Rudd has the mandate but not the perfect plan

John Menadue tells The Age that the health reforms deserve support but are missing some cost cutting measures
First published in The Age on 18 April 2010

Substantial and sustained health reform is needed, not a state versus federal duel.

THE great health debate of 2010 is a dud. We should be talking about the shape of our future health system and what we’re prepared to pay for it. Instead, the battle between Kevin Rudd and John Brumby over who funds hospitals – an important but relatively small part of the picture – has left us feeling like tennis spectators watching a tedious baseline rally.

But in the pages of medical journals and health blogs, a debate of sorts is going on. Australia’s leading health brains have now published their critiques. And their verdict? A handful applaud the PM for a step in the right direction. Most, though, criticise the plan and have some sympathy for Brumby’s view.

Many agree with Brumby that the new funding model is simply a rebadging of taxpayer funds. Rudd wants to claw back 30 per cent of the state’s GST revenue, drop their hospital contribution from 60 per cent to 40 per cent, and then channel those GST funds into the system.

Most importantly, there is no clear plan of how the government intends to ”shoulder the burden” of the rising future hospitals bill. Rudd makes this promise, yet, as the experts point out, Canberra has for a decade squibbed on its half of the hospital funding agreement. Where will the extra money come from? ”There is nothing in the plan,” wrote one of the Medibank and Medicare architects, John Deeble, ”that would … inject any extra money into public hospitals over the next 10 years.”

And, according to the gurus, the blame game will continue. The new funding split is 60-40, but under Rudd’s plan, responsibility (read, blame) is split three ways: Canberra looks after the majority of funding, local networks run the hospitals, and the states will still have, as Rudd puts it, ”skin in the game” – they are responsible for management and building new hospitals.

The states will still have to pay billions to maintain hospitals and large parts of the bureaucracy, yet for what? There appears to be no political incentive for them to run things well and be accountable. Rudd wants to take the blame – and also the credit – so it will be the Commonwealth driving policy, not premiers and state health ministers.

While Rudd’s plan to tackle diabetes was well received, the experts were confounded by the absence of a mental health plan (on Thursday, Health Minister Nicola Roxon indicated Canberra would take on community mental health, but a comprehensive plan remains missing). Plans for dental care and chronic disease generally were also absent.

In announcing his diabetes plan, Rudd said that each year Australian hospitals see 237,000 potentially preventable admissions for diabetes complications. But University of Sydney mental health expert Sebastian Rosenberg said the beds could also be freed up by better community-based mental health care. The same statistics show 175,000 annual hospital admissions for mental illness. And the stay is longer: 14.8 days per episode versus 4.8 days for diabetes. Rosenberg pointed to an unpublished 2006 survey that found 44 per cent of public mental health beds were occupied by patients who just needed better care in other settings.

In a worrying sign early last month, Stephen Duckett, a former secretary of the federal Health Department, expressed concerns about Canberra’s ability to make policy, particularly around price-setting, for hospitals. Duckett said it would be ”extraordinarily difficult” to apply a national model of funding for each operation or task a hospital performs. ”The Commonwealth has not demonstrated it has the skill to do it,” Duckett said.

But perhaps the biggest problem with Rudd’s health reform is that it is obsessed with hospitals. Experts agree that improving the service offered by doctors, counsellors or physios, and preventing disease, is much more important than who funds the hospital system. As former senior bureaucrat John Menadue says, the world’s best health systems are grounded in primary care. Yet it was only last week, almost as an afterthought, that Rudd released the detail on his primary healthcare plan.

It’s not all grim for Rudd, however. Professor Stephen Leeder, director of the Menzies Centre for Health Policy, thinks his reforms will be tough and ”revolutionary” and will take a decade to implement, but many parts (such as introducing national standards) make sense. Menadue says the reforms deserve support, but are missing some big cost-cutting measures such as tackling avoidable mistakes and fixing the taxpayer subsidy to private health insurance.

Brumby should be applauded for being an advocate for Victorians, and his criticism is echoed by a majority of expert opinion. But these experts do not necessarily support Brumby’s Putting Patients First plan – few would back status quo arrangements that leave hospitals without clear and secure funding in the future. Brumby must also acknowledge that Rudd has a clear mandate for reform. When state and federal leaders meet tomorrow, patients would be best served with a mixed remedy: the good parts of both plans. And maybe then we can have a proper debate.

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