if the benefits exceed the costs. and given. This may help explain the clearly prejudicial attitude of many economists towards taxation. It does not To date the varying rates of population growth across justify their insinuating policy by stealth. Europe have been uncorrelated with expenditure growth. Figure 3 plots the actual growth for each country on the Hospital Queues vertical axis against the rate which would have resulted Queues or surpluses are difficult to avoid in the context of from ageing in the absence of any other influence and spe- a free service. Despite the understandable concern and Page 5 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 Cha Figure 3 nge in health expenditures compared with the change in age/sex predicted expenditures, 1960-95 (21 OCED countries) Change in health expenditures compared with the change in age/sex predicted expenditures, 1960-95 (21 OCED countries). Source: [9]. publicity, however, these should not be an important In the long term, however, queuing has little or noth- issue in the long term. Three brief comments are relevant ing to do with hospital efficiency. It is the outcome of here. the balance between supply and demand. There is, in principle, near universal agreement that realised 1. It is illustrative of one of the themes of this paper demand should reflect acceptable access to Medicare that policy options which are known, in principle, and admission for prescribed needs. Ultimately queu- cannot be put into action with any confidence because ing can only be altered by changing one of these vari- of the inadequate research into hospital and medical ables: that is, queuing must ultimately be regulated by behaviour, the inadequacy of information systems, changing effective access or supply and the latter can the lack of experimentation and the avoidance of sys- be set at a level which will create or remove unaccept- tem reforms designed to optimise the use of acute hos- able queues with or without hospital and system effi- pitals. ciency. There has been no long term research, to the author's knowledge, to determine the level of accepta- A partial solution to the problem, emphasised by gov- ble supply and access. Policy rhetoric emphasises ernment, is to increase hospital efficiency. Hospital deflectionary, albeit, important issues of efficiency. information systems, financial incentives and other internal reforms have a role to play of course. Hospital 2. However Australian Governments appear to be pri- pressures can also be reduced by rational step down marily concerned with eliminating monetary and not and step up policies, from expanded primary health true economic inefficiency. Extremely accurate budg- care and other low intensity facilities in conjunction etary data are collected. Virtually no data exist relating with appropriate admission and discharge policies. to the inefficiency inflicted upon patients in the form But system reforms and poor governance structures of suffering and disruption to their lives (as noted have inhibited experimentation and discouraged above). Similarly there has been minimal real interest development of these. in equity, evidenced by the fact that the public has not Page 6 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 been properly consulted. Recent research at the CHE technologies at the level of health service diffusion and [10] clearly demonstrates that, in the health sector at delivery. While Australia pioneered the economic evalua- least, there is an overwhelming concern with fairness tion of drugs, and the use of products and devices, and and sharing and relatively little interest in monetary technologies must be approved by the TGA, the overall efficiency, even when this is expressed in terms of research effort in this area is dispersed, uncoordinated and maximising the number of life years gained from a reactive and appears to have little error learning capacity. budget. Indeed, the research indicates that the general There is insufficient national capacity to evaluate old ther- community would sacrifice 1/3 of life years which apies retrospectively or to monitor outcomes. The data for could be allocated to people in order to achieve equi- this is collected, but is not used. table sharing. This strongly suggests that the policy of minimising expenditure - extracting an annual pro- Long term, there is an urgent need to install the capacity ductivity bonus and 'letting health departments cope' to proactively seek new technologies and to ensure (or - strongly conflicts with the preferences of the popula- block) their diffusion and use as quickly as possible. To tion. 'Inefficiency' in the form of greater tax financed fail to do so is to reduce population health. But the issue expenditure would clearly be preferred to the inequity has never been on the political radar. of non treatment. In view of the evidence that there is no change in subjective wellbeing as GDP rises, [4,11] Equity policies involving increased taxes and spending in Medibank and Medicare were established to achieve equi- areas of demonstrated public concern should be wel- table access to hospital and medical services. They comed. achieved this in one respect only, namely the extension of financial insurance to the 15 percent of the population 3. The past government's most publicised solution to who had not purchased it privately prior to Medibank. queuing - incentives for individuals to purchase PHI Apart from this small (albeit important) improvement the and private hospital care to 'take pressure off public achievement of equity has remained very largely at the hospitals' was, at best, evidence free avoidance of the rhetorical level. Using the first universal database from problem, but more consistent with a policy of appeas- Medibank Richardson and Deeble found that the use of ing the interests associate with PHI. It has been known both GP's and Specialists in Sydney in 1976 were both for at least a decade that queuing has been associated (coincidentally) 4.6 times greater than in Darwin after with supply side constraints, not uncontrollable adjusting for age and sex. Discrepancies between statisti- demand. This is exacerbated, not ameliorated, by the cal divisions were much greater [16]. Studies by the author transfer of medical staff to private hospital facilities 25 years later found similar discrepancies in the use of where they are likely to provide more, not less, inten- procedures across Victoria and huge differences in the use sive servicing for the same condition promoted by fee of new technologies in the public and private sectors for service and PHI [12-14]. The ability of government [17,18]. to base its policy for so long upon public disinforma- tion attests the lamentable state of public and journal- The response to the obvious inequities between urban istic understanding of even the simplest relationships and rural areas in Australia may best be described as 'dab in the health sector and the relevant magnitudes. policies'. There has been little serious attempt to equalise access. The issue, however, has not been near the top of Relatively Neglected Issues the public agenda and possibly because information Technologies about inequities is not routinely documented and distrib- New technology has been the great driver of human wel- uted throughout the community. Indeed, from the fare generally and new technologies have dominated and author's experience, it is possible that the non provision will continue to dominate both the costs and the benefits of information which has reinforced this complacency of health services. While face to face consultations per cap- may have been promoted by public authorities (see Addi- ita fell 6 percent in the 12 years to 2007/08 diagnostic and tional file 2). procedural services rose by 62 and 32 percent per person respectively and the overnight separation rate per 1,000 Another dimension of inequity relates to the adequacy of for acute services rose to a level 27 percent above the rate insurance coverage by type of medical service. As shown in the USA, 20 percent above the rate in the older UK pop- in Table 2, insurance coverage by Medicare is highly ulation and 66.7 percent above the rate in the comparable erratic reflecting the historical influence of the profes- Canadian population [15]. Lack of research prevents us sional groups benefiting from the insurance (default free from judging whether these large magnitude differences funding). Hospital services, the most expensive form of indicate a strength or a weakness in the Australian system. care, are almost fully insured and consequently, cheapest Despite this, lamentably small attention is given to health to use. Medicines are very poorly insured despite the fact Page 7 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 that the longevity of Australians is probably attributable, Quality and Safety in large part to the widespread availability and use of anti- The issue of adverse events in the Australian health system hypertensive drugs. But for many people at risk of CVD should dominate all others. However it will be closer to these are 'outside Medicare' - there is no subsidy. For the truth to describe it as Australia's best kept secret. In example, with an average price to patients of $15.11 per 1995 the 'Quality in Australian Health Care' (QAHCS) script in 2009 [19] people without a health care card study uncovered an appalling iceberg of avoidable adverse would pay the full price of the antihypertensive drug Aten- events including large scale unnecessary death. Following oll, the sixth largest volume PBS drug dispensed and those publication, virtually nothing effective occurred on a scale with a card face a 30 percent copayment which, evidence commensurate with the problem. Ten years later an edito- suggests, will impact disproportionately upon low indi- rial in the MJA reflected upon this as follows: vidual incomes as there is no immediate symptom relief [20]. Possibly the most cost effective therapy in the health 'Based on QAHCS outcomes 25 patients die each day system is effectively excluded from Medicare for the in our hospitals from preventable adverse events... we majority of the population and the disadvantaged pay have had report after report... we still have no nation- large copayments. Of all cardiovascular drugs on the PBS ally accepted framework for clinical governance to 15.8 percent receive no subsidy and an unknown number assure the safety and quality of Australian health serv- a very low subsidy [19]. There is no stated rationale for ices... This ongoing vacuum is an indictment of our discriminating against the loss of quality of life associated Health Ministers and organised medicine' [21]. with vision and teeth. Yet the relevant services are also largely uninsured. It appears that following publication the Health Minister of the day accepted the report as being methodologically The apparent (default) explanation is policy inertia, the sound and of great importance. However the representa- failure to review the system; or by an overriding year by tives of organised medicine pronounced it, without evi- year concern with the government budget. There are no dence, to be incorrect. Following a change in Government data to properly document the suffering this causes. shortly thereafter, the new Health Minister accepted this evidence free conclusion. The study was not repeated to There is no reason why regular reports should not be determine validity nor was there an urgent review of safety made available regarding access to and use of services by but simply a series of reports. The cumulative effect of groups differing geographically, socially, racially and by these was summed up, somewhat despairingly in 2006, by disease category. The data exist, but are not published. the persons initially placed in charge of the reform process Data should also exist documenting the needless suffering in the following way: which results from the exclusion of services. Explicit com- parisons of groups would sensitise the community and 'One might assume that systematic improvements possibly force policies that promote equity. It is possible within the health system are either happening or, at to surmise that it is precisely for this reason that such least, well advanced. Regrettable, improvements are information is not produced. still patchy. The greatest challenge for all remains how to achieve universal and systematic changes to the health system within a federated system' [22]. In 2009, the 'Report to Support Australia's First (sic) Table 2: Patient out-of-pocket payments 2005/06 National Primary Health Care Strategy noted that 'there is currently very little information about the quality of care % of cost provided in primary health care... the (US based) Com- Hospital 2.2 monwealth Fund survey... found (20 percent) of patients reported experiencing a medical, medicinal or laboratory Medical 11.3 error [23]. By the end of 2009 it was possible for Healy and Dugdale [24] to write 'realisation is dawning that Dental 67.9 medical errors are common events' - more than one and a half decades after results from QAHCS became available. Medicines 45.9 The term 'adverse event' is referred to in only four para- Aids/Appliances 74.1 graphs of the National Health and Hospitals Reform Commission final report. Total 17.7 Source: [3] Page 8 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 The size of the problem which has been ignored is simply Discussion astonishing. If the death rates estimated by the QAHCS Principles for dynamic adaptation A common feature of recommended reforms has been are correct then the number of Australians unnecessarily dying is approximately equivalent to a jumbo jet crashing what might be described as 'static optimality': A series of every 2 weeks each resulting in the deaths of 350 Austral- one-off recommendations are made for the achievement ians. Alternatively, it is equivalent to a repetition of the of the optimal health system. The author has contributed Bali bombing every 4 days. The cumulative unnecessary to this literature [14]. Many of the principles suggested deaths since the publication of the QAHCS report would are, of course, sound (particularly in the latter reference!) exceed the number of Australians killed in World War 1. In the optimal system there would be a single purchaser of all services for defined populations. The present irrational, We can only speculate on the reasons why Australian geographic, service-based and disease-based boundaries authorities have failed in their most fundamental duty of would be eliminated. Many or possibly all of the perform- protecting the lives of their citizens. One possibility is that ance indicators listed in the NHHRC's April Report would the magnitudes involved are simply too large for people be initially adopted [25]. to believe. (Indeed, it may even seem a little shrill to men- tion such melodramatic facts!) Human beings form clear Below I focus upon a dimension of reform which is sel- expectations concerning the way in which the world they dom considered but, in the light of the previous discus- experience operates. As John Maynard Keynes famously sion, would appear to be of greatest importance. The focus commented in the last paragraph of his 'General Theory', is a response to repeated failures; the failure to adequately after the age of 26-30 most find it very difficult to change respond to information when it is available - adverse these patterns. Australians, their politicians and the med- events and, evolving technologies; failure to investigate or ical profession have so long regarded the health system as address issues of stated importance - inequity; failure to being safe and amongst the best in the world that results seek out the nature of health system related social objec- from the QAHCS may simply have been dismissed as tives; failure to match policy priorities with the magnitude absurd, ie conflicting too radically with established pat- of the problem and failure to invest in the system naviga- terns of belief. The authorities who endorse or bury such tion equipment necessary for planning the future and research are well beyond the age of 30. The author's per- responding flexibly to error. sonal experience in attempting to publicise this report is consistent with this hypothesis (see Additional file 3). Repeating an earlier theme, the economic (and other) his- th Nevertheless a prudent government would have repeated tory of the 20 Century has been dominated by technol- the study to disconfirm it. ogy, innovation and uncertainty - elements for which economics has failed to provide either explanation or An alternative explanation is that policy makers, like oth- guidance. This is reflected in the health economics debate ers, are more responsive to sensational media reports than over optimal health systems which, apart from innovation correctly collected evidence. Cynically, they may only be of the moment, have largely ignored the implications of concerned with the lives of Australians that have been these three dominating themes for system reform. While identified and politicised by the press. More probably, market capitalism self evidently requires regulation and however, individuals in governments and bureaucracies the market model is manifestly unsuitable for the health (like others) are likely to have focussed only upon their sector, the history of capitalism in the 20th Century pro- defined area of responsibility and our governance struc- vides one important insight. The market provides a flexi- tures have not assigned responsibility for this situation to ble, adaptive and creative mechanism for allocating anyone and lack the flexibility to error learn and act deci- resources. The experience of the last 100 years, reviewed sively, at least in the health sector. comprehensively by Beinhocker [26], suggests the follow- ing principles: The National Health and Hospitals Reform Commission did acknowledge the existence of adverse events in muted • Monopolies, however creative initially, have gener- terms and, chillingly, stated that there is a need for 'culture ally evolved into conservative organisations which change'. This same phrase was used over a decade earlier commonly fail, a point clearly articulated by Prime and appears to be code for 'postpone the problem for a Minister Kevin Rudd, in the context of homeland secu- generation/leave it to the medical profession, to put their rity, when he endorsed the view that 'big departments th house in order - as they failed to do in the 20 Century'. risk becoming less accountable, less agile, less adapta- ble and more inward looking' [27]. � Corporations which do not 'reinvent themselves' regularly have a limited life time. Most firms fail after Page 9 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 a period of initial creativity and success. The US auto- the reality of equality. More substantively, when suc- mobile industry is a dramatic example; cessful elements of a sub-national health system are identified by a national authority they can be man- � The engine of progress is often small, innovative dated for the other health systems. It is doubtful that enterprise with an idea which has not or cannot be many would openly defend the structural pretence of implemented by the larger monopoly/corporation. equity for the reality of better health especially as both (The most spectacular recent example is Microsoft's goals can be currently improved. takeover from IBM of the market for desktop comput- ing); In this context Canada's leading health economist Bob Evans comments that: � Growing bureaucracy and overemphasis on due processes are often the reasons why larger 'non-rein- 'A particularly interesting feature of the Spanish (expe- venting' corporations loose the innovative advantage rience) is the way in which devolution of political (a generalisation again illustrated by the history of authority to sub-national governments served - against Microsoft and IBM); and conventional wisdom - to open a democratic window, advancing and securing the universal system in the � Organisations which have survived, innovated and face of ambivalence (at best) at the national level. 'reinvented themselves', have invested heavily in tech- (Canada provides a similar example)' [30]. nology and market research - their industrial 'naviga- tion equipment'. 2. Innovation should be 'ongoing' not simply the 'dab innovation' which characterises the present manage- The reform of the Australian health system should be ment, but should involve significant and sustained informed by this experience. The reform process should experimentation. As in every other industry this costs be driven to a significant extent, by the need to achieve money. The expectation that the Coordinated Care dynamic adaptability through time and, in particular, by Trials commenced in 1995 - by Australian standards, error learning. None of the reform proposals of which the more a 'splash' than a 'dab' - would achieve rapid cost author is aware, including those of the NHHRC, have saving without the outlay of significant expenditures emphasised this need. The 'buzz words' are scattered lib- was as naive as the expectation by a manufacturer that erally throughout rhetorical passages, but proposals do a new and profitable mode of production might not show how these translate into policy. Uniquely, the evolve without any venture capital. advantages of dynamic adaptability are implicit in the Scotton-Enthoven proposals for Managed Competition 3. Innovation should be informed by the careful although, as elsewhere, Scotton emphasises the static observation of success overseas, something which has properties of the model [28,29]. seldom occurred in Australia (the chief exception being the imitation of elements of Canadian Medicare The experience summarised above suggests that the fol- by Medibank in 1994). Despite evidence for over 30 lowing principles should be considered in the reconstruc- years that the US Kaiser Permanente Corporation has tion of the health system, in addition to the principles for operated highly successful, cost effective, integrated static optimality. clinics and more recent evidence from the reform of the Veterans Health Service there has been no attempt 1. No part of the Australian health system including to seriously study or experiment with their experience. the funding of research should be subject to monop- New Zealand's innovations have likewise been oly control. The simplest way of achieving this is to ignored. The inward looking nature of Australian pol- base an integrated health system upon a sub-national icy is epitomised by the failure of the PBAC to look at unit, either the state health regions or, possibly, fund- the international market price of drugs when negotiat- holding unit as envisaged in the model of Managed ing with pharmaceutical companies and this has Competition. These units should have a significant resulted in examples of extraordinary over payment degree of autonomy in the way in which they allocate [31]. This is as irrational as a corporation negotiating resources. As in the market, diversity maximises the in a market in terms of the data provided to it by an chance of successful innovation and improvement. interested party and ignoring the known prices else- where in the market. The counterargument that differences imply inequity is simply hypocritical. There has been no sustained 4. The above principles cannot be implemented with- concern with equity and, as evidenced by their support out investment in 'industry navigation equipment'. It for PHI, Australians are not particularly interested in is likely that no other industry in Australia spends as Page 10 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 little, proportionately, on the marketing, delivery and innovations. Significantly, as discussed later, this adaption of their product to customer (social) needs group was statutorily independent from government. as occurs in the health sector despite the fact that the industry is almost certainly the most complex and Governance Principles important for future wellbeing. The fact that this One example of the allocation of responsibilities based appears to be true in other countries does not lessen upon (but differing in emphasis from) a modified Scotton the consequences of this. There has been a failure to model which satisfies many of these requirements is sum- invest in health services research on anything much marised below along with a broad implementation time- more than a symbolic level and then without serious table [28,29]. (It is contrasted with Medicare Select later.) strategy or plan. While having one of the best data sys- De-politicising health tems in the world, it is largely unused in terms of its real potential for management and evaluation. Semi-autonomous commissions should be established at Research is largely conducted on an ad hoc, or 'on either the State or regional levels responsible for the pur- demand' basis, by health departments for specific pur- chase of all hospital and ambulatory including dental and poses and commonly results in confidential reports. ophthalmological services. The commission should be There is a dearth of creative ideas flowing through to directed by a board including representatives of the Com- the level of creative planning. monwealth, State and major providers of services and be able to innovate in both the form of purchasing and the The last serious proposal for comprehensive, coherent physical organisation of delivery. reform - the Scotton plan - died at least in part because of the failure to create a new generation of health The reform process economists capable of developing such or similar This should be driven by an independent commission plans and carrying out the prerequisite technical anal- which might itself evolve into a statutorily independent ysis as has been ongoing in the USA, the Netherlands body, analogous to the Reserve Bank, for the permanent and elsewhere. Perhaps with the wisdom of hindsight over-viewing of the health system. The body should not it is likely that the existence of serious navigation be dominated by 'insiders': health professionals, mem- equipment in the field of new technology would have bers of the government health bureaucracy or persons suggested such extreme uncertainty with respect to associated with government. (It is too easy for a culture to workforce requirements that a much greater emphasis develop in which common but contestable assumptions would have been given to the training of a flexible become universally accepted. Paraphrasing Donald workforce capable of varying its level of performance Rumsfeld, in the Health Sector 'stuff happens' (cf adverse in accordance with the emergence of new technology events); needed change will be implemented by the driven needs. responsible department and so on.) The Commission's charter, but not its operation, should, of course, be deter- 5. Since the introduction of Medicare in 1994 there mined politically (see BCA submission to the NHHRC has been bipartisan political support for the disregard [32]). Like the Reserve Bank it should have very significant of serious and well publicised deficiencies in the gov- research capacity, for example, incorporating an institute ernance of the health sector as well as those discussed as described below. above (Additional file 4). The hypothesis which appears best able to explain this is that at the govern- Regulation and monitoring ment level an increasingly important principle is to The Commonwealth should mandate a minimum pack- not create problems for government through reforms age of services and monitor access to these services with which will result in organised opposition from power- penalties for violation of the principles. However there ful interest groups and only benefit those (the public) should be capacity for difference and experimentation. who are largely unaware of the benefits that they might receive. If this hypothesis is correct and likely to Funding characterise future political motivation, then an Pooled government revenues should be based upon a pre- important governance principle is to establish a long determined formula with shares unrelated to any element term structure which is one stage removed from gov- of delivery. The needs adjusted per capita allocation to the ernment with government only responsible for broad purchasing authority, determined by the Commonwealth, policy and funding. The most concerted but largely should be phased in to replace the status quo. The for- unsuccessful attempt to significantly improve coordi- mula determining the government shares of the funding is nation within the present system was made by the irrelevant for system performance. Hospital and Health Services Commission, HHSC, (1973-1976) along with a number of other suggested Page 11 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 Service provision Ad hoc research Initially, as at present, States should run State hospitals It is highly desirable that issues of current public or polit- and the private sector run medical, dental, other ambula- ical interest should be satisfactorily researched and not be tory and pharmaceutical services. The Commonwealth the subject of disinformation and unsubstantiated spin. should be responsible for negotiating certain prices such The institute should have a capacity to conduct research as pharmaceuticals and the rebate for fee for service med- on the request of a Minister and on its own initiative. It ical services because of the lack of market power by sub- should have the task of proactively providing relevant national units. information to members of the media who are perceived to be providing factually incorrect information to the pub- Private Health Insurance lic. This should initially be unchanged except for the removal of the surcharge and phasing out of life time tables (effi- Blue sky research ciency measures). The subsidy should initially be main- There should be a capacity to either conduct or promote tained. However research is needed to determine the true additional research of a more long term or exploratory effect of PHI on the availability of health services to Medi- nature. care patients and the size of the subsidy should be deter- mined in the light of this and further research into HSR workforce population preferences with respect to a multi-tier health The institute should be responsible for monitoring and system. recommending measures to ensure a satisfactory health service research workforce. With current 'dab' funding of Navigation Equipment HSR there is no career path for health economics and At least one, and on the principle of non-monopoly, pref- unsurprisingly an almost complete dearth of research into erably more statutorily independent institutes should be health systems. Part of an institute's function should be created similar to but independent from the AIHW. They the training of such a workforce via cadetships in its should have the following functions: research divisions in conjunction with relevant university and government departments. Quality monitoring and assurance The institute should have powers to acquire and require Data information and to conduct onsite investigation. It The institute should have a statutory right to all relevant should be required to carry out ongoing international col- administrative and other data collected by the AIHW but lation of techniques for quality assurance and to translate also data which is not collected by the AIHW such as that these techniques into a form compatible with the Austral- monopolised by the current Commonwealth Department ian system. of Health and Ageing. Information diffusion In 1973 the Whitlam government created an institute sim- Comprehensive data provision on issues of access and ilar to the one described here. The Hospital and Health equity, including hospital specific queues by procedure Services Commission (H&HSC) was statutorily independ- should be made available on the web. ent and had the ability to analyse, plan, publish, intro- duce research and recommend policy. It initiated a data Technology and innovation based approach to policy development which resulted in The institute should proactively seek out new technolo- the establishment of the Community Health Program gies (preferably in conjunction with the relevant medical which included programs for family medicine, hospital colleges) and refer them to the relevant technology assess- development and initiatives with respect to diagnostic ment group for possible inclusion in Medicare. and rehabilitation services, Aboriginal and rural health, health transportation, Aboriginal and rural health and the Results of routine health services research and statutorily health workforce [33]. It differed from the present pro- determined information should be regularly provided to posal in two important respects. First, it relied upon exist- the public regarding the level of disaggregated service use ing institutions to obtain data. Secondly, it was largely and the (standardised) quality of different provider concerned with the formulation and recommendation of groups. policy. Ideas for innovation These differences may have proved lethal for its longevity The institute should monitor 'good ideas' which have suc- as the Commission was disbanded with the change of ceeded in other countries and proactively provide these to government in November 1975 [34]. It is for this reason appropriate bodies throughout the health system. that the present suggestion is for an institute which cannot Page 12 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 be seen as political through its advocacy of policies which these policies could prevent 'hundreds of thousands of may become or already have become politically aligned. Australians dying prematurely or falling ill and suffering Since Australia spends about $100,000 million on health between now and 2020'. But the barriers to these policies services there is, however, a strong case for (at least) two are even larger than those which have blocked serious institutes: one concerned with information and its dis- health sector reform, albeit being of the same political ori- semination and one with options formulation and advo- gin. cacy along the lines of the H&HSC. In the context of health sector reform, the most significant Timetable document was the final report of the National Health and With the exception of the creation of one or more insti- Hospital Reform Commission (NHHRC) 'A Healthier tutes for health services research and evaluation most of Future for all Australians' [37]. The report is structurally the suggested functions, or variants of them, could be elegant. It focuses upon health and its achievement in a achieved relatively quickly as they involve governance and social context as distinct from the services and financial financial flows rather than the creation of new physical flows which dominate most proposals for system reform. infrastructure. Initially the public would feel little effect. The report is structured according to important and piv- otal principles - connecting care, care at different life Subsequently, the form of delivery might change substan- stages, rural, mental health etc, inequalities and quality. tially as the area based commissions responsible for pur- However, none of the resulting sub-principles, excellent chasing services experimented with new methods of though many of them may be, are likely to become delivery (such as Kaiser-like clinics for integrated care). An embedded in the system unless the governance structure additional option would be a movement towards Man- determining regulation and incentives is appropriate and aged Competition as private health funds or other groups in this respect the report is deeply disappointing. Its dis- negotiated a 'carve out' for a voluntary group. Such a task cussion of governance is almost completely absent. In one would involve research into the determination of risk of the second round submissions Andrew Podger notes related premiums and likely effects upon cost and equity. that: (Recent evidence from the Netherland's experiment with Managed Competition suggests that this option might 'Governance is important. It is not a separate issue result in inequalities unacceptable even to the unegalitar- from practical measures aimed to improve service ian Australian public.) Evans [30] notes that from 1995 to delivery and health outcomes. It is the means by 2002 fund specific extra premiums (above needs-based which the Australian community can be sure that the capitation payments) rose from 3 percent to over 50 per- health system is delivering what it is there for. Moreo- cent suggesting significant quality differences between ver, current governance arrangements are contributing schemes. This again illustrates the need for reform based directly to current weaknesses in the quality, effective- upon careful research and modelling of the impact of dif- ness and efficiency of the Australian health system.' ferent regulatory structures. An indicative timetable is [38] reproduced in Additional file 5. The Commission's response was to use this quotation to The National Health and Hospitals Reform Commission head Chapter 6 and then provide less argument for their (NHHRC) recommendations with respect to governance than in the In 2009 several major reports were presented to the gov- interim report where it represented one page for each of ernment. First, a report to Support Australia's First three options under review. National Primary Health Care Policy conducted a detailed review of issues and options for the reform of Primary The focus of the Commission's report also has no overlap Health Care (PHC). The focus of this and the accompany- with the areas of concern discussed in this paper. This is ing draft report was primary services delivered by GPs, unsurprising. The present paper highlights errors and fail- nurses, allied health providers, Aboriginal health practi- ures and then sketches a governance system based upon tioners and pharmacists. Consistent with the problems the principle of error learning. The NHHRC, while noting identified in this paper the key elements included access, most of the relevant issues somewhere, does not seriously coordination, safety and information [23,35]. analyse past failures. It never considers the question why major problems and reforms, known and needed for dec- Next, in an impressive, evidence based report the National ades, have been ignored and what structural changes are Preventative Health Taskforce released its strategy docu- necessary to guard against a perpetuation of this problem. ment recommending policies which would, without doubt alter the unhealthy trajectory of Australian society As with all other proposals Australians would depend [36]. It is almost certainly correct in its assessment that upon the wisdom and benevolence of monopoly bureau- Page 13 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 crats for the monitoring and implementation of reform; on the one hand, from implementation and innovation that is error learning and dynamic adaptation would on the other. depend upon the same flawed mechanism as at present, namely a department largely driven by short term minis- The role of government, more generally, has been the sin- terial concerns and with significant monopoly control gle largest theme in the discipline of economics since over information, research, venture capital and with pow- Adam Smith highlighted its potential shortcomings, and erful personal and institutional incentives for the suppres- the largest single theme in the economic health policy sion of the information which drives reform, namely debate since the introduction of the UK NHS. However information concerning failures and errors. there is no echo of this in the NHHRC report. Australian government and governance are implicitly unproblemati- This casts some doubt upon the wisdom of the structure cal, dynamic and wise. The problems discussed by Donald of the report. Because 'connecting care', care at different Horne in the 'Lucky Country' have dissolved with time life stages, etc are important, it does not follow that they [39]. should have determined the structure of the report. Anal- ogously, while the quality of life, not radiotherapy, may In the governance structure outlined earlier in this paper be the endpoint of cancer services, a report into these serv- the answer to the question 'who guards the guardian' is ices should not necessarily make quality of life the struc- firstly the Commonwealth regulatory bodies and, sec- tural focus if the core problem is an absence of ondly, a statutorily independent body which, like the radiotherapy services. The report should focus upon the Reserve Bank, has supervisory and regulatory power but cause, not consequences of the problem. The integrity of no direct responsibility for service delivery. In the Com- the report depends upon a correct diagnosis of the core mission's governance structure there is no guardian of the problem and not a description, however accurate, of the Commonwealth authorities except the Minister and Par- downstream problems arising from them. liament and it is their impotence on large scale reform which has been the chief problem to date. The NHHRC documents so many - probably correct - downstream problems or potential improvements and so The needed governance structure should pre-commit gov- many elements of the current system are acknowledged as ernment to certain courses of action and ease the political sub-optimal that perspective on the problems is easily pain of desirable policy. Analogously, the Reserve Bank lost; and it appears to be lost in the report. For example, may increase interest rates despite short term popular in the draft report, the Quality of Australian Health Care opposition. Study (QAHCS), discussed earlier, is viewed as evidence that 'admission to hospital is not without risk' (p 133). These considerations suggest that the NHHRC's chief rec- This is analogous to acknowledging that 'the Sahara ommendations with respect to governance are seriously Desert has dry bits'. An alternative perspective is that the wrong. After a transitionary phase of hospital cost sharing QAHCS revealed the greatest non-military, avoidable (once believed to be inflationary) they would enshrine a calamity in Australia's history and that in another context Commonwealth monopoly. The depth of analysis sup- - say, product safety or occupational health and safety - porting this recommendation in the report, however, is the subsequent disregard of evidence of widespread death simply lamentable. It argues that '... we heard from many and injury would have led to criminal prosecution. But consumers and health professionals - a desire for one the potential lessons of this astonishing episode of Aus- health system' (p 147). But the problem documented in tralia's health history are lost in a sea of largely unfocused Additional file 4 here is the lack of coordination arising detail. In the final report it is simply noted that adverse from multiple funding sources for the services available to events can 'cause harm to a person receiving health care... any one individual - integration of primary health and such events cause patients distress and suffering, (and) hospital care, step down facilities, etc. This implies the compromise operational efficiency...' (p 55). need for a single fund holder for an individual not a single fund holder for all Australia. The case against diversity and The chief lesson which should have been learned from the experimentation in PHC is simply asserted, 'Our recom- QAHCS and the other failures documented here is that mendations for ... a transformed comprehensive primary government answerable departments - increasingly dedi- health care platform ...require one government - the Com- cated to the short term ministerial task of appeasing polit- monwealth Government - to be responsible -... thus we ically effective groups - are capable of major failures and recommend that the Commonwealth Government are increasingly questionable bodies for the short, or even assumes full responsibility for Primary Health Care Serv- medium term, direction of the health system. There is a ices' (p 148). The argument for economies of scale is need for the separation of policy and system monitoring untrue and the difficulty tracking border crossing over- looks developments in data processing technology in the Page 14 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 last few decades. The Commission argues against regional The relative self satisfaction with the Australian system health authorities because 'there are dangers of 'balkonis- largely arises from a widespread ignorance of the issues ing' health services, with people's access to care deter- discussed here and possibly from crediting the good mined by the region they live in' (p 154). The health of Australians to the institutional and governance Commissioners do not use irony elsewhere in the report. arrangements which emerged historically as a result of self-interest, pragmatism and genuine idealism and which In the context of these proposals there is no discussion of are now described, misleadingly, as 'a system'. The exist- regulatory or system incentives for innovation. Almost as ence of similar problems in other countries does not rep- an afterthought, however, the Commission does appear to resent evidence of Australia's success but, more probably, recognise some of the problems inherent in a monopoly of similar histories of defective governance. Bad ideas and and recommends 'Medicare Select' as a longer term gov- bad practices have also been globalised and health system ernance model. This is a less developed version of Man- planning and reform has commonly been delegated to aged Competition than the model advocated by Scotton interested parties, namely the medical profession, which [40]. It represents an almost complete negation of the is generally untrained in system science, and public health arguments for a monopoly. Concern with 'cost and bureaucracies steeped in the immovable imperatives of bureaucracy' dissolve and 'innovative approaches to fund- the status quo. However the good health of most Austral- ing' are advocated (p 158). These must equate with ians cannot justify system satisfaction as its cause is not employee contributions (one of the most poisonous ele- well understood (deficient research) and as suggested ear- ments of the US system) or private contributions favour- lier, is probably more attributable to the widespread use ing the wealthy and copayments (disadvantaging the of a limited number of effective therapies and effective poor). The concerns discussed above are not mentioned. public health measures than to the (dis)organisation of curative services. As 'the devil is often in the detail' Scotton never envisaged his suggestions as being an implementation plan or one By design and not by default, reform has been incremental which could be fully evaluated on the basis of his broad where the increments have been tiny, timid and some- description. There is no devil in the NHHRC option as times backwards (eg PHI legislation). While it is true that there is no detail for it to be in. There is no possibility of we are, in large part, prisoners of history this perspective Medicare Select being endorsed, as proposed, and its only can be overstated and the consequences of this rationali- contribution to the report is that it allows the Commis- sation of inertia extremely deleterious to the wellbeing of sion to encourage the government to reconsider govern- the population. There can be little doubt that major prob- ance. lems with the system have simply been ignored and that this is not attributable to history but to a lack of dyna- mism, itself attributable in large part to the monopoly Conclusion Andrew Podger reports that in his capacity of Secretary to control over serious system reform by a politicised the Health Minister, he would suggest a major review of bureaucracy. the health system 'almost every other year'. He (the Min- ister) would respond that articulating clearly the long It has been argued here that the approaches to reform term direction was as dangerous as "'big bang" reform' implemented and discussed in Australia have largely [41]. missed these dimensions of the problem. Proposals are 'static'. Once achieved the health system will be optimal. The goal of evidence based policy at the system level Wise, centralised bodies will identify and implement appears as far away today as evidence based medicine in needed change without the need for too much evidence or th the 19 Century and the quotation above indicates a fun- ongoing experimentation. This approach is reflected in damental reason for this. It suggests an obvious conclu- the NHHRC report [25]. Recommendations are listed but sion. While elements of the ideal health system are they arise from nowhere and in terms of implementation necessarily political - for example the right of people to strategies lead nowhere. It is implicitly assumed that with buy better access to better quality care - measures should the slightly clarified governance structure, which is recom- be taken which de-politicise reform or at least reduce the mended, we should trust the bureaucracy to achieve these political cost of it. The suggestion here is that this be targets. No broader thinking is revealed in the report. But achieved by the dissemination of accurate information historically the bureaucracy has comprehensively failed to about current performance and future options and by the reform important elements of Australia's health system or implementation and regulation of policy by de-politicised even to ensure that the health system is safe. More gener- bodies. ally the NHHRC failed to recognise any of the key themes discussed here and, in contrast, recommended the rein- forcement of the single most harmful element in the sys- Page 15 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 tem, the monopolisation of the entire country's health Additional file 5 system by a single body. Belief in the flexibility, benevo- Timetable to a (yet unproven) Managed Competition (NHHRC lence and wisdom of monopolies in either the public or Option 3) [43-48]. th private sectors simply misses the major lesson of the 20 Click here for file Century. [http://www.biomedcentral.com/content/supplementary/1743- 8462-6-27-S5.DOC] In view of the overwhelming evidence from outside the health system that progress depends upon the 'reinven- tion' of organisations from time to time, the final conclu- sion here is that the health sector, which represents the Acknowledgements The research described in this paper was supported by National Health and most expensive industry in the country - 10 percent of the Medical Research Council (NHMRC) Senior Professorial Research Fellow- national use of its resources - and a major potential source ship ID: 284363. of future wellbeing, requires a comprehensive, long term and long overdue review of all aspects of its operation. 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Department of Health and Ageing: Building a 21st Century Primary Health Care System, A Draft of Australia's First National Primary Health Care Strategy Canberra: Australian Government; 2009. 36. National Preventative Health Taskforce: Australia: The Healthiest Country by 2020. National Preventative Health Strategy - the roadmap for action. Canberra: Australian Government; 2009. 37. National Health and Hospitals Reform Commission (NHHRC): A Healthier Future for all Australians: Final Report June. 2009 [http://www.nhhrc.org.au/internet/nhhrc/publishing.nsf/Content/ nhhrc-report]. Accessed August 2009 38. Podger A: Submsision 292 to the National Health and Hospi- tal Reform Commision Interim Report Second Round Sub- missions. Canberra Common wealth Dept of Health and Ageing, Ageing CDoHa; 2009. 39. Horne D: The Lucky Country: Australia in the Sixties Melbourne: Penguin Books; 1964. 40. Productivity Commission: Managed Competition in Health Care. Workshop Proceedings; Canberra. AusInfo 2002. 41. Podger A: A Model Health System for Australia Inaugral Menzies Health Policy Lecture; 2006. 42. Tiffen R, Gittins R: How Australia Compares Cambridge: Cambridge University Press; 2004. Publish with Bio Med Central and every 43. Richardson J: Reducing the incidence of adverse events: scientist can read your work free of charge Results from a modified Delphi technique. Australia and New Zealand Health Policy 2008, 5:. "BioMed Central will be the most significant development for 44. National Health Strategy: The Australian Jigsaw: Integration of disseminating the results of biomedical researc h in our lifetime." Health Care Delivery, Issues Paper No 1 July 1991. Canberra: Sir Paul Nurse, Cancer Research UK Department of Health, Housing and Community Services; 1991. 45. Senate Community Affairs References Committee: Healing our Your research papers will be: Hospitals: Report on Public Hospital Funding. Parliament of available free of charge to the entire biomedical community Australia; 2000. 46. (The) Allen Consulting Group: Governments Working peer reviewed and published immediately upon acceptance Together: A Better Future for all Australians. 2004. cited in PubMed and archived on PubMed Central 47. Productivity Commission: Australia's Health Workforce, Research Report. Canberra: Productivity Commission; 2005. yours — you keep the copyright 48. Richardson J: Financing Health Care: Short Run Problems, Long Run BioMedcentral Options. Paper presented to the Health Reform Forum, Melbourne Business Submit your manuscript here: http://www.biomedcentral.com/info/publishing_adv.asp Page 17 of 17 (page number not for citation purposes) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australia and New Zealand Health Policy Springer Journals

Steering without navigation equipment: the lamentable state of Australian health policy reform

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Springer Journals
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Copyright © 2009 by Richardson; licensee BioMed Central Ltd.
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Medicine & Public Health; Public Health; Social Policy
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1743-8462
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1743-8462
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10.1186/1743-8462-6-27
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19948044
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Abstract

Background: Commentary on health policy reform in Australia often commences with an unstated logical error: Australians' health is good, therefore the Australian Health System is good. This possibly explains the disconnect between the options discussed, the areas needing reform and the generally self-congratulatory tone of the discussion: a good system needs (relatively) minor improvement. Results: This paper comments on some issues of particular concern to Australian health policy makers and some areas needing urgent reform. The two sets of issues do not overlap. It is suggested that there are two fundamental reasons for this. The first is the failure to develop governance structures which promote the identification and resolution of problems according to their importance. The second and related failure is the failure to equip the health services industry with satisfactory navigation equipment - independent research capacity, independent reporting and evaluation - on a scale commensurate with the needs of the country's largest industry. These two failures together deprive the health system - as a system - of the chief driver of progress in every successful industry in the 20th Century. Conclusion: Concluding comment is made on the National Health and Hospitals Reform Commission (NHHRC). This continued the tradition of largely evidence free argument and decision making. It failed to identify and properly analyse major system failures, the reasons for them and the form of governance which would maximise the likelihood of future error leaning. The NHHRC itself failed to error learn from past policy failures, a key lesson from which is that a major - and possibly the major - obstacle to reform, is government itself. The Commission virtually ignored the issue of governance. The endorsement of a monopolised system, driven by benevolent managers will miss the major lesson of history which is illustrated by Australia's own failures. Background ingly, the pharmaceutical industry, the public health Concerns which have dominated national debate and lobby and 'government economic rationalists'. government attention have commonly reflected vested interests and ideologies rather than the evidence-based One ideology concerns the unsubstantiated superiority of magnitude of problems. The different interest groups varying levels of private ownership, control and financing include, as they have always done, the medical profession, in the health sector. Another ideological belief is that private health insurance (PHI), private hospitals, increas- health spending should be dedicated only to health max- Page 1 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 imisation (ignoring some notions of freedom and fair- lethargic policy response. This again raises the question of ness). Then there is the ideology of many government how this could occur. departments - especially those heavily influenced by econ- omists - that small government is an end in itself and that In the remainder of the article it is argued that the answer minimum resource cost per unit of measured output is to these questions is, in large part, that the health system always desirable. In the health sector this latter ideology has poor governance and has failed to invest adequately in does not reflect population values [1]. research and experimentation. This is symptomatic of a more fundamental problem, namely the near monopoli- In contrast with these views, there is a strong argument for sation of each part of the system by conservative and public spending to be based upon evidence, including evi- defensive government agencies and the belief that defi- dence relating to public values. This, of course, requires ciencies may be corrected by (occasional) one-off tinker- information, but currently much of the information ing with the system rather than by the creation of a system needed to achieve this apparently obvious goal does not based upon the production and diffusion of evidence, exist, that is, the health system is being steered without health services research commensurate with size and satisfactory navigation equipment. importance of the health sector and upon error learning rather than error suppression. Some principles for achiev- In the present paper I initially comment upon three of the ing this are discussed. prominent issues in the health debate, each of which is associated with a powerful constituency namely, private Issues of Exaggerated Importance health insurance (PHI), ageing and hospital queues. Pri- Private Health Insurance (PHI) vatisation could be added as a fourth. The theme of this To put PHI in perspective there are two dominating facts. brief discussion is that the quality of the analysis has been First, the imperfect evidence available suggests that many poor to the extent that it borders, at times, upon disinfor- Australians wish to have PHI. National statistics on the mation. This raises the question of how this could occur. redistributive mechanisms in Australia and the resultant In the following sections I outline evidence of more signif- levels of poverty suggest that Australia is one of the least icant system failure - the regulation and diffusion of tech- egalitarian and the least generous nations in the devel- nology, the fairness of the system and the quality of care. oped world (see Table 1 and Additional File 1). Results Relative to their importance these issues have been largely from the Monash Health and Ethics Survey [2] reveal ignored in the health debate and attracted, at best, a overwhelming support for the proposition that people Table 1: How Australia compares The rank order of Australia compared with 18 other OECD* countries: selected statistics Year Rank No. of countries Australia's ranking % population in absolute poverty 1995 10 = highest 10 10 Social security transfer (% GDP) 1990-1999 17 = lowest 17 17 % elderly in poverty Late 1990s 16 = highest 16 16 Income of elderly (above 65). ÷ Income 18-64 Mid 1990s 16 = lowest 16 16 th th Income at 90 /income at 10 percentile Late 1990s 17 = highest inequality 17 13 % population with income below 50% of median income Late 1990s 16 = highest 16 15 % children in poverty - single mother mid 1990s 15 = highest 15 13 - two parents 15 = highest 15 13 Official Aid/GDP 2000 18 = lowest 18 15 Total tax/GDP (%) 2000 1 = highest tax 18 15 * All OECD countries with a population above 3 million Source: [42] Page 2 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 should be allowed to spend additional monies on their imperfect analogy would be a policy to increase the own health. Many Australians like to jump queues and uptake of fire insurance for houses by randomly burning support multi-tier access to health services. down houses, increasing people's fear of being a victim and thereby inducing them to take out fire insurance. The second dominating fact is that, in terms of its impor- tance for the sustainability of the health sector, PHI is Under these circumstances it is difficult to determine the quantitatively trivial. In 2007/08 it raised $7.86 billion of underlying demand for (legitimately subsidised) PHI, but the total national health expenditure of $103.56 billion or survey results cited above indicate a rejection of the about 7.6 percent. Even in the hospital sector where its notion that individuals should not be permitted to spend funds are concentrated, it raised only 11 percent of reve- more of their own income to receive better access to better nues [3]. The highly publicised statistic that PHI under- services. pins private hospitals which, in turn, carry out over 50 percent of elective surgery is one of the many examples of Perversely, the subsidy for those taking PHI which is the disinformation, or perhaps more accurately, 'spin', on the most criticised policy is the most justifiable in terms of statistics. Health funds and private hospitals are the land- social and normal economic policy. It is justified, how- lords providing beds and equipment. The Government, ever, not as a device to increase membership per se, or not PHI, provides the overwhelming proportion of the health care revenue but in terms of (one notion of) equity insurance against the medical costs in these hospitals. to those who are paying more for their health care. This argument depends upon PHI having no adverse effects It would be feasible (as distinct from necessarily desira- upon others by, for example, diverting a disproportionate ble), for private hospitals to be nationalised overnight number of doctors from public hospitals). It is untrue, as with 57 percent of their contribution to hospitals being some advocates from the public health lobby have argued met from the government subsidy to premiums and the that the subsidy is bad economic policy or that the remaining revenues raised by PHI met by an approximate resources are wasted. Rather, a subsidy is the normal 1.1 percent increase in taxation. This would not be an eco- device for promoting a social policy and resources are nomic cost to the nation but a redistribution from non transferred not wasted. But throughout the health care contributors to PHI to those who are currently members. debate issues of social values are routinely misrepresented This course of action is neither advocated nor criticised as issues of economic (in) efficiency. here. The key point is that, financially, PHI is an inessen- tial part of the health sector. The Australian health scheme Ageing cannot be held to ransom by the self evidently false claim The belief that there is a looming crisis because of the age- that it depends upon PHI. ing of the population and booming demands of those who thoughtlessly chose to be born after 1945 appears to Finally, it is difficult to even measure the underlying sup- be a function of bad arithmetic. It reflects the well known port for PHI as the measures taken to support it have dis- error of reasoning in percentages and disregarding abso- torted the relationship between preferences for PHI and lute values. Exaggerating somewhat, the percentage of purchasing decisions. Legislation in the last decade has centurions may well increase by 600 percent in the next 20 driven Australians into PHI with policies which deserve to years, a frightening prospect until translated into an abso- be enshrined in the Guinness Book of Records - as the lute increase from 100 to 700, a figure too low to have a most bizarre micro-economic policy in a developed coun- detectable impact on health expenditures. try in the last half century. Importantly, and unremarked in reports, a much higher The levy on the wealthy who fail to purchase PHI has the rate of taxation driven by a much higher growth rate of same economic logic as promoting the Australian auto- health expenditures is consistent with a rising material mobile industry with a punitive tax surcharge on the standard of living. This may be verified by anyone capable income of wealthy Australians who fail to buy an Austral- of calculating compound growth rates. Figure 1 illustrates ian car. Lifetime tables are even more perverse. Insurance, the effect of health expenditures rising at twice the rate per which is usually envisaged as a mechanism for reducing annum as GDP. The bar diagram on the left depicts the risks has, by legislation, been forced to increase risk. The GDP visually as an index of 100 and the proportion of this uncertainty associated with illness over the next 20-30 devoted to health services. The bar on the right illustrates years is clearly much greater than the uncertainty associ- the effect upon resource use and availability in 40 years ated with the next 2 to 3 years. Those making a decision time if health services grow at 4 percent per annum and with a respect to the purchase of insurance are now faced GDP at half this rate. GDP would rise by a factor of 2.208. with greater anxiety and fear because of the longer deci- Health expenditures would increase from 10 to 22 percent sion period, and fear drives people to insurance. An of this. However, resources left for other expenditures Page 3 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 Th Figure 1 e magnitude of health and GDP 2009-2049 The magnitude of health and GDP 2009-2049. would increase by 90 percent. This is the simple arithme- of the GDP. But there is no economic or social reason why tic result of a larger magnitude (GDP) growing more in the composition should not change, especially if it absolute terms than a lesser magnitude (health) despite increases wellbeing. Historically, the economy has been rising less in percentage terms. The key message is rela- flexible. The agricultural sector, for example has tively insensitive to the numbers used in the example; viz, 'imploded' in percentage terms without adverse effects. it is almost inconceivable that rising health expenditures The service sector, including health, has expanded to our could significantly contribute to a reduction in the GDP/ advantage (and possibly to the benefit of the environ- capita. ment). Even the use of GDP/capita as a benchmark is largely a The Intergenerational Reports and Productivity Commis- product of history and intellectual inertia as the available sion have carried out analyses in which the loss of per- evidence shows no relationship between GDP/capita and spective results in serious disinformation [6,7]. Figure 2, individual wellbeing [4,5]. Policy, however, appears to be taken from the beginning of the 2007 Intergenerational driven by a fear of changes in the percentage composition Report and reproduced widely, encapsulates one of the Disinforma Figure 2 tion: Intergenerational Report 2007, budget deficit as % of GDP Disinformation: Intergenerational Report 2007, budget deficit as % of GDP. Source: [6]. Page 4 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 widely cited headline 'messages' from the report. This is cifically technological change. The result indicates that that the budget deficit as a percent of GDP will rise alarm- ageing effects have been absorbed into general expendi- ingly to the year 2046-47 and in a way that is directly ture growth. Historically, the inextricable link between attributable to increased health expenditures. The ageing and health expenditures as a percent of GDP increased government health expenditures are shown to implied by government reports and the press is simply exactly match the increased deficit. However the report disinformation. does not make clear - at least in its headlines - that its pro- jections are based upon the assumption that past trends The final assumption underlying these defective analyses will continue inflexibly and that taxation is pegged at the is that taxation will remain fixed as a percentage of GDP. level necessary to support service use in 2007. The Produc- Tax rates in Australia are amongst the lowest in the West- tivity Commission reaches similar headline conclusions ern World (Table 1) and could rise by 50 to 60 percent albeit with qualifications deep in the body of the report. before reaching the levels of countries whose rates of eco- The National Health and Hospitals Reform Commission nomic growth and standards of living have been unaf- has clearly accepted this message and warns that health fected by their higher tax rates. expenditures could so dominate State budgets that there would be no money left for roads or education [8]. Policy analysis may have been driven by bad arithmetic. A less benign interpretation is that economic advisors are In fact these results are entirely attributable to a set of presenting data to achieve a covert objective suggested by assumptions which are tenuous at best and wrong at bad neoclassical economic theory. There is an arcane worst. In the light of recent macro-economic experience belief in this discipline that additional taxation carries an economic prediction to the year 2046-47 should be 'excess burden' for human wellbeing. I have described it as undertaken only in satire. However four points should be arcane because there is no empirical evidence for this obvious: belief and the logic behind it is wrong. It assumes that with less tax people work harder and are thereby better off 1. The economic burden of health spending depends (or else why would they have worked harder?) The under- upon the rate of growth of GDP. lying assumption is that the undistorted balance between work, leisure and all other elements relevant for human 2. Ageing per se in the absence of new health technol- wellbeing is in an optimal state before the distortion of ogy but with economic growth would have a minimal marginal taxation. The assumptions behind this evidence- effect on the burden of health expenditures. Even with free belief are so absurd they will not be repeated here. zero GDP growth and no other changes age driven expenditure would rise between 1997 and 2051 from It is worth noting, however, that while the excess burden 7.5 to 11 percent of GDP [9]. 'doctrine' teaches that each dollar of tax has a dispropor- tionate cost, economic theory has not suggested a way of 3. Extrapolations are based upon assumptions. In the demonstrating the excess or deficit value of most of the present case the effect of ageing has been obtained by Government activity funded from these taxes. It is implic- adding technology driven trend health expenditures to itly assumed in the GDP accounts that health, education, the ageing effect, not by an ageing effect per se. How- law and defence contribute to wellbeing an amount equal ever, the impact of technology over a longer period of to their dollar cost (and therefore less than the 'cost' of time is far more difficult to predict than relatively inex- taxation). Transfer payments to the disadvantaged also do orable changes in the medium term population struc- not generate net benefits but only redistribute them as, ture. according to orthodox theory, we cannot compare the utility benefits of one person with another. Transfers may, 4. Technologies may be cost enhancing (as at present) however, distort work incentives and, for the same arcane or cost reducing (as with the introduction of antibiot- reason as above this is harmful. Consequently, and with- ics and possibly products arising from the present bio- out evidence, tax based transfers become a net cost. The tech revolution). Unlike population, technology can benefits must be treated on a dollar for dollar basis; the be regulated in such a way that increased expenditures taxes inflict more than a dollar for dollar cost when taken should be welcomed if the benefits exceed the costs. and given. This may help explain the clearly prejudicial attitude of many economists towards taxation. It does not To date the varying rates of population growth across justify their insinuating policy by stealth. Europe have been uncorrelated with expenditure growth. Figure 3 plots the actual growth for each country on the Hospital Queues vertical axis against the rate which would have resulted Queues or surpluses are difficult to avoid in the context of from ageing in the absence of any other influence and spe- a free service. Despite the understandable concern and Page 5 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 Cha Figure 3 nge in health expenditures compared with the change in age/sex predicted expenditures, 1960-95 (21 OCED countries) Change in health expenditures compared with the change in age/sex predicted expenditures, 1960-95 (21 OCED countries). Source: [9]. publicity, however, these should not be an important In the long term, however, queuing has little or noth- issue in the long term. Three brief comments are relevant ing to do with hospital efficiency. It is the outcome of here. the balance between supply and demand. There is, in principle, near universal agreement that realised 1. It is illustrative of one of the themes of this paper demand should reflect acceptable access to Medicare that policy options which are known, in principle, and admission for prescribed needs. Ultimately queu- cannot be put into action with any confidence because ing can only be altered by changing one of these vari- of the inadequate research into hospital and medical ables: that is, queuing must ultimately be regulated by behaviour, the inadequacy of information systems, changing effective access or supply and the latter can the lack of experimentation and the avoidance of sys- be set at a level which will create or remove unaccept- tem reforms designed to optimise the use of acute hos- able queues with or without hospital and system effi- pitals. ciency. There has been no long term research, to the author's knowledge, to determine the level of accepta- A partial solution to the problem, emphasised by gov- ble supply and access. Policy rhetoric emphasises ernment, is to increase hospital efficiency. Hospital deflectionary, albeit, important issues of efficiency. information systems, financial incentives and other internal reforms have a role to play of course. Hospital 2. However Australian Governments appear to be pri- pressures can also be reduced by rational step down marily concerned with eliminating monetary and not and step up policies, from expanded primary health true economic inefficiency. Extremely accurate budg- care and other low intensity facilities in conjunction etary data are collected. Virtually no data exist relating with appropriate admission and discharge policies. to the inefficiency inflicted upon patients in the form But system reforms and poor governance structures of suffering and disruption to their lives (as noted have inhibited experimentation and discouraged above). Similarly there has been minimal real interest development of these. in equity, evidenced by the fact that the public has not Page 6 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 been properly consulted. Recent research at the CHE technologies at the level of health service diffusion and [10] clearly demonstrates that, in the health sector at delivery. While Australia pioneered the economic evalua- least, there is an overwhelming concern with fairness tion of drugs, and the use of products and devices, and and sharing and relatively little interest in monetary technologies must be approved by the TGA, the overall efficiency, even when this is expressed in terms of research effort in this area is dispersed, uncoordinated and maximising the number of life years gained from a reactive and appears to have little error learning capacity. budget. Indeed, the research indicates that the general There is insufficient national capacity to evaluate old ther- community would sacrifice 1/3 of life years which apies retrospectively or to monitor outcomes. The data for could be allocated to people in order to achieve equi- this is collected, but is not used. table sharing. This strongly suggests that the policy of minimising expenditure - extracting an annual pro- Long term, there is an urgent need to install the capacity ductivity bonus and 'letting health departments cope' to proactively seek new technologies and to ensure (or - strongly conflicts with the preferences of the popula- block) their diffusion and use as quickly as possible. To tion. 'Inefficiency' in the form of greater tax financed fail to do so is to reduce population health. But the issue expenditure would clearly be preferred to the inequity has never been on the political radar. of non treatment. In view of the evidence that there is no change in subjective wellbeing as GDP rises, [4,11] Equity policies involving increased taxes and spending in Medibank and Medicare were established to achieve equi- areas of demonstrated public concern should be wel- table access to hospital and medical services. They comed. achieved this in one respect only, namely the extension of financial insurance to the 15 percent of the population 3. The past government's most publicised solution to who had not purchased it privately prior to Medibank. queuing - incentives for individuals to purchase PHI Apart from this small (albeit important) improvement the and private hospital care to 'take pressure off public achievement of equity has remained very largely at the hospitals' was, at best, evidence free avoidance of the rhetorical level. Using the first universal database from problem, but more consistent with a policy of appeas- Medibank Richardson and Deeble found that the use of ing the interests associate with PHI. It has been known both GP's and Specialists in Sydney in 1976 were both for at least a decade that queuing has been associated (coincidentally) 4.6 times greater than in Darwin after with supply side constraints, not uncontrollable adjusting for age and sex. Discrepancies between statisti- demand. This is exacerbated, not ameliorated, by the cal divisions were much greater [16]. Studies by the author transfer of medical staff to private hospital facilities 25 years later found similar discrepancies in the use of where they are likely to provide more, not less, inten- procedures across Victoria and huge differences in the use sive servicing for the same condition promoted by fee of new technologies in the public and private sectors for service and PHI [12-14]. The ability of government [17,18]. to base its policy for so long upon public disinforma- tion attests the lamentable state of public and journal- The response to the obvious inequities between urban istic understanding of even the simplest relationships and rural areas in Australia may best be described as 'dab in the health sector and the relevant magnitudes. policies'. There has been little serious attempt to equalise access. The issue, however, has not been near the top of Relatively Neglected Issues the public agenda and possibly because information Technologies about inequities is not routinely documented and distrib- New technology has been the great driver of human wel- uted throughout the community. Indeed, from the fare generally and new technologies have dominated and author's experience, it is possible that the non provision will continue to dominate both the costs and the benefits of information which has reinforced this complacency of health services. While face to face consultations per cap- may have been promoted by public authorities (see Addi- ita fell 6 percent in the 12 years to 2007/08 diagnostic and tional file 2). procedural services rose by 62 and 32 percent per person respectively and the overnight separation rate per 1,000 Another dimension of inequity relates to the adequacy of for acute services rose to a level 27 percent above the rate insurance coverage by type of medical service. As shown in the USA, 20 percent above the rate in the older UK pop- in Table 2, insurance coverage by Medicare is highly ulation and 66.7 percent above the rate in the comparable erratic reflecting the historical influence of the profes- Canadian population [15]. Lack of research prevents us sional groups benefiting from the insurance (default free from judging whether these large magnitude differences funding). Hospital services, the most expensive form of indicate a strength or a weakness in the Australian system. care, are almost fully insured and consequently, cheapest Despite this, lamentably small attention is given to health to use. Medicines are very poorly insured despite the fact Page 7 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 that the longevity of Australians is probably attributable, Quality and Safety in large part to the widespread availability and use of anti- The issue of adverse events in the Australian health system hypertensive drugs. But for many people at risk of CVD should dominate all others. However it will be closer to these are 'outside Medicare' - there is no subsidy. For the truth to describe it as Australia's best kept secret. In example, with an average price to patients of $15.11 per 1995 the 'Quality in Australian Health Care' (QAHCS) script in 2009 [19] people without a health care card study uncovered an appalling iceberg of avoidable adverse would pay the full price of the antihypertensive drug Aten- events including large scale unnecessary death. Following oll, the sixth largest volume PBS drug dispensed and those publication, virtually nothing effective occurred on a scale with a card face a 30 percent copayment which, evidence commensurate with the problem. Ten years later an edito- suggests, will impact disproportionately upon low indi- rial in the MJA reflected upon this as follows: vidual incomes as there is no immediate symptom relief [20]. Possibly the most cost effective therapy in the health 'Based on QAHCS outcomes 25 patients die each day system is effectively excluded from Medicare for the in our hospitals from preventable adverse events... we majority of the population and the disadvantaged pay have had report after report... we still have no nation- large copayments. Of all cardiovascular drugs on the PBS ally accepted framework for clinical governance to 15.8 percent receive no subsidy and an unknown number assure the safety and quality of Australian health serv- a very low subsidy [19]. There is no stated rationale for ices... This ongoing vacuum is an indictment of our discriminating against the loss of quality of life associated Health Ministers and organised medicine' [21]. with vision and teeth. Yet the relevant services are also largely uninsured. It appears that following publication the Health Minister of the day accepted the report as being methodologically The apparent (default) explanation is policy inertia, the sound and of great importance. However the representa- failure to review the system; or by an overriding year by tives of organised medicine pronounced it, without evi- year concern with the government budget. There are no dence, to be incorrect. Following a change in Government data to properly document the suffering this causes. shortly thereafter, the new Health Minister accepted this evidence free conclusion. The study was not repeated to There is no reason why regular reports should not be determine validity nor was there an urgent review of safety made available regarding access to and use of services by but simply a series of reports. The cumulative effect of groups differing geographically, socially, racially and by these was summed up, somewhat despairingly in 2006, by disease category. The data exist, but are not published. the persons initially placed in charge of the reform process Data should also exist documenting the needless suffering in the following way: which results from the exclusion of services. Explicit com- parisons of groups would sensitise the community and 'One might assume that systematic improvements possibly force policies that promote equity. It is possible within the health system are either happening or, at to surmise that it is precisely for this reason that such least, well advanced. Regrettable, improvements are information is not produced. still patchy. The greatest challenge for all remains how to achieve universal and systematic changes to the health system within a federated system' [22]. In 2009, the 'Report to Support Australia's First (sic) Table 2: Patient out-of-pocket payments 2005/06 National Primary Health Care Strategy noted that 'there is currently very little information about the quality of care % of cost provided in primary health care... the (US based) Com- Hospital 2.2 monwealth Fund survey... found (20 percent) of patients reported experiencing a medical, medicinal or laboratory Medical 11.3 error [23]. By the end of 2009 it was possible for Healy and Dugdale [24] to write 'realisation is dawning that Dental 67.9 medical errors are common events' - more than one and a half decades after results from QAHCS became available. Medicines 45.9 The term 'adverse event' is referred to in only four para- Aids/Appliances 74.1 graphs of the National Health and Hospitals Reform Commission final report. Total 17.7 Source: [3] Page 8 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 The size of the problem which has been ignored is simply Discussion astonishing. If the death rates estimated by the QAHCS Principles for dynamic adaptation A common feature of recommended reforms has been are correct then the number of Australians unnecessarily dying is approximately equivalent to a jumbo jet crashing what might be described as 'static optimality': A series of every 2 weeks each resulting in the deaths of 350 Austral- one-off recommendations are made for the achievement ians. Alternatively, it is equivalent to a repetition of the of the optimal health system. The author has contributed Bali bombing every 4 days. The cumulative unnecessary to this literature [14]. Many of the principles suggested deaths since the publication of the QAHCS report would are, of course, sound (particularly in the latter reference!) exceed the number of Australians killed in World War 1. In the optimal system there would be a single purchaser of all services for defined populations. The present irrational, We can only speculate on the reasons why Australian geographic, service-based and disease-based boundaries authorities have failed in their most fundamental duty of would be eliminated. Many or possibly all of the perform- protecting the lives of their citizens. One possibility is that ance indicators listed in the NHHRC's April Report would the magnitudes involved are simply too large for people be initially adopted [25]. to believe. (Indeed, it may even seem a little shrill to men- tion such melodramatic facts!) Human beings form clear Below I focus upon a dimension of reform which is sel- expectations concerning the way in which the world they dom considered but, in the light of the previous discus- experience operates. As John Maynard Keynes famously sion, would appear to be of greatest importance. The focus commented in the last paragraph of his 'General Theory', is a response to repeated failures; the failure to adequately after the age of 26-30 most find it very difficult to change respond to information when it is available - adverse these patterns. Australians, their politicians and the med- events and, evolving technologies; failure to investigate or ical profession have so long regarded the health system as address issues of stated importance - inequity; failure to being safe and amongst the best in the world that results seek out the nature of health system related social objec- from the QAHCS may simply have been dismissed as tives; failure to match policy priorities with the magnitude absurd, ie conflicting too radically with established pat- of the problem and failure to invest in the system naviga- terns of belief. The authorities who endorse or bury such tion equipment necessary for planning the future and research are well beyond the age of 30. The author's per- responding flexibly to error. sonal experience in attempting to publicise this report is consistent with this hypothesis (see Additional file 3). Repeating an earlier theme, the economic (and other) his- th Nevertheless a prudent government would have repeated tory of the 20 Century has been dominated by technol- the study to disconfirm it. ogy, innovation and uncertainty - elements for which economics has failed to provide either explanation or An alternative explanation is that policy makers, like oth- guidance. This is reflected in the health economics debate ers, are more responsive to sensational media reports than over optimal health systems which, apart from innovation correctly collected evidence. Cynically, they may only be of the moment, have largely ignored the implications of concerned with the lives of Australians that have been these three dominating themes for system reform. While identified and politicised by the press. More probably, market capitalism self evidently requires regulation and however, individuals in governments and bureaucracies the market model is manifestly unsuitable for the health (like others) are likely to have focussed only upon their sector, the history of capitalism in the 20th Century pro- defined area of responsibility and our governance struc- vides one important insight. The market provides a flexi- tures have not assigned responsibility for this situation to ble, adaptive and creative mechanism for allocating anyone and lack the flexibility to error learn and act deci- resources. The experience of the last 100 years, reviewed sively, at least in the health sector. comprehensively by Beinhocker [26], suggests the follow- ing principles: The National Health and Hospitals Reform Commission did acknowledge the existence of adverse events in muted • Monopolies, however creative initially, have gener- terms and, chillingly, stated that there is a need for 'culture ally evolved into conservative organisations which change'. This same phrase was used over a decade earlier commonly fail, a point clearly articulated by Prime and appears to be code for 'postpone the problem for a Minister Kevin Rudd, in the context of homeland secu- generation/leave it to the medical profession, to put their rity, when he endorsed the view that 'big departments th house in order - as they failed to do in the 20 Century'. risk becoming less accountable, less agile, less adapta- ble and more inward looking' [27]. � Corporations which do not 'reinvent themselves' regularly have a limited life time. Most firms fail after Page 9 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 a period of initial creativity and success. The US auto- the reality of equality. More substantively, when suc- mobile industry is a dramatic example; cessful elements of a sub-national health system are identified by a national authority they can be man- � The engine of progress is often small, innovative dated for the other health systems. It is doubtful that enterprise with an idea which has not or cannot be many would openly defend the structural pretence of implemented by the larger monopoly/corporation. equity for the reality of better health especially as both (The most spectacular recent example is Microsoft's goals can be currently improved. takeover from IBM of the market for desktop comput- ing); In this context Canada's leading health economist Bob Evans comments that: � Growing bureaucracy and overemphasis on due processes are often the reasons why larger 'non-rein- 'A particularly interesting feature of the Spanish (expe- venting' corporations loose the innovative advantage rience) is the way in which devolution of political (a generalisation again illustrated by the history of authority to sub-national governments served - against Microsoft and IBM); and conventional wisdom - to open a democratic window, advancing and securing the universal system in the � Organisations which have survived, innovated and face of ambivalence (at best) at the national level. 'reinvented themselves', have invested heavily in tech- (Canada provides a similar example)' [30]. nology and market research - their industrial 'naviga- tion equipment'. 2. Innovation should be 'ongoing' not simply the 'dab innovation' which characterises the present manage- The reform of the Australian health system should be ment, but should involve significant and sustained informed by this experience. The reform process should experimentation. As in every other industry this costs be driven to a significant extent, by the need to achieve money. The expectation that the Coordinated Care dynamic adaptability through time and, in particular, by Trials commenced in 1995 - by Australian standards, error learning. None of the reform proposals of which the more a 'splash' than a 'dab' - would achieve rapid cost author is aware, including those of the NHHRC, have saving without the outlay of significant expenditures emphasised this need. The 'buzz words' are scattered lib- was as naive as the expectation by a manufacturer that erally throughout rhetorical passages, but proposals do a new and profitable mode of production might not show how these translate into policy. Uniquely, the evolve without any venture capital. advantages of dynamic adaptability are implicit in the Scotton-Enthoven proposals for Managed Competition 3. Innovation should be informed by the careful although, as elsewhere, Scotton emphasises the static observation of success overseas, something which has properties of the model [28,29]. seldom occurred in Australia (the chief exception being the imitation of elements of Canadian Medicare The experience summarised above suggests that the fol- by Medibank in 1994). Despite evidence for over 30 lowing principles should be considered in the reconstruc- years that the US Kaiser Permanente Corporation has tion of the health system, in addition to the principles for operated highly successful, cost effective, integrated static optimality. clinics and more recent evidence from the reform of the Veterans Health Service there has been no attempt 1. No part of the Australian health system including to seriously study or experiment with their experience. the funding of research should be subject to monop- New Zealand's innovations have likewise been oly control. The simplest way of achieving this is to ignored. The inward looking nature of Australian pol- base an integrated health system upon a sub-national icy is epitomised by the failure of the PBAC to look at unit, either the state health regions or, possibly, fund- the international market price of drugs when negotiat- holding unit as envisaged in the model of Managed ing with pharmaceutical companies and this has Competition. These units should have a significant resulted in examples of extraordinary over payment degree of autonomy in the way in which they allocate [31]. This is as irrational as a corporation negotiating resources. As in the market, diversity maximises the in a market in terms of the data provided to it by an chance of successful innovation and improvement. interested party and ignoring the known prices else- where in the market. The counterargument that differences imply inequity is simply hypocritical. There has been no sustained 4. The above principles cannot be implemented with- concern with equity and, as evidenced by their support out investment in 'industry navigation equipment'. It for PHI, Australians are not particularly interested in is likely that no other industry in Australia spends as Page 10 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 little, proportionately, on the marketing, delivery and innovations. Significantly, as discussed later, this adaption of their product to customer (social) needs group was statutorily independent from government. as occurs in the health sector despite the fact that the industry is almost certainly the most complex and Governance Principles important for future wellbeing. The fact that this One example of the allocation of responsibilities based appears to be true in other countries does not lessen upon (but differing in emphasis from) a modified Scotton the consequences of this. There has been a failure to model which satisfies many of these requirements is sum- invest in health services research on anything much marised below along with a broad implementation time- more than a symbolic level and then without serious table [28,29]. (It is contrasted with Medicare Select later.) strategy or plan. While having one of the best data sys- De-politicising health tems in the world, it is largely unused in terms of its real potential for management and evaluation. Semi-autonomous commissions should be established at Research is largely conducted on an ad hoc, or 'on either the State or regional levels responsible for the pur- demand' basis, by health departments for specific pur- chase of all hospital and ambulatory including dental and poses and commonly results in confidential reports. ophthalmological services. The commission should be There is a dearth of creative ideas flowing through to directed by a board including representatives of the Com- the level of creative planning. monwealth, State and major providers of services and be able to innovate in both the form of purchasing and the The last serious proposal for comprehensive, coherent physical organisation of delivery. reform - the Scotton plan - died at least in part because of the failure to create a new generation of health The reform process economists capable of developing such or similar This should be driven by an independent commission plans and carrying out the prerequisite technical anal- which might itself evolve into a statutorily independent ysis as has been ongoing in the USA, the Netherlands body, analogous to the Reserve Bank, for the permanent and elsewhere. Perhaps with the wisdom of hindsight over-viewing of the health system. The body should not it is likely that the existence of serious navigation be dominated by 'insiders': health professionals, mem- equipment in the field of new technology would have bers of the government health bureaucracy or persons suggested such extreme uncertainty with respect to associated with government. (It is too easy for a culture to workforce requirements that a much greater emphasis develop in which common but contestable assumptions would have been given to the training of a flexible become universally accepted. Paraphrasing Donald workforce capable of varying its level of performance Rumsfeld, in the Health Sector 'stuff happens' (cf adverse in accordance with the emergence of new technology events); needed change will be implemented by the driven needs. responsible department and so on.) The Commission's charter, but not its operation, should, of course, be deter- 5. Since the introduction of Medicare in 1994 there mined politically (see BCA submission to the NHHRC has been bipartisan political support for the disregard [32]). Like the Reserve Bank it should have very significant of serious and well publicised deficiencies in the gov- research capacity, for example, incorporating an institute ernance of the health sector as well as those discussed as described below. above (Additional file 4). The hypothesis which appears best able to explain this is that at the govern- Regulation and monitoring ment level an increasingly important principle is to The Commonwealth should mandate a minimum pack- not create problems for government through reforms age of services and monitor access to these services with which will result in organised opposition from power- penalties for violation of the principles. However there ful interest groups and only benefit those (the public) should be capacity for difference and experimentation. who are largely unaware of the benefits that they might receive. If this hypothesis is correct and likely to Funding characterise future political motivation, then an Pooled government revenues should be based upon a pre- important governance principle is to establish a long determined formula with shares unrelated to any element term structure which is one stage removed from gov- of delivery. The needs adjusted per capita allocation to the ernment with government only responsible for broad purchasing authority, determined by the Commonwealth, policy and funding. The most concerted but largely should be phased in to replace the status quo. The for- unsuccessful attempt to significantly improve coordi- mula determining the government shares of the funding is nation within the present system was made by the irrelevant for system performance. Hospital and Health Services Commission, HHSC, (1973-1976) along with a number of other suggested Page 11 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 Service provision Ad hoc research Initially, as at present, States should run State hospitals It is highly desirable that issues of current public or polit- and the private sector run medical, dental, other ambula- ical interest should be satisfactorily researched and not be tory and pharmaceutical services. The Commonwealth the subject of disinformation and unsubstantiated spin. should be responsible for negotiating certain prices such The institute should have a capacity to conduct research as pharmaceuticals and the rebate for fee for service med- on the request of a Minister and on its own initiative. It ical services because of the lack of market power by sub- should have the task of proactively providing relevant national units. information to members of the media who are perceived to be providing factually incorrect information to the pub- Private Health Insurance lic. This should initially be unchanged except for the removal of the surcharge and phasing out of life time tables (effi- Blue sky research ciency measures). The subsidy should initially be main- There should be a capacity to either conduct or promote tained. However research is needed to determine the true additional research of a more long term or exploratory effect of PHI on the availability of health services to Medi- nature. care patients and the size of the subsidy should be deter- mined in the light of this and further research into HSR workforce population preferences with respect to a multi-tier health The institute should be responsible for monitoring and system. recommending measures to ensure a satisfactory health service research workforce. With current 'dab' funding of Navigation Equipment HSR there is no career path for health economics and At least one, and on the principle of non-monopoly, pref- unsurprisingly an almost complete dearth of research into erably more statutorily independent institutes should be health systems. Part of an institute's function should be created similar to but independent from the AIHW. They the training of such a workforce via cadetships in its should have the following functions: research divisions in conjunction with relevant university and government departments. Quality monitoring and assurance The institute should have powers to acquire and require Data information and to conduct onsite investigation. It The institute should have a statutory right to all relevant should be required to carry out ongoing international col- administrative and other data collected by the AIHW but lation of techniques for quality assurance and to translate also data which is not collected by the AIHW such as that these techniques into a form compatible with the Austral- monopolised by the current Commonwealth Department ian system. of Health and Ageing. Information diffusion In 1973 the Whitlam government created an institute sim- Comprehensive data provision on issues of access and ilar to the one described here. The Hospital and Health equity, including hospital specific queues by procedure Services Commission (H&HSC) was statutorily independ- should be made available on the web. ent and had the ability to analyse, plan, publish, intro- duce research and recommend policy. It initiated a data Technology and innovation based approach to policy development which resulted in The institute should proactively seek out new technolo- the establishment of the Community Health Program gies (preferably in conjunction with the relevant medical which included programs for family medicine, hospital colleges) and refer them to the relevant technology assess- development and initiatives with respect to diagnostic ment group for possible inclusion in Medicare. and rehabilitation services, Aboriginal and rural health, health transportation, Aboriginal and rural health and the Results of routine health services research and statutorily health workforce [33]. It differed from the present pro- determined information should be regularly provided to posal in two important respects. First, it relied upon exist- the public regarding the level of disaggregated service use ing institutions to obtain data. Secondly, it was largely and the (standardised) quality of different provider concerned with the formulation and recommendation of groups. policy. Ideas for innovation These differences may have proved lethal for its longevity The institute should monitor 'good ideas' which have suc- as the Commission was disbanded with the change of ceeded in other countries and proactively provide these to government in November 1975 [34]. It is for this reason appropriate bodies throughout the health system. that the present suggestion is for an institute which cannot Page 12 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 be seen as political through its advocacy of policies which these policies could prevent 'hundreds of thousands of may become or already have become politically aligned. Australians dying prematurely or falling ill and suffering Since Australia spends about $100,000 million on health between now and 2020'. But the barriers to these policies services there is, however, a strong case for (at least) two are even larger than those which have blocked serious institutes: one concerned with information and its dis- health sector reform, albeit being of the same political ori- semination and one with options formulation and advo- gin. cacy along the lines of the H&HSC. In the context of health sector reform, the most significant Timetable document was the final report of the National Health and With the exception of the creation of one or more insti- Hospital Reform Commission (NHHRC) 'A Healthier tutes for health services research and evaluation most of Future for all Australians' [37]. The report is structurally the suggested functions, or variants of them, could be elegant. It focuses upon health and its achievement in a achieved relatively quickly as they involve governance and social context as distinct from the services and financial financial flows rather than the creation of new physical flows which dominate most proposals for system reform. infrastructure. Initially the public would feel little effect. The report is structured according to important and piv- otal principles - connecting care, care at different life Subsequently, the form of delivery might change substan- stages, rural, mental health etc, inequalities and quality. tially as the area based commissions responsible for pur- However, none of the resulting sub-principles, excellent chasing services experimented with new methods of though many of them may be, are likely to become delivery (such as Kaiser-like clinics for integrated care). An embedded in the system unless the governance structure additional option would be a movement towards Man- determining regulation and incentives is appropriate and aged Competition as private health funds or other groups in this respect the report is deeply disappointing. Its dis- negotiated a 'carve out' for a voluntary group. Such a task cussion of governance is almost completely absent. In one would involve research into the determination of risk of the second round submissions Andrew Podger notes related premiums and likely effects upon cost and equity. that: (Recent evidence from the Netherland's experiment with Managed Competition suggests that this option might 'Governance is important. It is not a separate issue result in inequalities unacceptable even to the unegalitar- from practical measures aimed to improve service ian Australian public.) Evans [30] notes that from 1995 to delivery and health outcomes. It is the means by 2002 fund specific extra premiums (above needs-based which the Australian community can be sure that the capitation payments) rose from 3 percent to over 50 per- health system is delivering what it is there for. Moreo- cent suggesting significant quality differences between ver, current governance arrangements are contributing schemes. This again illustrates the need for reform based directly to current weaknesses in the quality, effective- upon careful research and modelling of the impact of dif- ness and efficiency of the Australian health system.' ferent regulatory structures. An indicative timetable is [38] reproduced in Additional file 5. The Commission's response was to use this quotation to The National Health and Hospitals Reform Commission head Chapter 6 and then provide less argument for their (NHHRC) recommendations with respect to governance than in the In 2009 several major reports were presented to the gov- interim report where it represented one page for each of ernment. First, a report to Support Australia's First three options under review. National Primary Health Care Policy conducted a detailed review of issues and options for the reform of Primary The focus of the Commission's report also has no overlap Health Care (PHC). The focus of this and the accompany- with the areas of concern discussed in this paper. This is ing draft report was primary services delivered by GPs, unsurprising. The present paper highlights errors and fail- nurses, allied health providers, Aboriginal health practi- ures and then sketches a governance system based upon tioners and pharmacists. Consistent with the problems the principle of error learning. The NHHRC, while noting identified in this paper the key elements included access, most of the relevant issues somewhere, does not seriously coordination, safety and information [23,35]. analyse past failures. It never considers the question why major problems and reforms, known and needed for dec- Next, in an impressive, evidence based report the National ades, have been ignored and what structural changes are Preventative Health Taskforce released its strategy docu- necessary to guard against a perpetuation of this problem. ment recommending policies which would, without doubt alter the unhealthy trajectory of Australian society As with all other proposals Australians would depend [36]. It is almost certainly correct in its assessment that upon the wisdom and benevolence of monopoly bureau- Page 13 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 crats for the monitoring and implementation of reform; on the one hand, from implementation and innovation that is error learning and dynamic adaptation would on the other. depend upon the same flawed mechanism as at present, namely a department largely driven by short term minis- The role of government, more generally, has been the sin- terial concerns and with significant monopoly control gle largest theme in the discipline of economics since over information, research, venture capital and with pow- Adam Smith highlighted its potential shortcomings, and erful personal and institutional incentives for the suppres- the largest single theme in the economic health policy sion of the information which drives reform, namely debate since the introduction of the UK NHS. However information concerning failures and errors. there is no echo of this in the NHHRC report. Australian government and governance are implicitly unproblemati- This casts some doubt upon the wisdom of the structure cal, dynamic and wise. The problems discussed by Donald of the report. Because 'connecting care', care at different Horne in the 'Lucky Country' have dissolved with time life stages, etc are important, it does not follow that they [39]. should have determined the structure of the report. Anal- ogously, while the quality of life, not radiotherapy, may In the governance structure outlined earlier in this paper be the endpoint of cancer services, a report into these serv- the answer to the question 'who guards the guardian' is ices should not necessarily make quality of life the struc- firstly the Commonwealth regulatory bodies and, sec- tural focus if the core problem is an absence of ondly, a statutorily independent body which, like the radiotherapy services. The report should focus upon the Reserve Bank, has supervisory and regulatory power but cause, not consequences of the problem. The integrity of no direct responsibility for service delivery. In the Com- the report depends upon a correct diagnosis of the core mission's governance structure there is no guardian of the problem and not a description, however accurate, of the Commonwealth authorities except the Minister and Par- downstream problems arising from them. liament and it is their impotence on large scale reform which has been the chief problem to date. The NHHRC documents so many - probably correct - downstream problems or potential improvements and so The needed governance structure should pre-commit gov- many elements of the current system are acknowledged as ernment to certain courses of action and ease the political sub-optimal that perspective on the problems is easily pain of desirable policy. Analogously, the Reserve Bank lost; and it appears to be lost in the report. For example, may increase interest rates despite short term popular in the draft report, the Quality of Australian Health Care opposition. Study (QAHCS), discussed earlier, is viewed as evidence that 'admission to hospital is not without risk' (p 133). These considerations suggest that the NHHRC's chief rec- This is analogous to acknowledging that 'the Sahara ommendations with respect to governance are seriously Desert has dry bits'. An alternative perspective is that the wrong. After a transitionary phase of hospital cost sharing QAHCS revealed the greatest non-military, avoidable (once believed to be inflationary) they would enshrine a calamity in Australia's history and that in another context Commonwealth monopoly. The depth of analysis sup- - say, product safety or occupational health and safety - porting this recommendation in the report, however, is the subsequent disregard of evidence of widespread death simply lamentable. It argues that '... we heard from many and injury would have led to criminal prosecution. But consumers and health professionals - a desire for one the potential lessons of this astonishing episode of Aus- health system' (p 147). But the problem documented in tralia's health history are lost in a sea of largely unfocused Additional file 4 here is the lack of coordination arising detail. In the final report it is simply noted that adverse from multiple funding sources for the services available to events can 'cause harm to a person receiving health care... any one individual - integration of primary health and such events cause patients distress and suffering, (and) hospital care, step down facilities, etc. This implies the compromise operational efficiency...' (p 55). need for a single fund holder for an individual not a single fund holder for all Australia. The case against diversity and The chief lesson which should have been learned from the experimentation in PHC is simply asserted, 'Our recom- QAHCS and the other failures documented here is that mendations for ... a transformed comprehensive primary government answerable departments - increasingly dedi- health care platform ...require one government - the Com- cated to the short term ministerial task of appeasing polit- monwealth Government - to be responsible -... thus we ically effective groups - are capable of major failures and recommend that the Commonwealth Government are increasingly questionable bodies for the short, or even assumes full responsibility for Primary Health Care Serv- medium term, direction of the health system. There is a ices' (p 148). The argument for economies of scale is need for the separation of policy and system monitoring untrue and the difficulty tracking border crossing over- looks developments in data processing technology in the Page 14 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 last few decades. The Commission argues against regional The relative self satisfaction with the Australian system health authorities because 'there are dangers of 'balkonis- largely arises from a widespread ignorance of the issues ing' health services, with people's access to care deter- discussed here and possibly from crediting the good mined by the region they live in' (p 154). The health of Australians to the institutional and governance Commissioners do not use irony elsewhere in the report. arrangements which emerged historically as a result of self-interest, pragmatism and genuine idealism and which In the context of these proposals there is no discussion of are now described, misleadingly, as 'a system'. The exist- regulatory or system incentives for innovation. Almost as ence of similar problems in other countries does not rep- an afterthought, however, the Commission does appear to resent evidence of Australia's success but, more probably, recognise some of the problems inherent in a monopoly of similar histories of defective governance. Bad ideas and and recommends 'Medicare Select' as a longer term gov- bad practices have also been globalised and health system ernance model. This is a less developed version of Man- planning and reform has commonly been delegated to aged Competition than the model advocated by Scotton interested parties, namely the medical profession, which [40]. It represents an almost complete negation of the is generally untrained in system science, and public health arguments for a monopoly. Concern with 'cost and bureaucracies steeped in the immovable imperatives of bureaucracy' dissolve and 'innovative approaches to fund- the status quo. However the good health of most Austral- ing' are advocated (p 158). These must equate with ians cannot justify system satisfaction as its cause is not employee contributions (one of the most poisonous ele- well understood (deficient research) and as suggested ear- ments of the US system) or private contributions favour- lier, is probably more attributable to the widespread use ing the wealthy and copayments (disadvantaging the of a limited number of effective therapies and effective poor). The concerns discussed above are not mentioned. public health measures than to the (dis)organisation of curative services. As 'the devil is often in the detail' Scotton never envisaged his suggestions as being an implementation plan or one By design and not by default, reform has been incremental which could be fully evaluated on the basis of his broad where the increments have been tiny, timid and some- description. There is no devil in the NHHRC option as times backwards (eg PHI legislation). While it is true that there is no detail for it to be in. There is no possibility of we are, in large part, prisoners of history this perspective Medicare Select being endorsed, as proposed, and its only can be overstated and the consequences of this rationali- contribution to the report is that it allows the Commis- sation of inertia extremely deleterious to the wellbeing of sion to encourage the government to reconsider govern- the population. There can be little doubt that major prob- ance. lems with the system have simply been ignored and that this is not attributable to history but to a lack of dyna- mism, itself attributable in large part to the monopoly Conclusion Andrew Podger reports that in his capacity of Secretary to control over serious system reform by a politicised the Health Minister, he would suggest a major review of bureaucracy. the health system 'almost every other year'. He (the Min- ister) would respond that articulating clearly the long It has been argued here that the approaches to reform term direction was as dangerous as "'big bang" reform' implemented and discussed in Australia have largely [41]. missed these dimensions of the problem. Proposals are 'static'. Once achieved the health system will be optimal. The goal of evidence based policy at the system level Wise, centralised bodies will identify and implement appears as far away today as evidence based medicine in needed change without the need for too much evidence or th the 19 Century and the quotation above indicates a fun- ongoing experimentation. This approach is reflected in damental reason for this. It suggests an obvious conclu- the NHHRC report [25]. Recommendations are listed but sion. While elements of the ideal health system are they arise from nowhere and in terms of implementation necessarily political - for example the right of people to strategies lead nowhere. It is implicitly assumed that with buy better access to better quality care - measures should the slightly clarified governance structure, which is recom- be taken which de-politicise reform or at least reduce the mended, we should trust the bureaucracy to achieve these political cost of it. The suggestion here is that this be targets. No broader thinking is revealed in the report. But achieved by the dissemination of accurate information historically the bureaucracy has comprehensively failed to about current performance and future options and by the reform important elements of Australia's health system or implementation and regulation of policy by de-politicised even to ensure that the health system is safe. More gener- bodies. ally the NHHRC failed to recognise any of the key themes discussed here and, in contrast, recommended the rein- forcement of the single most harmful element in the sys- Page 15 of 17 (page number not for citation purposes) Australia and New Zealand Health Policy 2009, 6:27 http://www.anzhealthpolicy.com/content/6/1/27 tem, the monopolisation of the entire country's health Additional file 5 system by a single body. Belief in the flexibility, benevo- Timetable to a (yet unproven) Managed Competition (NHHRC lence and wisdom of monopolies in either the public or Option 3) [43-48]. th private sectors simply misses the major lesson of the 20 Click here for file Century. [http://www.biomedcentral.com/content/supplementary/1743- 8462-6-27-S5.DOC] In view of the overwhelming evidence from outside the health system that progress depends upon the 'reinven- tion' of organisations from time to time, the final conclu- sion here is that the health sector, which represents the Acknowledgements The research described in this paper was supported by National Health and most expensive industry in the country - 10 percent of the Medical Research Council (NHMRC) Senior Professorial Research Fellow- national use of its resources - and a major potential source ship ID: 284363. of future wellbeing, requires a comprehensive, long term and long overdue review of all aspects of its operation. 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Parliament of available free of charge to the entire biomedical community Australia; 2000. 46. (The) Allen Consulting Group: Governments Working peer reviewed and published immediately upon acceptance Together: A Better Future for all Australians. 2004. cited in PubMed and archived on PubMed Central 47. Productivity Commission: Australia's Health Workforce, Research Report. Canberra: Productivity Commission; 2005. yours — you keep the copyright 48. Richardson J: Financing Health Care: Short Run Problems, Long Run BioMedcentral Options. Paper presented to the Health Reform Forum, Melbourne Business Submit your manuscript here: http://www.biomedcentral.com/info/publishing_adv.asp Page 17 of 17 (page number not for citation purposes)

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