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Like the Curate’s Egg: A Market-based Response and Alternative to the Bennett Report

Jeremy Sammut | PM104 | 26 November 2009


The final report of the National Health and Hospital Reform Commission (NHHRC or the Commission), A Healthier Future for All Australians (the Bennett Report), is like the curate’s egg— only good in part and therefore spoiled overall.

The NHHRC has acknowledged the need to ensure health services are responsive to the needs of patients, and has recommended some very limited market-based reforms to improve the efficiency of public hospitals. But, overall, the Commission’s long-term health reform blueprint will not put consumers in charge and ‘develop a person-centred health system.’

The major recommendations contained in the Bennett Report concern:

(1) Expanding the role of the Commonwealth in the primary care sector of the health system;

(2) Ending the ‘blame game’ by clarifying the complex and overlapping governance responsibilities of the federal and state governments; and

(3) Modifying the way the public hospital system is run and funded.

The three major problems with the reforms recommended by the Commission are:

1.      Ineffective primary care centred strategy. Spending billions of taxpayers’ dollars on a Commonwealth-financed GP Super Clinics network will not fix the problems in Australia’s public hospital system.

2.      Tinkering with governance arrangements at the national level. Recasting federal and state responsibilities to establish clearer policy, funding, and performance accountabilities for problems in the health system will not achieve structural reform of the way public hospital and other taxpayer-funded health services are produced.

3.      Market-based hospital reform doesn’t go far enough. Requiring all public hospitals to be 100% funded on an activity-based casemix basis is an overdue reform, but casemix funding alone will not end the wasteful and inefficient administration of public hospitals by state government health bureaucracies.

The chair of the NHHRC, Dr Christine Bennett, has claimed that the most important reforms in the Bennett Report will make the health system ‘person-centred,’ because the proposed primary care reforms will allow ‘health consumers to have access to the services they need’ instead of only having access to current mix of ‘hospital-centric’ health services that governments ‘want to offer.’

Developing a truly person-centred health system requires market-based structural reform of the governance, funding, and delivery of taxpayer-funded health services. Instead of health departments allocating the taxpayer subsidy to government-owned public hospitals and community health services, a new set of flexible and responsive arrangements are required. The taxpayer subsidy should be tied directly to the delivery of patient care by either public or private providers, and demand for health services should be allowed to set the supply of health services according to the clinical needs of individual patients.

Unfortunately, the NHHRC has adopted a highly contradictory, top down approach to the so-called person-centred health reform. The federal government has been advised that the best way to take pressure off public hospitals is to fill the service gaps in the primary care sector that allegedly cause overuse of hospital services.

According to the Commission, improved access to Medicare-funded multidisciplinary ‘coordinated’ primary and allied health care services will prevent avoidable admissions and keep the elderly and chronically ill well and out of overcrowded hospitals. The evidence, including expert discussion papers prepared for the NHHRC, shows that these community-based so-called ‘alternative models of care’ are no substitute for hospital care.

The NHHRC’s plan to provide more primary care and less hospital services is therefore a characteristically flawed example of ‘command-and-control’ central planning:

• The primary care reforms designed to create a less ‘hospital-centric’ health system oriented around stronger community-based services will not improve access to hospital services in the long run.

• The recommended governance reforms do not address the root causes of the hospital crisis, which are the systemic problems in public hospitals that severely restrict access to basic hospital services.

• The proposed hospital reforms do not adequately address the real cause of dangerous overcrowding, which is the critical nationwide shortage of acute public hospital beds.

• Higher spending on supposed ‘wellness’ promoting preventive health measures is the wrong priority for an ageing Australia, given the urgent need to open more beds to provide timely hospital treatment for an older and sicker population in the coming decades.

Due to the serious problem with the Bennett Report’s flawed prescription for a better health system, it is important to carefully scrutinise the recommendations and establish the alternative set of principles, priorities and policies that should guide sustainable, long-term health and hospital reform.

To cope with the health challenges of the twenty-first century, this monograph recommends the federal government implement the following market-based structural reforms of the financing and administration of the health system:

A) A federally-funded hospital voucher scheme covering the casemix cost of treatment in either public or private hospitals, in conjunction with the re-establishment of local public hospital boards; and

B) An extended health voucher scheme for chronic disease management and other communitybased services (including sub-acute and hospital-in-the-home care) provided by either public or private providers.

The national hospiall and health voucher scheme will allow consumer choice, provider competition, and clinical need as diagnosed by doctors to determine the appropriate supply of health services in coming decades. A voucher-based health system would be truly person-centred, and provide all Australians with better access to the right care at the right time and right place, especially when health needs are greatest and hospital treatment is essential.

Jeremy Sammut is a research fellow at The Centre for Independent Studies. He has contributed five papers to the CIS Papers in Health and Ageing Series, including The Coming Crisis of Medicare and The False Promise of GP Super Clinics. Jeremy has a PhD from Monash University in history and has had opinion articles covering a broad range of health topics published in newspapers throughout Australia.

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