Ensuring Australia’s economic sustainability

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National goal: Create a high performing health care system directed towards preventing illness and empowering citizens to sustain their health.

The health system must be more directed to support the productivity and quality of life of people of all ages, in an economically sustainable way. It should proactively aim to deliver lower rates of hospital admissions and lower growth in cost of acute care, while achieving better health outcomes and a higher level of consumer satisfaction.

Health performance

Australian health outcomes are frequently cited among the best in the world, in terms of our population living long, healthy and productive lives. However, high life expectancy is often more related to levers other than health services care. Quality of food, clean water, sanitation and urban planning, a high quality education system and low unemployment more directly support this outcome.

In some other measures of health care provision, especially equity, safety, access and coordinated care, Australia lags behind countries like the UK, Germany and the Netherlands.

For example, we have growing disparities between different population groups, with little real advances in health outcomes for our indigenous populations and very poor access for people from low socio-economic backgrounds. In addition, we have high, levels of personal levels of copayment relative to many other countries, with the exception of the US.

Finally, although our per capita spend on healthcare is relatively low, it masks significant opportunity to improve the level of efficiency and unnecessary variability in our public hospitals. Targeting this and a few other measures more aggressively will reduce the level of cost burden and make our health care system more sustainable into the future.

Health issues

  • Rising expense – health care is one of the fastest rising areas of government expense, costing taxpayers approximately $100 billion per year, or 9.5% of GDP.

    It is likely that, in the future, health expenditure will grow faster than GDP. Within 20 years, The Federal Treasury expects Australia’s health care bill to top $250 billion, as our population ages, and the burden of chronic disease levels increase – at a time when Government revenues may be falling due to a shrinking working population.
  • Chronic diseases – now account for a large proportion of illnesses in Australia, yet they are also some of the most preventable of health issues. Chronic disease is taking an increasing toll on all age groups, not just the elderly, lowering educational outcomes, limiting workforce participation, driving early retirement and restricting involvement in the community.
“Chronic disease costs about $30 billion a year (3% of GDP) in direct costs and lost productivity. Yet up to one third of this is preventable.”
Australian Institute of Health and Welfare
  • Inefficient, federated system – The Australian health care system has multiple moving parts, with little incentive to integrate or coordinate care delivery. Yet most patients, particularly those with chronic or complex diseases, need a range of medical, nursing and allied health services to manage their conditions.

    The current federated system leads to significant efficiencies, through duplicated payments, complex administrative and operational processes – with many patients falling through the cracks. The result is often errors, re-work and higher cost and a poor consumer experience.
  • Focus on in-hospital solutions – the current system funnels patients into higher-cost venues, such as hospitals. For example, patients often go to the emergency department because they lack community care alternatives. Similarly, 65% of Australians spend the last days of their life in hospital, compared with 35% in Europe, because most States lack high quality, home-based palliative care.
  • Disproportionate costs for frequent users – a small percentage of patients use a high proportion of a hospital’s resources. These frequent users repeatedly end up in emergency rooms and hospitals for medical crises that could be prevented with more targeted, timely and appropriate, ongoing care.
  • Ageing health care workforce – as the need for health services increases, our health care workforce is nearing the retirement cliff. In future, although we will have enough doctors, we will face major gaps in the supply of nursing professionals. This issue will be exacerbated by the need to accommodate the additional demands of NDIS. Workforce shortages, including for doctors, will also remain particularly acute in rural and remote areas.

Health recommendations

Australia needs to alter its health care paradigm, with a holistic approach incorporating the following disruptive concepts:

  • Integrated care delivery – with a strong focus on long-term condition prevention and management. Care from disparate providers needs to be coordinated around the consumer. This will help to reduce the incidence of chronic disease and allow people already with chronic disease to be managed more often outside of hospitals.
  • New financing and payment model – that supports appropriate high quality care, including single funding. Australia needs to change its pay-for-service model, and introduce a value-based, pay-for-performance model that rewards quality outcomes, not throughput, and seeks to keep individuals out of expensive hospital facilities.

    This will require the incoming Government to revisit its multiple payment systems, including health insurance, and move to a single, integrated health insurance system covering all aspects of care. Such a system could still be supplied by multiple, private providers, but it will need consistent standards and regulations to incentivise holistic care and reward positive health outcomes.
  • Adoption of E Health and mHealth technologies – these technologies will be vital in lowering costs, increasing access and improving outcomes. They include: cloud computing, providing mobile access to health information and applications; use of social networks, which are already providing patient centric information sharing and peer support; and big data analytics, providing anywhere, anytime diagnostic insights.
  • Focus on out of hospital solutions – new remote monitoring and mobile technologies mean we can move health care out of hospitals’ and doctors’ offices to patients’ homes. Over time this will lower health care costs, improve consumer experience, while extending access beyond the reach of traditional health care.

    The NBN, together with mobile monitoring and detection devices will be important enablers, supporting post-operative and chronic care in the community and early detection. For example, sensing devices such as blood pressure cuffs are being connected directly or wirelessly to, or actually built into, smartphones.
  • Citizen empowerment – patients empowered with their own information, via smartphone apps and rapid remote access to clinicians, could trigger huge efficiencies throughout the health system. Empowered citizens will take more preventive actions, engage in real-time monitoring, choose better and more cost-effective options and live healthier lives. This change would also be welcomed by Australians, who are looking to the health care system to adopt efficient and productive models from other industries that are more in tune with the hectic pace of their modern lives.
  • Use big data analytics to drive investment and services strategies – just as the banking system uses analytics to predict customer behaviour and understand service provision, health care should use predictive modelling to shape service provision. Detailed and robust data about people’s current and future health can, in some instances, accurately predict future health events, informing intervention. Predictive modelling will be particularly important in identifying and diverting frequent users from the hospital system, by providing them with early care and, if necessary, interventions.
  • Open up service provision to other professions – health care provision is very professionally demarcated and highly industrialised, resulting in many clinical groups and professions performing medical tasks that easily fall within an alternative practitioner’s capability. We need to open up aspects of health care provision to other sectors, taking the pressure off our dwindling supply of doctors, nurses and allied health practitioners.

Health conclusion

Australia needs a new system for delivering, consuming and paying for health care. All the technology enablers exist to support such a system. Now we need an incoming Government with the vision and decisiveness to put world’s best practice into action.