National Healthcare Series - Australia – New Zealand

Australia – New Zealand

Private health insurance (PHI) is an important part of the Australian health system. It was argued that, without the reforms, the public hospital system would undoubtedly collapse under the increased demand for public health services.

Cost containment and Gatekeepers

There are three central goals of the system

  1. Fairness
  2. Equity
  3. Efficiency
  4. Accountability

A basic requirement is that those with equal needs have equal opportunities to access care. However, patients with equal needs do not have equal opportunities to access to certain services such as rheumatological services in Australia. Access to a rheumatologist varies considerably between the States and Territories and the PBS criteria require a rheumatologist to apply for the biologicals on behalf of the patient. [1]

Not everyone who has a rational case for subsidised access to a particular form of healthcare can gain access to it. The important responsibility of clinicians, who are, in effect, the ‘gatekeepers‘, to manage the expectations of patients as well as their disease was thus impaired. [2]

The health sector in Australia faces major challenges such as:

  • Ageing population
  • Spiraling health care costs
  • Continuing poor Aboriginal health
  • Emerging threats to public health

At the same time, the environment for policy making is becoming increasingly complex.

In this context, strong policy capacity – most commonly understood as the capacity of government to make ‘intelligent choices’ between policy options is essential if governments and societies are to address the continuing and emerging problems effectively.[3]

Since 1995 Australian health insurers have been able to purchase health services pro-actively through negotiating contracts with hospitals, but little is known about their experience of purchasing. Many of the traditional tools used to generate competition and enhance efficiency (such as selective contracting and co-payments) have had limited use due to public and political opposition. Adoption of bundled case payment models using diagnosis related groups (DRGs) has been slow

Private health insurers also face a complex web of regulation, some of which appears to impede moves towards more efficient purchasing. In introducing the 1995 contracting reforms, the Commonwealth Minister proposed that one of the central objectives was to transform private health insurers from “passive bill payers” into active purchasers of services for their members [4]

Increased public hospital bed numbers are crucial if:

  1. We are to reduce waiting times
  2. Ease the Emergency Department pressures
  3. Improve patient care
  4. Have patients in the most appropriate clinical setting for their condition.

“The AMA supports the move to establish hospital boards, and will work with government to develop the appropriate model, which will need to include clinicians. Much of the Plan depends on cooperation and take-up from the States and Territories.[5]

The fact is at present:

Private care

  1. Gives access to the best doctors and left to the wealthy
  2. Exposure to medical errors is less of a problem for private patients

Public Care

  1. Access to the best doctors is erratic

  2. Exposure to medical errors seems more of a problem for public patients

Australia has a real problem with medical errors in the health care system.

It is estimated errors are at between

  • 3.2 and 5.4 per cent in the US
  • 9 per cent in Denmark
  • 10 to 11 per cent in the UK
  • But a shocking 10.6 to 16.6 in — Australia (Bedkober, B., IPA Review, March 2007).

The figure of 10 per cent was just recently confirmed in a government report. According to Wilson (“Quality in Australian Health Care”, 1995) one in six hospital admissions generates an adverse event, half of which is preventable and six in every 1,000 admissions are ending in a preventable death from an adverse event including complications.

In this two-tier system

  1. The majority of public patients end up on waiting lists
  2. Private patients get access through their referring doctors to what they believe are the best performing hospitals or specialists.[6]

[1] http://www.anzhealthpolicy.com/content/5/1/4 Access to high cost medicines in Australia: ethical perspectives

[2] http://www.anzhealthpolicy.com/content/5/1/4 Access to high cost medicines in Australia: ethical perspectives

[3] http://www.anzhealthpolicy.com/content/6/1/3 Evaluating health policy capacity: learning from international and Australian experience.

[4] http://www.anzhealthpolicy.com/content/2/1/6 Buying best value health care: Evolution of purchasing among Australian private health insurers

[5] http://www.ama.com.au/node/2890 Coalition’s Health Plan Sets the Right Course But Lacks Funding Detail

[6] http://www.onlineopinion.com.au/view.asp?article=7715 Road map for Australian health care reform – Part I