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Medicare goes local in search of “disruptive innovation”

4 April 2012

Can local networks pull off the healthcare reforms that have eluded state and national governments, asks Melissa Sweet

Right:

Medicare Locals have eighteen months to prove themselves, argues the chair of the Western Sydney Medicare Local, Di O’Halloran (above)

Medicare Locals have eighteen months to prove themselves, argues the chair of the Western Sydney Medicare Local, Di O’Halloran (above)



AT a recent breakfast meeting in the heart of Sydney’s sprawling western suburbs, Di O’Halloran was introduced to the audience as someone known for getting things done. In previous lives O’Halloran worked as a horse trainer and a GP, but she stopped clinical work several years ago to concentrate on what she calls a “personal crusade” to achieve a better, fairer health system.

A conjoint professor in the department of general practice at the University of Western Sydney, O’Halloran works with a range of agencies and groups, including as chair of the Royal Australian College of General Practitioners Presidential Taskforce on Health System Reform. But it was her role as chair of the Western Sydney Medicare Local, one of sixty-two new primary healthcare organisations trying to find their footing in the shifting sands of health reform, that she was explaining to the audience gathered in Parramatta. As O’Halloran spoke plainly about the challenges ahead, she gave every impression of someone juggling multiple balls while negotiating a particularly difficult tightrope.

Medicare Locals – independent companies established with federal funding – are being asked to do what may well prove to be impossible: to be a type of super-bandaid patching together a fractured health system. Their task is to integrate a fragmented primary care sector by helping GPs, practice nurses, psychologists, physiotherapists, community health workers, allied health professionals, pharmacists and others in the public and private sectors to work more closely with each other.

In addition to roping together the silos within primary care, Medicare Locals are expected to develop better links between primary care and public and private hospitals as well as aged care services. They are intended as the glue in a system whose entrenched funding and structural divisions have not been budged by efforts at national health reform. In a sense, they are being asked to do, locally or regionally, what endless meetings of bureaucrats and politicians haven’t achieved nationally.

Beyond all this, they are also charged with shifting the focus of primary care to population health. Rather than simply responding to the needs of patients who present for treatment, the sector will for the first time be held accountable for the health of a particular geographic area. If the ambition is realised, this will mean looking beyond clinical services to the “social determinants of health” – things like housing, food supply, transport, education and work opportunities, and social infrastructure and support. And Medicare Locals are expected to do all of this with modest means – a federal allocation of $493 million over four years – relative to the heft of the institutional interests they are charged with influencing and the breadth of their responsibilities.

The size of the task ahead shouldn’t be underestimated, says Mark Booth, a health economist previously involved in primary healthcare reform in Britain and New Zealand, and now first assistant secretary in the Department of Health and Ageing’s primary and ambulatory care division. “This is an enormous change for primary care in Australia,” he told the Parramatta meeting. “Medicare Locals don’t have an awful lot of money,” he added, and so they will need to work “very smartly.”

This theme is echoed by Philip Davies, professor of health systems and policy at the University of Queensland and a director of the Metro North Brisbane Medicare Local. “I don’t think it’s really quite dawned on them or the government just how nebulous and therefore how difficult the job they are being given actually is,” he says. “They are trying to organise a part of the health sector which comprises largely independent small businesses over which they have no authority. We’ve got a primary healthcare sector that is a patchwork, and knitting its disparate elements together is core business for Medicare Locals – but the knitting needles are slippery and the wool is in pieces.”

Di O’Halloran uses another metaphor to describe the place of Medicare Locals alongside the mega-resourced hospital sector. “We are,” she told the Parramatta meeting, “the pimple on the pumpkin.”

But this need not be entirely a bad thing. Smaller, newer organisations can be more nimble and are less likely to be held back by the weight of bureaucracy, tradition and culture that so often stymies change in health. Perhaps they will prove more able to support a bottom-up approach and, as one policy expert puts it, to become “disruptive innovators.”

Emil Djakic, a Tasmanian GP who chairs the Australian General Practice Network (which is soon to morph into the Australian Medicare Local Network), says the evolution of sixty-two Medicare Locals out of 120 divisions of general practice is a “dramatic” development that will provide an infrastructure to sustain improvements to the healthcare system in coming decades. He envisages that Medicare Locals will go on to win funds from sources other than federal and state departments of health – from education, social services, water, planning and regional community agencies, for example. At long last, he says, there will be an infrastructure to help Australia achieve the World Health Organization’s principal that health should be part of all government policies.

In the meantime, he is pleased the Medicare Local covering his hometown of Ulverstone has begun identifying and plugging gaps in after-hours care. “The stunning thing about that is it’s the first time in sixteen years anybody has actually approached this practice and said, ‘What are you doing [in after-hours care], what’s working, not working, what’s missing?’” he says. “It’s the first time someone is asking the community, including the service providers, if their needs are being met.”


AUSTRALIA is not alone in trying to shift the centre of gravity of the health system from hospitals to primary healthcare. New Zealand, Canada and Britain, to name just a few, have already em­barked on this journey, with various results. For decades, international research has backed up the case for strengthening primary healthcare, both to achieve greater equity and to use resources more efficiently – a particular concern for Australia, given our relatively high rate of hospital bed use. The demands of ageing populations and a rising tide of chronic diseases have added impetus to the push for more sustainable, responsive systems.

According to Booth, other factors driving primary healthcare reform internationally include changing methods of delivery that have blurred the boundaries between acute and community care – with much of the care previously delivered in hospitals now occurring in the community – and the move to more collaborative, multidisciplinary care.

Another driving force is the growing recognition that super-specialised healthcare exacerbates health inequalities. As the World Health Organization put it in a 2008 report, primary healthcare has the most chance of subverting the “inverse care law,” which holds that the wealthiest people – those whose need for healthcare is often less – consume the most care, while those with fewer resources and more health problems consume the least. “Public spending on health services most often benefits the rich more than the poor in high and low income countries alike,” notes the report.

As Di O’Halloran’s understanding of the health system grew in her early years of working as a doctor, so too did her appreciation for the reality of the inverse care law. “The more I got involved in western Sydney, the more conscious I became of the need to have a system that focuses more on people in greatest need and at greatest risk – which it clearly doesn’t,” she says.

Indeed, there is much grim reading in a population analysis conducted by the Western Sydney Medicare Local, which covers an area of more than 820,000 people. It is one of the fastest-growing and most culturally diverse regions in the country, with Australia’s largest urban Indigenous population and many refugees. Some relatively wealthy areas sit alongside pockets of extreme disadvantage.

In Auburn, Blacktown Southwest and Parramatta South, roughly a third of families with children under fifteen are jobless – more than twice the figure for metropolitan Sydney. In these areas, nearly a third of women smoke during pregnancy (more than three times the rate across Sydney), and babies are more likely to have a tough start in life by being born under-weight. Rates of domestic violence and psychological distress are also much higher.

While the area has more than its fair share of poor health, it also generally has less access to health and aged care services – fewer GPs, practice nurses, psychologists, social workers and aged care places per person – than wealthier parts of Sydney. Rates of chronic disease are higher, as is hospitalisation for patients with diabetes. As one frustrated local community nurse told me, “Mt Druitt has the highest rates of diabetes in the state but all the diabetes workforce live in the eastern suburbs.”

On the positive side, however, these might just be the ideal conditions for enabling the types of change the health system is generally so successful at resisting. “Innovation is easier in disadvantaged areas,” says O’Halloran. Her experience suggests that when GPs and other service providers are stretched, they may be more willing to try new ways of doing things.

The Western Sydney Medicare Local has evolved out of the WentWest division of general practice, which had a reputation for fostering innovation and collaboration across jurisdictional boundaries. While many other Medicare Locals are still wondering how to advance relationships with their local hospitals, this one has begun holding regular joint executive meetings with its local hospital network, the Western Sydney Local Health District.

O’Halloran, who is on the boards of both organisations, says they have agreed to focus on shared priorities, including the needs of children and families, the aged, people with chronic and complex conditions or mental health problems, and Aboriginal and Torres Strait Islander people. At a system level, the joint priorities include population health planning, e-health, after-hours care, and a research, development and evaluation framework.

Another joint priority is to continue work on local sites of HealthOne, a statewide initiative of the previous NSW government to bring together general practice and state-funded primary and community healthcare services. Janis Paterson, a community nurse who worked with a HealthOne hub at Mt Druitt, was involved in intensive case management for patients with chronic conditions; the approach, she says, brought benefits for both services and patients.

Paterson describes the case of a man with multiple chronic conditions who was presenting to hospital about sixty times a year and seeing his GP more than twice a week. At case conferences with the patient and his service providers it became evident that when he was taking himself off to hospital for chest pains he was, in fact, suffering panic attacks. “No one had been looking at the total picture for him,” she recalls. “He had seen his mother die, so that was precipitating the panic attacks when he felt unwell with his chronic illness.”

After receiving psychological help and a comprehensive care plan, the next year he turned up to hospital thirty-eight times. The year after that it was sixteen, and then it was eight. He also lost weight and developed a healthier lifestyle. “It made such a difference to his life,” says Paterson. His is a success story she aims to replicate in her new role as a care coordinator with the Western Sydney Medicare Local. Her job, funded by the local hospital network, will focus on improving the coordination of care for “frequent flyers” – those presenting regularly at hospitals. She will liaise with their GPs, identify referral services, and help coach them in managing their own conditions better.

While the aim is to keep people out of hospital, Paterson hopes also to make a difference for patients and their service providers. But she doesn’t expect this to happen overnight, particularly given the broader background of economic and social disadvantage.


A SIMILAR point is made by Tim Usherwood who, for the past decade and a half, has spent a day a week working at the community-controlled Aboriginal medical service at Mt Druitt. Usherwood, professor of general practice at the University of Sydney and a director of the Western Sydney Medicare Local, works in a purpose-built clinic alongside Aboriginal health workers, a social and emotional wellbeing team, community nurses, psychologists, grief counsellors, a comprehensive dental team, midwives and child health nurses.

“We are able to provide the joined-up primary healthcare at the Aboriginal medical service that is not often possible in private general practice,” he says. Even so, while he has seen the quality of the service improve over the years, there has not been a commensurate improvement in the health of locals.

“The health status of the community reflects the many social determinants of health, and the reality is that I can’t say I’ve seen a great improvement in the general health of the population in western Sydney in the time I’ve been working there,” he says. “High quality primary healthcare is enormously important in promoting health but sometimes what you’re doing is picking drowning people out of the river. What you can’t do is address what’s pushing them in the river in the first place.”

Usherwood hopes Medicare Locals will enable a more effective voice for disadvantaged communities. “We’ve got a strong role now to speak for our communities and for our primary healthcare services in negotiations with local health districts and other state and local government services,” he says.

At the Newcastle offices of the Hunter Urban Medicare Local – another seen as leading the pack in primary healthcare innovation – the CEO, Mark Foster, also has a sense that the new organisation will wield more clout than its forerunner division of general practice. “The minute we were announced as the Medicare Local, I noticed that there seemed to be a change in the way that other organisations viewed us,” says Foster, who also works part-time as a GP. “There’s definitely been a step up in the level of interest and the seriousness with which some organisations want to work with us.”

A good example of the increased engagement is a collaborative project with the Hunter New England Local Health District, called Health Pathways. Over the next few years, he expects it will result in web-based referral pathways for hundreds of conditions. These will help GPs identify options in both the acute and the community sectors, ensuring they are referring appropriately and providing the services with the information they need. The pathways will also include a focus on health promotion. Foster is confident that helping health professionals to communicate in a systematic, consistent way will improve patient care.

As well as a focus on e-health, another of his priorities is to identify and meet the education needs of primary healthcare professionals, preferably via multidisciplinary programs. “Education can also improve the interpersonal relationships so people can start putting faces to names and start having discussions with people from other professions that are perhaps different to what they otherwise might have imagined,” he says.

Like O’Halloran, Foster sounds somewhat overwhelmed by the “huge” expectations surrounding Medicare Locals. He sees “a pretty big mismatch” between what they are supposed to do and their resourcing. “The risk for Medicare Locals is that they are not able to meet everyone’s expectations because they haven’t been properly resourced.” He notes that the federal funding for his Medicare Local is only about 10 per cent more than the previous division’s turnover. “I can’t understand the funding caution,” he says. “It’s a pivotal piece of the government’s health reform and absolutely critical for their hospital reforms to work. It’s a very small investment compared to the investment in the hospitals.”


LAST year, the Australian General Practice Network analysed 118 media articles about Medicare Locals published between March and June. Many of the rural and regional stories were positive and the metropolitan coverage, while scarcer, tended that way as well. What the study described as “the controversial and negative stories” about Medicare Locals were found elsewhere, in the GP magazines Australian Doctor and Medical Observer. Any further analysis would no doubt find that this criticism continues.

Indeed, a recurring theme of discussions among Medicare Local leaders is the need to maintain GP engagement. Says Di O’Halloran, “Medicare Locals will only succeed if their GPs are engaged and willing to be involved and willing to make extra effort to play the game of health reform. To do that, Medicare Locals have to keep them informed, be very open and transparent, to make sure they’re not an arm of government, that GPs are still front and centre in their thinking and goals, and that GP services will be enhanced. This isn’t just window dressing, this is a critical component of Medicare Locals’ ability to achieve change.”

Given that GPs are being asked to share power and influence and to see their own clinical practice and business models in a broader context, fostering this engagement won’t be straightforward. At the same time, GPs face considerable uncertainty about how the governance of the new organisations will play out and about the external environment, including what a change of federal government might mean.

With so much media attention focused on hospitals, emergency departments and surgery waiting lists, an ongoing risk is a political disengagement from primary healthcare reform. One senior figure fears a change of direction under a new federal government. “It requires a consistent policy direction over a period of five, ten, twenty years; if we don’t get that we’re doomed,” says Richard Matthews, a former senior NSW health bureaucrat now working as a health policy consultant.

There are also more immediate concerns. Medicare Locals still don’t know what indicators will be included in the Healthy Communities reports, which are expected to provide an accountability framework through the new National Health Performance Authority. Some worry that the shift to activity-based funding for hospitals might force the hospitals to focus on throughput rather than working with their fledgling neighbours. “There is huge potential for perverse incentives to do things in hospital that should be done in the community and to develop models of care simply to get Commonwealth funding,” says Matthews.

It’s too early to tell which model of Medicare Local is best able to meet these many challenges. The organisations themselves vary enormously in size, capacity, governance (some have individual membership, others have organisational members), and the configuration of their state and territory partners. (Victoria, for example, has had a network of primary care partnerships in operation for more than a decade.) In some places, Medicare Locals will be competing for the attention of hospital networks.

While the Western Sydney Medicare Local is fortunate to have evolved out of a successful single organisation, others are dealing with a much messier transition, bringing together disparate organisations, sometimes in acrimonious circumstances. Nor are all divisions making the leap to become Medicare Locals; some are continuing as separate organisations.

The South West WA Medicare Local, for example, sees itself as an entirely new entity rather than a creature of the divisions. So far pharmacy organisations account for the majority of its members, says its transitional CEO, Suzanne Leavesley. “The pharmacists have seen this as an opportunity for them to expand their role,” she says.

Some Medicare Locals are juggling more complexity than others. The Country North SA Medicare Local faces a massive task in covering 800,000 square kilometres, and negotiating with forty local hospitals, twenty-seven community health services, eight health service clusters, ten Aboriginal health communities and twenty-five health advisory committees, within twenty-eight local government areas, ten state electorates and three federal electorates. And this list doesn’t include all of the non-government agencies in its catchment.

In the Victorian provincial city of Geelong, however, the CEO of the Barwon Medicare Local, Jason Trethowan, feels relatively blessed to have only one large hospital in his area, and by the fact that people in the local health system tend to know each other. “People from the city look at us with a bit of envy because we can get on and do things that it may take them longer to do,” he says. Trethowan exudes a quiet optimism about the future, and is hopeful of achieving “cooperative federalism at a local level.” While he may not have the big budgets of hospitals, he says “relationship capital” will prove to be the key currency for Medicare Locals.

Trethowan’s priorities include working with the hospital to reduce emergency department demand and strengthening e-health capacity (most of the GPs, specialists and allied health providers in the area are already connected to share patient information online). He also expects to work with local government and community organisations to tackle the social factors influencing health. Diabetes stands out, he says, as an area in which organisations other than health services can play an important role – through land use and planning decisions, for instance, to encourage healthier eating and more active lifestyles. Also on his to-do list is a primary healthcare needs assessment, which will mark a significant change from the past approach under which programs were usually specified centrally.


Trethowan’s organisation covers about 280,000 people. Unlike many Medicare Locals, it is a service provider, with about 40 per cent of its seventy-five staff being clinicians. They mostly work in youth health, mental health, diabetes and aged care – all areas of identified market failure, says Trethowan. “We have no ambition to be providing services where the public or private system is capable of doing it. Instead, we’re filling gaps,” he says.



SOME hope that Medicare Locals may also prove a first step on a journey towards health funding being held and allocated at a regional level, with streamlined local governance and pooled funding for local hospital, primary healthcare and aged care services. “Ultimately most people know in their heart of hearts that there should be a single point of accountability for all health services within a geographic area,” says Richard Matthews. “Once the Medicare Locals have got the infrastructure to enter into such an arrangement as equal partners, that will bring real opportunities for reform.” But he’s not surprised that this vision isn’t being promoted. “There is such a myriad of vested interests that this reform will need to be carefully managed in order to achieve a single point of accountability.”

Daryl Sadgrove, CEO of the Australasian College of Health Service Management, is another supporter of regional fund-holding, seeing it as the best chance for breaking down funding and service silos. But if this is the long-term goal, then it should be spelt out, he says. “I’ve had discussions with the Department [of Health and Ageing] that encouraged me, that made me feel like they did have a long-term, big view for these organisations potentially as fund-holders,” he says. “That’s a very exciting future, but if that is the vision, I think it should be a very strong and public vision, and the Medicare Locals can then start developing the board mix and skills and teams that they may need to support that vision. It’s a huge jump from being a ten- to fifteen-member organisation in the community to being a billion dollar fund-holder.”

In the meantime, Danny O’Connor, chief executive of the Western Sydney Local Health District, is committed to driving integration of the state and federally funded sectors at a local level. In a previous role, he oversaw the integration of state-funded community health services and general practice at Molong in rural NSW. It was a difficult job and remains a work in progress, but it provides a model for what he would now like to see happen at the Mt Druitt HealthOne site.

The goal is to end up with a single governance structure and operational environment, with the GPs and community health workers sharing a building and patient records. O’Connor says such an arrangement has the potential to increase the productivity and performance of community health workers. He would also like to see hospitals put under pressure to make the new primary healthcare organisations succeed. “It’s in my interest that the Medicare Local succeeds because it is an important linchpin in helping me to reduce hospital admissions,” he says.

And how will we judge that success? For Vern Hughes, convenor of the National Campaign for Consumer-Centred Health Care, the most important indicator will be whether Medicare Locals enable innovation rather than focusing on managing existing systems. They should be adopting innovative approaches from other areas of human services, such as disability services and Indigenous programs, that might be applicable to health. “We need to shift the focus from the players and elements of the system to innovations,” he says. “There is a huge need for innovation but there is just no tradition in the health system of people using the term innovation and thinking in innovative ways.”

Tony Hobbs, a GP from Cootamundra in rural NSW who helped lead the development of the primary healthcare reform strategy, remains disappointed that the goal of giving the federal government full responsibility for primary care funding and policy was not achieved. He will judge Medicare Locals successful if, in five years’ time, they are providing support to the full range of primary healthcare providers and there is better coordination of services. But the most important measure, he says, will be whether the local community feels a sense of ownership. Like its counterparts in western Sydney and Tasmania, Hobbs’s Medicare Local plans to run a citizens’ jury to hear what a representative sample of the community would like the organisation to do. He also hopes for a joint community advisory group for hospitals and Medicare Locals.

Health policy analyst Jennifer Doggett says that Medicare Locals should be judged by measures that reflect consumers’ priorities and are developed with consumer input. “It’s not clear yet what exactly is going to be included in the Healthy Communities reports,” she says, “but there is no point in Medicare Locals embarking on consumer consultation processes and making efforts to become more consumer-focused if, in the end, their performance is going to be assessed on measures that do not accurately reflect consumers’ needs.”

According to the federal government, Medicare Locals will be evaluated in terms of “access to services, quality of service delivery, financial responsibility, patient outcomes and/or patient experience.” Doggett says, “It may be just a matter of rhetoric but this looks to me as though ‘patient experience’ is the last priority… There is no point to a Medicare Local increasing access to particular services if they are not the ones that consumers want.”

While Di O’Halloran argues that Medicare Locals have eighteen months to prove themselves, given federal election timing, others caution that it will take much longer to assess their true impact. Says Daryl Sadgrove, “The potential is enormous but it’s a very long-term vision and we’ve got to all be tolerant that we can’t build Rome in a day. A ten- or fifteen-year vision is what we should be looking to.”

Perhaps the most appropriate metaphor for health reform is that of a marathon. Sprinters need not apply. •

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