Diagnosing Australia’s Health Care System

Australians enjoy the third highest life expectancy of any country in the world. We have a health system which at its best is the equal of any other. Medicare, the Pharmaceutical Benefits Scheme and our public hospitals all provide equity and access to life saving treatments. Despite these positive achievements there is still much that can be done to improve our health system overall.

The Australian health care system can ultimately be characterised by a lack of integration, with our health care system having been described before as “a series of disjointed silos and structural relationships”. The interface between primary health care and acute hospitals is an area which could be improved, and generally suffers from a lack of information sharing, and communication.

While an appropriate electronic health record system may help this communication issue, it is clear that the multiple layers of responsibility and the disconnect between primary health care and acute hospitals in our health care system are also major contributors to this problem.

Ultimately, our nation-wide system of health is less efficient as a result of our federal system of Government. Public hospitals are the responsibility of the State Governments, while nursing homes, the Pharmaceutical Benefits Scheme (‘PBS’) and Medicare are Commonwealth responsibilities. Rather than the creative tension which would be expected in a completely federal health system, our current structure has led to cost shifting, and “the blame game” between the different tiers of Government.

It should be a focus to have a strong Primary Health care system in this country, and indeed, this makes sense. Research shows that that health systems with a strong primary health care focus are more efficient, have lower rates of hospitalisation, and better health outcomes than those which do not have such a strong focus on primary care. It places the importance on prevention and chronic disease management, rather than on expensive and sophisticated late-stage interventions. One of the lost opportunities of the Rudd ‘Health Revolution’ is that the major focus was on tertiary hospitals rather than on primary health care.

While General Practice has always had a focus on prevention, population health and the management of chronic disease, many recent developments have enhanced their capacity to carry out this role.

In primary health care alone, there are several areas where the Howard Government helped improve the overall quality of patient care. The computerisation of general practice made a significant impact on patient care, and was achieved rapidly through the use of practice incentives. The introduction, and now widespread use of practice nurses has increased the productivity of the average GP and allowed their focus to be on diagnosis and formulating management plans.

The Howard Government also used the existing infrastructure of Medicare to provide dental services for those with chronic disease, people who were being let down by their State dental services. We ensured that the role of General Practice in managing mental health was recognised through the introduction of specific Medicare items in our $1.9 billion package for mental health that was introduced in 2006. The widespread use of care plans has expanded the access of Medicare to allied health professionals.

All in all, primary health care in Australia made some significant advances during the Howard years.

Australia’s Diagnosis

The latest report on Australia’s health from the Australian Institute of Health and Welfare shows that, as a country we have no grounds for complacency regarding the overall quality of our Health care system.

While our life expectancy is currently in the top three in the world, on many chronic disease indicators we rank quite poorly. Australia’s levels of obesity put us in the worst third of the OECD, and within OECD countries we compare poorly on our management of diabetes and infant mortality rates. Our levels of kidney disease are on the rise, and potentially preventable hospitalisations (health conditions that should be managed well enough to remain out of hospital care) are also increasing .

On preventative health measures, Australia compares poorly on DTP vaccination, fruit and vegetable consumption and alcohol consumption against other OECD nations.

Lastly, in a comparison done by the Commonwealth Fund between seven countries (United States of America, United Kingdom, New Zealand, Canada, Germany, Netherlands, and Australia), Australia ranks equal last with regards to overall accessibility of appointments with primary care physicians. In the same report, we also ranked sixth of seven with regards to “safe care”, which is described as avoiding injuries to patients from the care that is intended to help them .

Health Financing

Health funding accounts for a reasonable portion of Australia’s spending. Australia health spending is middle ranking amongst other OECD countries. As a per centage of Gross Domestic Product (‘GDP’), Australia’s total health spend (federal, state & private) rose over a decade from 7.1 per cent of GDP to almost 9.1 per cent of GDP by 2007-2008 .

On forecasts from the latest Intergenerational Report, the Australian Government’s spending on health, is expected to almost double between now and 2050, rising from four per cent of GDP in 2009-10 ($50 billion) to 7.1 per cent in 2049-2050 ($250 billion).

This makes it important that health expenditure represents value for money, and that our health system is as efficient as it can be.

One of the reasons that Medicare has been an enduring and popular reform was that it built on what was already in place and did not seek to reinvent the wheel. The architects of our Medicare system understood that a fee-for-service model was the best basis for remunerating medical practitioners, and for the reform to be accepted this should continue.

The recent steps by the Government to introduce a $1,200 capitation payment for the management of diabetes represent a stark departure from this fee-for-service position and fails to understand the greater problems with a capitation style payment.

The current blended system that we have which continues fee-for-service but allows payments for preventative activities and chronic disease management represents a good approach, however a better approach may be to look at the payments system which operates in Denmark and the Netherlands where there is a capitation payment for providing care and case management for chronic diseases and fee for service style funding for office visits.

General Practice & GP Super Clinics

The concept of multidisciplinary care and concentration of General Practitioners is nothing new. Around Australia you can find many medical centres which have combined General Practitioners with other allied health, pathology, radiology and pharmacy. They do not have a catchy name, and they are not called “GP Super Clinics”, but family practices have been developing these extended practices for years.

There was no market failure which required government intervention or the use of taxpayers hard earned money to remedy. The government funded “Super Clinics” were created in direct competition to those which have been set up, and funded voluntarily by the private sector.

Far more would have been achieved with far less expenditure by encouraging the existing General Practitioner practices around the country, through incentives, to expand and include allied health services voluntarily. By supporting practices to build or lease extra rooms to house allied health sessions, extra doctors, registrars and students you build on already established and successful clinics, and promote competition in the market.

It is a waste of taxpayer’s money to provide what the private sector is capable of delivering, and has already been delivering for years. In addition, the Super Clinics program has created an element of unfair competition in the market due to the excessive capital grants provided.

There is evidence that an unfair regulatory environment has been created for existing family GP clinics who have invested in valuable services for the community over many years. The withdrawal of services by established family GPs, due to the unfair competition created by Super Clinics will be detrimental to patients who have grown to trust and rely on the dedicated services of their family GP over many years.

The Coalition shares the concerns of many health and medical professionals about Labor’s policies that undermine the doctor-patient relationship and the viability of existing family GP services, which is exactly what their Super Clinic program has done.

The bungled implementation of the (not-so) Super Clinic program represents another policy delivery failure by the Labor Government with only three of the original 36 fully operational in their first term.

The more concerning possibility is that the funding of GP Super Clinics by the Federal Labor Government will see a freeze on private sector investment due to the uncertainty that a taxpayer funded GP Super Clinic may be could be just around the corner.

The Future of Australian Health Policy

Under a Coalition Government the fundamental elements of health policy will remain: a commitment to Medicare, bulk-billing and community rating for private health insurance.

However, as previously mentioned, the Australian health care system is characterised by fragmentation between primary care and hospitals, between general practitioner and specialist and between the State and Federal Health Departments, and this is an aspect that needs to be addressed.

Kaiser Permanente, an integrated managed care organisation based in Northern California has attracted interest from health policy makers around the world for their model of integrated and cost effective care. In the Australian context Kaiser could be understood as operating as both an insurer, a hospital and a doctor group practice.

Recent articles have comparing Kaiser with the British National Health Service have concluded that Kaiser offers much better value for money and uses much fewer acute bed days. Patient and doctor satisfaction is high.

A comparison of Kaiser and the Danish primary care system showed that the clinical integration of Kaiser was stronger than that in the Danish health care system which operates as a more integrated system than Australia.

Specifically more clinicians in Kaiser reported timely information transfer, agreement on roles and responsibilities and mechanisms to ensure effective handoffs.

As measured by the Commonwealth Fund, Australia is mid-ranking in the delivery of coordinated care. While the experience of forced managed care by the Keating Government in the mid-1990s has meant lasting hostility to the notion of managed care, the challenge for a future Coalition Government will be to use the example of Kaiser and determine if a greater degree of integration is achievable in Australia.

The recent National Health and Hospital Reform Commission made a recommendation about the introduction of health and hospital plans in Australia.

Using the Dutch system of “managed competition” in health insurance as a model, they suggested improvements to Medicare which could provide the degree of integration which the Australian health system requires. This proposal is well worth considering in the Australian context.

Specifically, this proposal may address the lack of integration, which is one of our bigger impediments to coordinated care in Australia.


While Australians enjoy long healthy lives, there are still many aspects of our health system which can be improved, and a few of these have been discussed above. Strengthening primary health care and improving the interface between GP’s, allied health practitioners and the hospital setting remains an important goal for any future Coalition government.

International examples like Kaiser Permanente in the United States of America, and the Netherlands system of managed competition in health insurance demonstrate what is possible to achieve.

Any future Coalition Government will still need to maintain a strong commitment to Medicare, bulkbilling and a community rating for our private health insurance sector, but the challenge however, will be to consider what practical initiatives we can undertake to build on, and improve the existing Australian health care sector.

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