NSW PUBLIC HOSPITALS REQUIRE RADICAL REFORM

The systemic failures of public hospitals in NSW are caused by their excessive bureaucratisation. NSW hospitals require drastic reform, says a new report released on Thursday by the Centre for Independent Studies.

In Radical Surgery – the only cure for NSW hospitals, Professor Wolfgang Kasper calls for the
end of self-seeking bureaucrats running hospitals as a government department.

‘Over the past decade public spending on Australian hospitals has gone up by 64 percent. Yet, citizens and taxpayers have received little improvement in the quality of healthcare’, conclude Kasper.

‘While cuts have been made in public bed numbers and frontline clinical staff, the proportion of departmental managers and area health staff has expanded by a stupefying 69 percent between 2001 and 2006,’ says Professor Kasper. ‘Typical of centrally administered systems, there has been insufficient reinvestment, leading to shortages, which require rationing, queuing and long waiting lists in NSW hospitals.’

The quality of public health services has been downgraded by the burden of a growing bureaucracy.

Radical change can no longer be avoided or postponed. Reform should introduce these features:
1. Hospitals earn revenue for performing services: Medicare should issue tax-funded ‘patient vouchers’ to empower patients to choose their hospital, and government should invite bids for annual ‘bed vouchers’ to fund the maintenance of hospital beds. Hospitals must be weaned off direct budget allocations and earn their revenue in the market.
2. Hospital autonomy: Local boards should be given genuine autonomy to make managerial decisions for their local hospitals.
3. Saving administration and compliance costs: The reform will allow government to ditch the unfortunate experiment with the NSW area health bureaucracy.

Without drastic reform, NSW citizens are likely to lose their free access to public hospitals.

The embargoed report is available at https://www.cis.org.au/policy_monographs/pm91.pdf
Wolfgang Kasper is Professor of Economics emeritus at the University of New South Wales.
He is available for comment.