Health Reform, Governance and Political Will: Governance is about how power is managed

The Prime Minister has threatened to ‘take over’ state hospitals and government decisions are awaited on several commissions of enquiry.

The report of the National Health and Hospitals Reform Commission was particularly disappointing with its plans for Denticare and Medicare Select which together would seriously put Medicare at risk. That is not to say however that Medicare doesn’t need some urgent reform. I have written about that elsewhere.

Will we get a breakthrough in health reform? Unfortunately, history is not encouraging. Government archives are crammed with health enquiry reports that have not been implemented. I have spoken at many health conferences over many years and I have chaired two state government health enquiries. I have found widespread agreement on the sorts of reforms that are necessary, but it hasn’t happened.  Incremental band-aid reform has failed. Boldness, a ‘big bang’ approach is necessary to break the mould and inspire the community.

The health sector is under great pressure. Demand is increasing rapidly across all age groups and not just amongst the old as the Prime Minister infers.
As the Productivity Commission put it in 2005 ‘population ageing does not appear to have been a major driver of increased demand for health services’. We all see our doctor too often. In the last decade and a half, we have on average increased our annual Medicare funded visits from 7 to almost 14. In 10 years, real costs have increased 5% per annum. Last week, not surprisingly, we saw another increase in private health insurance premiums at twice the inflation rate. Clinicians in almost all areas are frustrated and the community is dissatisfied and ignored.

Above all else, what is lacking is political will in the face of special interests (just ask Barack Obama about the power of special interests in health in the USA). The debate in Australia is between the government and well-funded and well-organised special interests – the AMA, private health insurance companies, the Pharmacy Guild, state governments and their health bureaucracies. The community is not organised to
participate in the debate.

Most of us are only interested in the health sector at periodic times in our life.
By contrast, parents are much more obviously involved throughout the schooling of their children from pre-school to university.

The media is under resourced to effectively tease out the important health issues. This is in part because of the complexity and size of the health sector.

In these circumstances, it is very easy for special interests to push their concerns when there is so much confusion and misinformation available and where the community is excluded.

As the Economist put it last week, ‘(health) providers hold all the cards’ in any healthcare reform. That is the reason why governance is so critical.

Logic and argument does not succeed in the face of these special interests. Where possible they avoid real debate and respond occasionally in personal and ideological terms. They rely on their lobbying power. They corrupt public discussion and debate. There are about 900 full-time lobbyists in Canberra, many in the health field. There are 34 lobbyists for every cabinet minister. The most powerful and secretive lobbyists for the status quo in health are the state governments and their health bureaucracies. They are major contributors to our dysfunctional federation in health. Different programs and different interests have produced what Tony Abbott has rightly called a ‘dog’s breakfast’.

What then to do in the face of these special interests and the paralysis in hard decision-making?

The Commonwealth Government should establish a permanent, independent, professional and community-based statutory authority, an Australian health commission, similar to the Reserve Bank in the monetary field. The Reserve Bank’s governance structure has made it almost impervious to lobbying and generally, it has been independent, although some appointments warn us of the risks of appointing political friends. Such an independent health commission with strong economic capabilities is necessary to facilitate informed public discussion, counter the power of special interests and determine programs and distribute Commonwealth health funds across the country. Last year, the Business Council of Australia called for a single ‘independent body that can lead and be accountable by the Australian community’ for health services. The traditional ministerial/departmental model is proving just too susceptible to special
interests in health.

The Commonwealth Government should not opt out of policy responsibility, but issue principles, as it does to the Reserve Bank, to provide policy and implementation guidelines for the health commission. The principles could include:

  • universality,
  • equity,
  • efficiency (both technical and allocative),
  • single-payer (to best manage costs),
  • choice of provider,
  • subsidiarity (delivering healthcare at the most feasible local level by ‘shifting resources and funding to regional health organizations’),
  • accountability (With all providers obliged to meet key benchmarks. What about a ‘my hospital’ website? With fee for service, providers are compensated for the number and length of transactions rather than health outcomes.),
  • social solidarity and risk-sharing, and
  • personal responsibility (For personal health outcomes and use of health services – the ‘moral hazard’ question).

CPD has developed policies to implement almost all of these principles. The Commonwealth Government should provide three-year rolling budgets for the commission.

State governments should be encouraged, with financial inducements, to cede their health functions to such an independent and professional commission, which would be less politically partisan. The states could participate in the nomination of commissioners. If they are unwilling, the Commonwealth Government could go to a referendum with such a proposal. It would be both good policy and hopefully, good politics. Essential Research reported on 15 February this year in its national survey that 58% of Australians supported a Commonwealth takeover of state hospitals. Only 10% opposed.

Alternatively, states who will not cede their health powers could be offered, by the Commonwealth, a joint commonwealth/state health commission in their state that would have agreed governance, pooling of all funds and a state-wide health plan (see – A Coalition of the Willing).

There is a useful precedent in Ontario for an independent commission. In 1996, the provincial government set up a Health Services Restructuring Commission, not only to advise on restructure but also to implement the restructuring. Ministers recognised that they were too subject to pressure by special interests and that a more arms-length and independent commission could achieve outcomes that ministers couldn’t. Ministers had shown that they were unwilling or unable to address necessary closure or rationalisation of hospitals and clinical services. The Commission made significant progress and after a period handed back its powers to ministers. A key to the Commission’s success was public education to outflank the special interests so that the public could better understand and accept the necessary changes.

An explicit distancing of ministers in Australia from day to day and partisan health issues would be a major step in the direction of evidence based policy and practice. It would also make the political life of health ministers, particularly state health ministers, much easier. They could get out of the daily firing line. They should not, and obviously would not, abdicate policy responsibility and that is why the Commonwealth should, in consultation with the community (as Commissioner Romanov did in Canada), set out for the first time the principles that should guide health programs in this country

It is important not to separate hospital and non-hospital care in any new governance arrangements. We have a hospital obsession which is at the expense of thinking and planning how total healthcare can perform better. Expensive hospital care is the price we pay for not attending to other healthcare needs.

Throwing more money at health is not the answer. Interestingly, a survey of 1800 people over 45 in 2009 by the Health Council of Canada, found that 58% believed that healthcare would not improve if more money was spent. Because of bad governance there is waste everywhere in the Australian health sector, eg excessive servicing in many areas, workforce demarcations, avoidable mistakes and subsidies to high-cost private health insurers. In these areas alone there are over $10 b pa of savings. This waste will only be reduced with improved governance.
Policy is easy. Implementation, which requires political will, is the hard part. An independent commission could produce a sea change in the journey to genuine health reform. Governance is the key.

This paper was presented to the Informa Health Congress in Sydney on 3 March 2010