Inside Story

Current affairs & culture from Australia and beyond.

1925 words

Dial M for missed opportunity?

30 October 2017

The Productivity Commission’s healthcare recommendations might not go far enough, but they could still be too bold for the government

Right:

Courageous, minister? Treasurer Scott Morrison leaves a radio studio at Parliament House after releasing the Productivity Commission’s report last Tuesday. Mick Tsikas/AAP Image

Courageous, minister? Treasurer Scott Morrison leaves a radio studio at Parliament House after releasing the Productivity Commission’s report last Tuesday. Mick Tsikas/AAP Image


Shifting the Dial, the Productivity Commission’s latest report on Australia’s economy-wide productivity performance, will hearten those who want governments to play the policy-leadership role that Coalition MPs often seem uncomfortable with. In its discussion of healthcare, the report provides grounds both for optimism and for cynicism — optimism that overdue reforms might this time eventuate, and cynicism fuelled by the knowledge that ideology and ineptitude could leave yet another set of useful proposals languishing.

The Turnbull government comes late to the view that healthcare has a role to play in improving productivity; rather, its tendency has been to see the healthcare budget as an impost on the economy. It’s an approach inherited from John Howard and Peter Costello’s Intergenerational Reports and reinforced by the Abbott government’s dogmatic belief that federal healthcare spending at current levels is unsustainable.

A key driver of the review seems to have been the fact that while Australia has the third-highest life expectancy in the OECD, at 82.8 years, many people spend the last decade or more of their lives in ill health. Chronic illnesses, and the consequent demands placed on family members in particular, are having a measurable impact on employment rates and productivity.

Conversely, as the report’s foreword points out, rises in productivity contribute to wellbeing. But there is a caveat: they do so only if “effective redistribution and social support policies are in place.” As a 2016 Productivity Commission discussion paper noted, a rise in national prosperity can even work to increase inequality between population groups.

Yet the focus of this report — and of treasurer Scott Morrison’s remarks when he released it last week — is on healthcare rather than health, on jobs rather than wellbeing, and on productivity rather than the distribution of the benefits that will potentially result. Little attention is given to the healthcare sector’s role as a creator of jobs and as a centre of research, and its role in translating that research into practice. Nor does the report recognise how investment in healthcare services can itself be a driver of economic activity, especially in regional and rural areas.

But it is refreshing to see the Productivity Commission acknowledge that user needs are often not given priority, and that resources in health and social services need to be shifted to better match people’s preferences. This is a neglected aspect of efficiency, especially in relation to the needs of Indigenous people and people living with mental illness and disabilities.


Boiled down, the Productivity Commission makes six recommendations designed to improve the health of Australians.

Improving regional prevention and chronic care: Under this proposal, federal, state and territory governments would allocate funds to each Local Hospital Network to improve population health, manage chronic conditions and reduce hospitalisation. The funds would come from the activity-based funding currently provided to public hospitals, along with funding normally paid to general practitioners through the Practice Incentives Program and Medicare items related directly to prevention and chronic disease management. The prevention and care would be conducted in collaboration with Primary Health Networks, potentially ensuring greater collaboration between primary and acute care.

This recommendation also calls for the centrepiece of the Turnbull government’s primary care reforms, the yet-to-commence Health Care Homes model, to be modified to allow for local variants with supplementary funding. The Health Care Homes scheme has already been the subject of delays and considerable criticism.

It’s an approach that has been discussed often over the years and makes clinical and economic sense. But it has repeatedly been killed off by the federal–state financial wrangling and a lack of support from clinicians. Examples of how it might work do exist — Victoria’s Primary Care Partnerships scheme is one — and the idea has been implemented more fully and successfully overseas through Accountable Care Organisations and the community benefit requirements that apply to tax-exempt hospitals in the United States.

Eliminating low-value interventions more quickly: This is practical advice rather than a reform recommendation. Several mechanisms for identifying low-value healthcare interventions already exist, including the Medicare Benefits Schedule Review, the Choosing Wisely program, the Australian Commission on Safety and Quality in Health Care, the Medicare Services Advisory Committee and the Pharmaceutical Benefits Advisory Committee. The problem is that they move very slowly and rely on outside expertise.

Even when decisions are eventually made by these committees, the government is even slower to implement them, often paralysed into inactivity by the opposition of interest groups. And even when consensus is reached, getting clinicians to change their practices can be difficult and time-consuming.

Putting the patient at the centre of the system: This is an apple-pie goal with which everyone would agree — indeed, it is one of the aims of Health Care Homes — yet its implementation has proved elusive. Clinical turf battles, the failure of medical education to promote multidisciplinary teamwork, a fee-for-service system that rewards activity rather than outcomes — all work against change.

Like Health Care Homes, the review places great reliance on the better use of electronic health records. Its recommended patient-reported experience and outcome measures would be a useful mechanism for identifying where patients’ needs and perceptions differ from those of their doctors. Improvements in patient literacy would also help, but the implication here is that it is up to patients themselves to ensure they are at the centre of their treatment and care, when the onus should be on those who provide it.

The most noteworthy recommendation in this section of the report is that greater weight should be given to patients’ convenience. Surgery hours, transport and parking can be significant barriers to getting access to vital healthcare services.

Using information better: Australian governments collect a huge amount of data about health and healthcare but, as the review notes, it is often presented in ways that are messy, partial, inconsistent, duplicative and difficult to access. Often, too, the data is of little value, merely representing activity rather than results. Little effort is made to mine the data to ensure programs are properly targeted, outcomes measured, programs evaluated, and cost-effectiveness assessed.

The review wants all this to change. Policy analysts would agree, but resources will be needed to make it happen. Experts must agree on the tools and data needed to determine whether these reforms deliver the desired changes. It is notoriously difficult to measure productivity in sectors like healthcare, where the intended outcomes can be the subject of disagreement, and their measurement and appropriate timeframes are uncertain.

Using new technology to change pharmacy dispensing: Of all the reforms that could and should be made to pharmacies, a move to automatic dispensing scarcely ranks. If the goal is to better use pharmacists’ skills to encourage quality use of medicines as part of the primary care team, there are more effective ways of doing this. One possibility is to convert to a model where the practice of pharmacy is separated from the associated business of selling cosmetics, clothing and toiletries.

Regardless, we can be quite certain that nothing will come of this recommendation. The powerful pharmacy lobby has already pronounced its verdict (“off the radar in terms of silliness” and “reckless vandalism of the health system”) and a shaky Turnbull government is not likely to provoke it.

Modifying alcohol taxes: The review recommends that the federal government end the concessional treatment of high-alcohol, low-value products, primarily cheap cask and fortified wines. Interestingly, it doesn’t spell out in any detail the rationale and the health and societal benefits that would accrue.

Alcohol harms are undoubtedly severe and costly. It is conservatively estimated that the direct societal costs of alcohol are more than double the total alcohol tax revenue received by the Commonwealth. On that basis, it’s hard to oppose this measure, but it does raise important questions about the limited availability of alcohol and substance abuse programs and the fact that they are not linked more closely with programs dealing with mental health and domestic violence.

Perhaps most obviously, if the review was willing to consider changing taxation arrangements for alcohol, then why not for sugary drinks? Their consumption is linked to rising rates of obesity, which exact a huge and growing toll on society, productivity and the economy, estimated nationally at $130 billion a year. Absenteeism, presenteeism and workplace injuries all increase with overweight and obesity.

And one more thing: If governments are to be the leading agent of change, then the way they function — together and separately — needs to be reformed too. The review makes the case for a new Commonwealth, state and territory agreement, distinct from the activities of the Council of Australian Governments (though it also argues that COAG is in need of renewal). The potential deal-breaker here is that the review argues that tax reform should be an integral part of the reform agenda.


So what’s missing from these recommendations? There are some obvious gaps, and it’s tempting to see some of them as a calculated effort to avoid controversy and sidestep the Turnbull government’s ideological barriers. Most obviously, the key role that prevention and dealing with the social determinants of health could play is simply glossed over.

Take mental health, for example. About one in five Australians has a mental health disorder and our national suicide rate is relatively high. The review notes that successful prevention and early-intervention efforts could boost labour force participation by up to 26 percentage points, but it makes no recommendations about which programs should be strengthened.

More broadly, the report’s value is limited by its silo approach. The vital links between education and health are not examined; a separate section on better functioning towns and cities fails to acknowledge the relationship between urban planning and health; and the push for better ways for governments to work together doesn’t discuss a whole-of-government approach to tackling “wicked problems.”

Some commentators have also expressed concern that the Productivity Commission’s proposals are meant as cost-saving measures. The review discussion paper revealed that the government asked the Productivity Commission to look at the design of healthcare and education systems where “the provision of goods and services is made with little or no pricing signals to consumers” — a familiar theme of the Coalition’s push for increased co-payments and fees for healthcare services. And despite the treasurer’s sudden enthusiasm for “more integrated and patient-centred healthcare,” he is continuing to push for market-based systems and contestability, even in areas such as coordinated care, mental health and Indigenous health, where this is most evidently not the right model.


Reform requires boldness, vision and tenacity. It takes time to garner support and carefully implement changes, and even more time for them to deliver benefits. Because these time frames are inevitably longer than those of budgetary and political cycles, significant reforms need bipartisan agreement, along with long-term funding commitments and independent agencies for implementation and evaluation.

The Productivity Commission says it has “deliberately floated ideas that cannot always be implemented immediately, but where preparation and further testing is needed for fruition.” A flow chart in the 2016 discussion paper  shows how it goes about “sorting the wheat from the chaff” policy-wise, and the final filter is political and practical feasibility. This filter has obviously been used on these recommendations.

Will Australian governments, with the Turnbull government as leader, be bold enough to implement the recommendations of this review, despite their timidity in the face of loud voices and opposition from entrenched interests? Or will it join a growing pile of similar recommendations to government gathering dust in the archives? ●

Read next

2568 words

Patient policy-making for a region on the move

There are no quick fixes for a crisis like the forced displacement of Myanmar’s Rohingya, but a new collaboration has been preparing the way for an effective regional approach

Right:

Indonesian foreign minister Retno Mardusi, shown here with her Australian counterpart Julie Bishop at August’s Bali Process Government and Business Forum, was the first foreign official to visit Myanmar and Bangladesh after the current Rohingya crisis began. Richard Wainwright/AAP Image

Indonesian foreign minister Retno Mardusi, shown here with her Australian counterpart Julie Bishop at August’s Bali Process Government and Business Forum, was the first foreign official to visit Myanmar and Bangladesh after the current Rohingya crisis began. Richard Wainwright/AAP Image