Opening statement to the Senate Select Committee on Health

Opening Statement by AHHA Chief Executive Alison Verhoeven
to the
Senate Select Committee on Health
14 April 2015
Thank you, Senator O’Neill, and thank you to the Committee for the invitation to contribute to this
important discussion.
I would like to respond to the key elements of the Committee’s terms of reference in the context of
the Government’s policies and proposed reforms.
Much of the recent focus for health policy discourse in Australia has been on economics and
funding, and the importance of building sustainability into the Australian healthcare system
The Government’s recent approach to health funding reform has been to propose cuts to
expenditure and the establishment of price signals by shifting costs to patients and clinicians. This
approach has been driven by the view that health funding is out of control and unsustainable.
Despite these claims, Australia’s health expenditure as a proportion of GDP is close to the OECD
average and the recent Intergenerational report states that projected growth in Australian
government spending on health will broadly keep pace with Australia’s growing and ageing
population and will be slower than projected in previous IGRs.
Addressing the sustainability of the health sector by focussing on efficiency is a more practical and
sensible approach than shifting costs and increasing out-of-pocket expenses.
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In our pre-Budget Submission, the AHHA identified a range of activities that can deliver improved
efficiency providing better value and better outcomes for patients.
The AHHA supports initiatives like Choosing Wisely, a program driven by clinicians who use an
evidence-based approach to identify low-value or no-value investigations and treatments to free up
resources for the provision of more effective and timely care for those who will benefit most.
Patients benefit by avoiding unnecessary tests and interventions with the associated costs,
inconvenience, loss of time and productivity.
The vast majority of the items on the Medicare Benefits Schedule (MBS) have not been formally
assessed against contemporary evidence of safety, effectiveness and cost-effectiveness. Linking the
MBS review process to the Choosing Wisely program would create efficiencies through the common
evidentiary review processes, as well as through the disinvestment decisions that would be mutually
agreed across Government and clinicians.
A systematic approach that links the work of the Choosing Wisely program to the Medical Services
Advisory Committee and Pharmaceutical Benefits Advisory Committee processes would provide an
effective lever to drive changes to care and reduce unnecessary and ineffective expenditure in the
health system.
At our recent Think Tank on Reform of the Federation and Health, it was acknowledged that the
funding and determination of health priorities are a shared responsibility across governments.
Changes cannot be made at one level of government without contemplating the impact this will
have on the other.
The Coalition’s August 2013 policy to Support Australia’s Health System1 was critical of the “shock
announcement” in the 2012 Mid-Year Economic and Fiscal Outlook that cut “$1.6billion from
projected funding” for hospitals and stated that “The Coalition supports the transition to a more
transparent funding model through activity based funding”.
Despite this, in its first budget the Coalition walked away from the long-term hospital funding
arrangements that had been mutually agreed between the Commonwealth, States and Territories.
This resulted in a cut of over $50 billion from projected funding and was accompanied by a
withdrawal of support for activity based funding. Uncertainty around funding is an ongoing problem
for hospitals and health services across the country. The ability to effectively plan long-term
strategies to address health needs and to shift the focus from treatment to prevention of illness and
maintenance of good health requires confidence in the availability of resources.
While the Government argues that hospital funding is a problem for the states and territories, the
reality is that it is a problem for all Australians, patients in particular, which cost-shifting and blameshifting will not address.
Similarly there is uncertainty about the Government’s commitment to oral health services. The
Coalition’s pre-election policy stated its commitment to the National Partnership Agreement for
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Adult Dental Services, but again the 2014-15 Budget told another story with the implementation
delayed for 12 months, with no subsequent indication that the Agreement will commence at all.
This situation highlights an inefficiency associated with short term funding arrangements. As a result
of funds provided through the National Partnership Agreement on Dental Waiting Lists, public sector
dental services have been able to significantly reduce waiting times for care. But the uncertainty
around the commencement of the next Agreement means staff are worried about ongoing
employment and are looking for alternatives. This results in periodic slow-downs and build-ups as
one source of funding ends and a new one is identified.
Likewise, the reliance on short-term funding as a stop-gap measure while policy is formulated is
impacting the viability of services and continuity of care in areas such as mental health, Indigenous
health and drug and alcohol services. The delayed announcement of the successful tenderers for the
Primary Health Networks was followed by a bungled process whereby unsuccessful tenderers and
their staff learned of their funding and job losses via a report in the Weekend Australian and its
health journalist’s twitter feed.
This short-term, last-minute, uncoordinated approach to health funding creates uncertainty for staff,
service providers, clients and their families. In rural and regional areas, in particular, it has the
potential to lead to loss of staff and expertise which can be difficult to address, and further impacts
service delivery.
Improvements in the overall function and effectiveness of the health system require a focus on
evidence-based strategies which address efficiency and clinical outcomes by targeting waste and a
commitment to long-term transparent funding processes.
A return to strategic policy making, rather than policy driven by short-term vision and haphazard
top-down funding decisions, is needed. A good starting point would be a return to National
Partnership Agreements, agreed jointly by the Commonwealth and States, to ensure ongoing,
sustainable funding for the quality health services Australians expect and need, including hospitals,
primary care, dental services, mental health, Indigenous health, and drug and alcohol services.
Rather than seeing this as a budget drain, the Australian Healthcare and Hospitals Association
encourages the Government to consider health investment as essential for a productive, healthy
economy; and shared decision-making with its partners across government and the private sector as
a sign of good government.
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