Before the election, I made this commitment: that we would end the blame game which had gone on for too long, and that with the reform of our nation’s health and hospital system, that the buck would stop with me.
I said we were determined to improve health and hospitals right across the nation, not just in a few marginal seats here and there.
I made the commitment that if elected to Government, the Commonwealth would take responsibility for major reforms of Australia’s health and hospitals system. And I said that if the States and Territories were not willing to implement cooperatively, a comprehensive health and hospitals reform plan to end the blame game, the Commonwealth would take the matter to the Australian people for a mandate to take full funding responsibility for the system.
The Government stands by each of these commitments. The Government takes its election commitments on health reform seriously, as we have done in each of the other major policy reforms we have embraced.
Today, I will outline our broader approach to the recommendations contained in this health and hospitals reform report. This, by any definition, is a major report with major implications for the nation, and I warn you in advance that my remarks today will be substantial in length, 40 minutes or more in duration – settle down, buckle up.
But I believe that it’s necessary given that this one of the most complex areas of policy reform to be undertaken by Government.
Since coming to office just over 18 months ago, the Government has demonstrated a serious commitment to health care and health reform.
We have made significant additional recurrent investments in the system – on top of the one-off injection of half a billion dollars into the system in 2008-09 to deal with the immediate crisis in hospital funding we confronted on coming to office.
Last November, we delivered a record $64 billion National Healthcare Agreement which meant:
- $60 billion for health and public hospital services over the next five years.
- A $1.1 billion investment in training more doctors, nurses and allied health workers – the single largest investment in the health system’s biggest capacity constraint.
- A $750 million investment in taking pressure off emergency departments – with an agreed performance benchmark that 80 per cent of emergency department presentations would be seen within clinically recommended triage times by 2012-13, as recommended by the Australian College of Emergency Medicine.
- A further $500 million investment in sub-acute care beds.
- A further $448 million investment in prevention, expanding the preventive health investment to $872 million – the single largest investment by an Australian Government in prevention, ever.
- And this comes on top of the immediate $600 million investment we made on coming to office in slashing elective surgery waiting times – just in its first stage, delivering 41,000 extra elective procedures, well above our target of 25,000.
In addition to the measures contained in the National Health Care Agreement, we are also investing more than a quarter of a billion dollars in primary health care services in local communities – with 32 new GP Super Clinics, and increased GP training places.
Alongside these funding increases, we have developed robust accountability measures through the COAG Reform Council to measure clearly real improvements in areas like hospital waiting times; screening for breast, cervical and bowel cancer; and vaccination rates.
These investments are already being implemented because we regarded them as urgent, and because they are not contingent on the larger blueprint for health care reform I am discussing today.
We are also now undertaking historic investments in nation building health infrastructure.We are investing $3..2 billion allocated to 36 major projects across our hospitals and medical research institutes.
And we have committed the single largest investment in cancer care infrastructure in Australia – with a $1.2 billion funding investment for two world-class comprehensive cancer centres at Parkville in Melbourne and the Chris O’Brien Cancer Centre at Royal Prince Alfred Hospital in Sydney, and a new national network of centres integrating cancer research, education and care.
All up, the Government has delivered substantive progress in health care reform. And these reforms have reflected our priorities.
- A commitment to prevention, because prevention is better than cure.
- A commitment to primary care, because our GPs represent the front line of care.
- A commitment to invest in the critical problem areas of our hospitals – to reduce waiting times for elective surgery and to improve access for our emergency departments.
- A commitment to sub-acute care to reduce preventable admissions to hospitals.
- A commitment to investing in our health workforce and health infrastructure needs.
- And a commitment to improve accountability for the health system overall, reflected in the new measurement systems incorporated for the first time in COAG reforms.
But the time has now come to move to the next stage of comprehensive health and hospital reform for the nation. Early last year we established the National Health and Hospitals Reform Commission, the first comprehensive review of the nation’s health system in nearly two decades.
Ten leading health experts were appointed to the Commission, bringing together a wealth of experience from past roles as clinicians, hospital and health system administrators, medical researchers; through roles in the community sector, remote area nursing, and in the most senior levels of government including a former Liberal Health Minister, Rob Knowles and a former Labor Premier Geoff Gallop.
The Commission is chaired by Dr Christine Bennett, who is former Chief Executive of Westmead Hospital and Community Health Services, Chief Medical Officer of BUP Australia, and CEO of Research Australia. They were charged with the job of developing a long-term plan for health reform.
The Commission’s initial task was to advise on the framework for the next Australian Health Care agreements, which were concluded last year. It provided valuable advice, assisting with the development of new performance benchmarks designed to ensure substantial returns on the new investments that we were making in the health care system.
It is for this reason that the bulk of the Government’s investments in the health and hospital system so far have in fact been targeted in the areas that the Commission has identified in the report released today as priorities for the long term.
Of course, the Commission’s larger task was to report on a long-term health reform plan to provide sustainable improvements in the performance of the health system for the future.
The Commission undertook a substantial and extensive consultation process – receiving more than 800 submissions from governments, professional associations, think tanks, health experts and patients and consumers that rely on our health system.
It also held more than 100 consultations among health experts, health consumers and people in every part of the health system. It also went out of its way to hear the voice of people in regional Australia – locations like Dubbo, Alice Springs andCairns.
In February, the Commission provided the Government with an interim report. That interim report focused on proposals with four key themes for reform:
- taking responsibility
- connecting care
- facing inequities in the system and
- and driving quality performance
On June 30 the Government received the final report of the Commission, and after having the opportunity to assess that report over the last couple of weeks, we are releasing it today. I would publicly thank Christine Bennett and the other Commissioners for their extraordinary dedication to this complex task.
In releasing the Commission’s report today, I am also setting out the next steps forward for national health care reform. As we embark on the reform of our health and hospital system, we are identifying seven guiding principles for reform:
- One – Building a health system that is focused on people, not on systems – and which delivers genuinely ‘joined-up’ services that are easier for an individual patient to navigate, rather than facing the frustration of not knowing where to go because finding your way through the system is just too hard.
- Two – maximising our focus on prevention, because prevention is better than cure.
- Three – delivering comprehensive primary care or frontline care that properly connects GPs and community care on the one hand and acute and sub-acute care on the other.
- Four – most critically, minimising waiting times for acute care – for both our public hospital emergency departments and for planned elective surgery – and increasing the availability of hospital beds.
- Five – improving the care provided after hospital – by doing a better job in delivering sub-acute care and community based care
- Six – providing better access to care, improving the quality and safety of our health care system and achieving better health care outcomes for all Australians.
- Finally, doing all this more efficiently with a clear-cut delineation of the roles and responsibilities of the Commonwealth and the States – cost-effectively for the health system and at minimum cost to individual patients.
The Health Reform Commission has provided critical reasons as to why system-wide health care reform is necessary now. As a starting point, however, it is important to recognise the strengths of our health system.
In many respects, our health system compares well to other nations. By international benchmarks, we have one of the highest life expectancies in the world. And we achieve relatively good health outcomes with an expenditure that is below the OECD average, at 8.7 per cent of GDP in 2006-07.
But things are changing. Demographic changes such as population ageing will see the health cost curve rise in the years to come – with 1.6 million Australians aged over 85 by 2047, four times as many as there are today.
These changing demographics will increase demand for health services – contributing 23 per cent of the total increase in health outlays by 2033. Our unhealthy lifestyles are also catching up with us, with escalating rates of chronic disease. Combined, these factors will result in rising costs to the Pharmaceutical Benefits Scheme, alongside the higher cost of medical technologies and skilled workers.
If we continue to provide health services on the basis of business-as-usual, with no policy change, our health and aged care costs are forecast to rise sharply from around nine per cent of GDP, now, to 12.4 per cent of GDP a little over two decades from now.
By any standard this is a very large increase indeed. It goes from $96.5 billion in ’07-08 to $246 billion in 2032-33. These changes are also putting greater pressure on the universality of health care, the cornerstone of the Australian health system since Medicare.
Indeed already, we see faults and strains on the system that the Commission concludes are leading to the emergence of a two-tiered health system, with the best quality care becoming available only to those who can afford it – or those who are located in the right places. The more remote you go and as access to services dwindle, the lower the Medicare benefits returned per patient.
Meanwhile, the impact of the growing pressures on our health system are falling disproportionately on the most disadvantaged Australians – those with the least capacity to bear those strains. Another reason for change is that we need a health system built around the needs of patients, not providers.
The health system of the past was built on a model of care where most treatment was provided within the walls of a hospital. But times have changed, models of care have changed, and the needs of patients have changed as well. It’s time we had a health system that caught up with these changes.
A health system that places the needs of the patient first and that helps the patient navigate what can be a completely confusing system for them. But there are a few better pieces of evidence of that need for change than the fact that today we spend just two per cent of our health funding on prevention, and 70 per cent on providing acute care. The pie chart on your screen shows this clearly
In other words, our health system only starts caring about people’s health when they get sick instead of investing to keep them fit and well as long as possible.
In principle we all know that prevention is better than cure – but there’s a lot to be done to make that a guiding principle of our health system and the funding of that system. Focusing on preventative health means re-thinking many aspects of our health system.
Furthermore, one of the most important is to build a strong, robust and efficient primary health care system – that is, providing better access to front line care through our GPs and related community care services.
On this point, Australia is beginning to fall behind. Our GPs in particular are under increasing pressure to provide services that are more appropriately provided by other health professionals, with the result that many patients either fall through the cracks or are forced into the hospital system.
In recent years there has been a shift towards larger practices, but large practices still represent only about half of all practices. An even smaller proportion of these larger practices provide genuine multidisciplinary care.
Another critical sector where there are significant inefficiencies are our public hospitals, arising from a patchwork of inconsistent and sometimes conflicting financial, clinical and jurisdictional responsibilities.
One out of every three Australians who present to public hospital emergency departments are not seen within a clinically recommended time – and this has not changed for quite some time. And one out of every six Australians on a waiting list for elective surgery are not seen within a clinically recommended time.
The Commission’s Report estimates a productivity gap between current and optimal efficiency of our hospitals of somewhere in the order of 20 to 25 per cent – a potentially massive source of improved service delivery. The Commission also notes that aged care services will need to respond to population ageing by at least doubling the number of aged care places from 223,000 places to 464,000 places by 2030.
Provisions will also need to be made for greater flexibility in the provision of aged care services.
And the Commission notes there is scope for greater efficiency in the provision of aged care as well, concluding that aged care providers could be 17 per cent more efficient if all operated at the level of the most efficient services, creating the capacity for an additional 23,100 clients in the aged care sector.
Dental health is identified as one of the major access and equity gaps plaguing our current health care system.
The Commission cites research from earlier this decade estimating that there were some 650,000 Australians on our public dental waiting lists – among them our pensioners and lowest income earners – with an average wait of two years for essential dental treatment. These public patients experience significantly poorer oral health outcomes than the general population.
We also face a serious problem of rising mental illness in our community. Some 65 per cent of people who need mental health care go untreated. This starts with young Australians. A lack of early identification services and intervention, forces people suffering from acute mental illness to turn to hospital-based services as their first and only option for help.
Further (inaudible) we have a major problem with adequacy of the health workforce – particularly in rural and remote Australia. This is a problem today, but it will become a greater problem in the future, with the vast increase in the demand for health workers.
Finally, the Commission concludes better data is equally vital for monitoring the effectiveness of reforms to be undertaken so we can measure the outcomes of the changes to the inputs we may make.
These, then, are some of the major reasons canvassed by the Health Reform Commission to underpin what they describe as a system that has now reached a tipping point – where fundamental reforms are now needed, rather than just tinkering at the edges
The Commission has outlined an extensive and graduated reform plan to address these major emerging challenges for the system. Having reflected on the advice in the report, the Government faces three strategic options for the future.
Our first option is a partial takeover of the health system, with the Commonwealth taking responsibility for the following:
- All preventative care; all primary care;
- all hospital outpatients; all dental care;
- all aged care;
- all non-acute mental health services;
- 40 per cent of the funding for all acute hospital patients, and
- all sub-acute care delivered outside of our hospitals.
In itself, this would deliver the single most comprehensive health and hospital reforms since the introduction of Medicare.
Let me now go to some of the content of these individual recommended reforms.
- First, the Commission recommends that we need to make prevention a focus of our health system.This means national leadership through an independent National Health Promotion Agency and governments together committing to long-term targets for health outcomes.
- Second, to deliver better connected care, the Commission recommends a series of reforms across the health system. Primary care services should be established as the cornerstone of a future person-centred health system, with the Commonwealth undertaking full funding responsibility. This should be supplemented by investment in local health infrastructure, so Australians have access to ‘one-stop-shop’ community health services and a broad range of services with extended opening hours at more convenient times for patients, as was reflected in one of the presentations from an Australian citizen about his concerns about what he needs from the health system today.
- Third, the Commission recommends our hospitals of the future should deliver highly specialised, technical care – with improved access to care for patients and new funding arrangements to make that access possible, including:
New National Access Targets that are used to measure and report on whether people are accessing the services they need and when.
Second, a new way of funding hospitals with the Australian Government paying States and Territories a set amount for each episode of care and treatment that public hospitals provide, otherwise called activity based funding.
Third, improving accountability in our hospitals, with public and private hospitals required to report publicly on performance against a national set of indicators which measure access, efficiency and quality of care provided.
Fourth, reshaping our hospitals to separate elective and emergency services, to help prevent planned surgery and procedures being cancelled when emergency patients take priority in future planning.
Five, reforms to public hospital outpatient services to more closely meet patients needs, including providing more of these services in community settings.
Six, strengthening subacute care as a priority for health infrastructure investments to help provide more help for people to recover and restore their health following acute intervention.
Furthermore, the Commission’s proposals for aged care reform are significant. They include more choice for consumers by lifting the current restrictions on the number of aged care places on offer, and providing greater scope for people to choose for themselves between community or residential care.
Also, making the system work better by funding people, not places, supplemented by streamlined, consistent assessment and aged care staff that are trained to support consumers to complete advance care plans. And, the use of better technology to improve the safety, efficiency and effectiveness of aged care.
In addition to making our health system work together more effectively, the Commission says we also need to target the major gaps in our system to deliver better access for patients across all categories of health need.
The Commission recommends a new National Aboriginal Health and Torres Strait Islander Health Authority to hold all health services to account for providing the appropriate services for Aboriginal and Torres Strait Islander peoples.
It also recommends mental health services should be best supported in the community with an increased investment in early intervention and social support services, stable housing and access to speciality mental health and dementia care services.
The area that represents one of the greatest challenges to achieve better health access is of course, dental health.
Dental health is among the starkest markers of inequality for Australians today. For dental care, the Commission has recommended:
- ‘Denticare Australia’, a bold proposal for universal access to dental care that would provide preventative, diagnostic and restorative services including extractions and dentures. It is proposed that this would be funded by an estimated increase in the Medicare Levy of 0.75 per cent in addition to existing funding by governments.
- Second, a nation-wide expansion of pre-school and school dental programs; and third, an expansion of the dental workforce through a one-year internship scheme prior to full registration – bringing dental practitioners into line with other medical practitioners.
The Commission also makes a range of recommendations to improve access to rural and regional health where current health outcomes are generally worse than for our major cities.
Fundamental to reform is to deliver clear-cut lines of accountability between Governments. Australians are tired of waste and duplication and the blame game.
In its final report, the Commission calls for one health system with a national approach to improving quality, fairness and outcomes. It proposes that the Commonwealth should take responsibility for preventative health through a new Health Promotion Agency.
The Commission also proposes the Commonwealth should take full responsibility for funding and policy of primary health care services. The Commission recommends:
- Outpatients services in our public hospitals being met by the Commonwealth at 100 per cent of the efficient cost per service, capped at that level.
- It recommends acute care for patients admitted to a hospital, or attendances at public hospital emergency departments, being met by the Commonwealth at 40 per cent of the efficient cost per case, with States to pay the remaining 60 per cent.
- It recommends expanding Commonwealth funding of sub-acute care.
- It recommends the Commonwealth should drive a national approach to workforce planning, education and professional registration, through the new National Workforce Agency.
The Commission also argues that the Commonwealth should take leadership in delivering a patient-controlled electronic health record for all Australians to improve the clinical effectiveness and economic efficiency of overall health system.
The Commission estimates that this entire reform plan comes at an indicative cost – to both Commonwealth and State Governments – of between $2.8 billion and $5.7 billion in recurrent costs per year, net of the Denticare Australia proposal. In addition, it recommends between $4.3 billion and $7.5 billion in one-off capital costs.
The Australian Institute of Health and Welfare has also estimated that these reforms would reduce spending by $4 billion per year two decades from now when measured against a no-policy change scenario. As you can see this reform which we describe as the partial take over option – is in fact comprehensive in its scope.
The second strategic option that grows from the report is to do all of the above as a first stage of reform, followed by the Commonwealth moving to a second stage of reform in the full takeover of the funding for our hospitals system.
Finally, there is a third strategic option available to the Government – one which the Commission explicitly recommends against – and that is undertaking both the above options simultaneously. This would give the Commonwealth full funding responsibility for all aspects of our health system.
The Government will leave each of these three options on the table for the next six months or so, as we engage in a detailed, direct consultation with the health sector and with communities around the nation on their response to the recommendations of the Health Commission Report.
We believe that the nation now needs to debate all three of these strategic options on the basis of now having a concrete set of proposals on the table.
Having outlined the three strategic options and their constituent parts that now lie before the Government, some will now ask why the Government will not announce a decision today on which strategy it will embrace for the future. There are a number of reasons for this.
First, the implementation of any of these options has massive implications for all Australians. The Government is determined to get this right through a thorough, methodical approach. The health care sector consumes almost one in every 10 dollars in Australia and employs one in every 14 workers. It is used every day by millions of Australians.
The Pharmaceutical Benefits Scheme subsidises 171 million prescriptions every year. Medicare funds more than 279 million medical services each year – in other words, 10 services for every Australian each year. Public hospitals deliver over seven million accident and emergency services every year.
There are also about five million actual hospital admissions and 41 million outpatient services. And in any one fortnight, almost one in four Australians visit a doctor in their community. Therefore fundamental decisions about the entire system must not be taken lightly, and we do not intend to do so.
To this end, now that the Commission has provided its independent report, the Government will use the recommendations of this report as a basis for direct consultation with the health sector and the Australian public between now and the end of the year.
The Minister and I will now engage directly with the nation’s major hospitals in each of our capital cities. This will begin tomorrow when the Minister and I visit Royal North Shore Hospital in Sydney, the first of a series of consultations with around 25 major metropolitan teaching hospitals around the country.
The Minister and I believe that we need to hear first-hand from those in the front-line of health and hospital care – warts and all. I’m sure a lot of what we hear won’t be pretty. And I’m sure we’ll also hear many of the good things our health and hospital systems are doing as well. We want to hear directly their response to the various recommendations contained in this report.
In addition, the Government will be consulting directly with a representative group of rural, regional and private hospitals as well our health professionals, community health services and other critical parties to the debate.
Following the conclusion of this extensive direct engagement with the sector based on the concrete recommendations put to the Government by the Commission, the Government will then convene a special COAG meeting with the States and Territories in late 2009, explicitly on health and hospitals reform.
This will be followed by a further COAG meeting in early 2010 where the Commonwealth will put to the States and Territories a reform plan that they would either agree with or disagree with as a future direction for health and hospitals reform.
Consistent with the Government’s pre-election commitments, if there is no agreement to a comprehensive national reform plan, the Commonwealth will proceed to seek a mandate from the Australian people for the proper reform of our health system for the future.
That is our plan, that is our intention, that is our course of action.
There is a second important set of reasons for using this process to reach final decisions on the future of the system. Future reform of the health and hospital system will obviously have profound implications for the public revenue and the Government is not scheduled to release the Henry Report until years’ end.
Also, the Government is due to receive the next Intergenerational Report by years’ end as well, which will contain new demographic data for the future as we seek to plan the system for the future. It therefore makes sense to be armed with these two reports as we move to final decisions on the future of the system.
Finally, given the serious stakes involved, it is important that all parties now engage in a fully informed debate shaped by the facts as contained in the Commission’s report. It is not rational to engage immediately in the politics of a simplistic rule-in or rule-out of any of the recommendations contained in the Commission’s report.
Inevitably we, the Government, will not accept all of their recommendations. Nonetheless, it is time that a considered, mature, national debate occur on the critical decisions we as a nation need to make for the future.
It is now nearly two decades since a review of this significance has been undertaken on health and hospitals – and it is critical, it is absolutely critical that we get this right. Whatever options we adopt, we will be adopting them within the context of fundamental fiscal disciplines.
As I made clear in my opening remarks, the challenge of implementing the Government’s commitments has been complicated by the severity of the global economic recession – the worst global economic downturn since the Great Depression.
While the Government has substantially increased the public investment in health care during the past 18 months, we face serious fiscal constraints in the years ahead.
As the economic recovery strengthens, the Government will be implementing its plan to return the budget to surplus, which will mean tough decisions, unpopular decisions and some budget cuts.
The Government has set out strict spending targets as part of its medium term fiscal strategy and plan for economic recovery. This includes returning real spending growth to two per cent once the economy recovers and returns to above-trend growth, until the budget returns to surplus.
The Government’s response to the Commission’s strategy and its recommendations will be consistent with this fiscal discipline. I am mindful that the Commission has recommended the most substantial reform to the structure of our health and hospitals system since the establishment of Medicare.
To undertake reform that delivers better health outcomes to all Australians the Government has three main funding options – none of which are mutually exclusive.
The first involves a fundamental rethink of funding responsibilities for service delivery between the Federal and State Governments.
Second is to drive efficiencies across the health system – so that we can do more with less. This has already been demonstrated by our health reforms in this year’s Budget.
By targeting areas where a legislated review of the Medicare Safety Net found that a number of doctors were charging excessive fees, the Government was able to deliver a Maternity Services Reform Package to expand choice for expectant mothers and their children right across the country.
Our reforms to private health insurance sought to make arrangements fairer and more sustainable into the future, and ensuring that those with the greatest capacity to pay for their health costs, do so.
The Budget measures mean that no longer will 90 per cent of adult Australians subsidise 10 per cent of Australians on higher individual or household incomes. This will save $1.9 billion over the forward estimates, and $8.7 billion over the period to 2019 – 2020.
The third option involves an examination of the revenue. As indicated above, the Henry Review of our tax system reports later this year and will allow us to plan our long-term health reforms in the context of our long-term fiscal outlook, to ensure the sustainability of the health care system into the future.
When it comes to health financing, the bottom line is this: we do not have infinite resources to finance health reform. There will be no blank cheques to the States. And there will be difficult tradeoffs.
As we travel around the country there will be constant tensions between the two fundamental questions relating to health reform. On one hand, how do we improve the health system, and on the other, how do we make the system sustainable in an environment of budget constraints.
There are no easy answers to these questions so let’s not pretend there are. They are all hard, but we intend to get on with the business. And they are not just questions just for government, but questions for the entire Australian community as well. And that is why it is doubly important that as a community we engage with these questions and understand the tradeoffs and the challenges that lie ahead.
To conclude, today I have spoken to you about the reasons for undertaking reform of our health and hospitals system; the Government’s reforms to date; our objectives for reform; the case for change, as made by the Commission; the strategic options now being considered by Government; the reasons for our decision-making process for the period ahead; and the fiscal constraints within which we will operate.
But where does the rubber really hit the road in all of this? It is with individual Australians who deserve the best health care in the world, and that is our objective.
People who every day ask themselves pretty basic questions like this:
- Why is it that my GP, cardiologist and pharmacist have each given me a different drug and how do I know whether I should be taking all of these?
- Why is it that my partner and I have to take a day off work to take the kids to the doctor?
- Why does my child need to wait for so long for help in the emergency department?
- Why is my elective surgery so often postponed?
- Why is it that mental health problems are so often picked up by our police and drug and alcohol workers, not by our health services?
- Would things be better if we all did more to stop people from getting sick in the first place?
- And how can Australians be confident that we’ll still have the access to the new life-saving drugs and technologies when the health system is going to face such pressures in the future?
I know and the Government knows that health care reform won’t be easy. In fact, it will be one of the hardest areas of reform to be embraced by this Government. No doubt we’ll hear many voices advocating simplistic solutions to these complex problems – simplistic solutions that ignore the totality of the system.
That will be of course, their democratic right, and I welcome such contributions. The Government welcomes the debate. But our job as the Government is to make the hard decisions that strike the balance of delivering a health care system that works for all Australians and a health care system that all Australians can afford.
I conclude where I began today. Our mission is to end the blame game – for a system where the Prime Minister can and should say that the buck stops with me. And these principles define the course of action that we have now embarked upon with this report – and the decisions the nation must take to build the health and hospital system that Australia needs for the 21st century.
I thank you for your attention.