The National Health And Hospitals Network – From Little Things, Big Things Grow – Nicola Roxon

The Hon Nicola Roxon MP retained her position as the Minister for Health and Ageing in the new Julia Gillard ministry. In a speech to The Sydney Institute on Monday 28 June 2010, Ms Roxon outlined comprehensively the major health reforms envisaged under the Rudd-Gillard administration. As Nicola Roxon put it: “The Gillard Government has the privilege and responsibility of delivering these important reforms – a responsibility that we are deeply committed to fulfilling.”

THE NATIONAL HEALTH AND HOSPITALS NETWORK – FROM LITTLE THINGS, BIG THINGS GROW

NICOLA ROXON

Many thanks for having me here to talk about one of the Labor government’s key 2007 commitments, one of its proudest reform achievements to date, and a central component of the coming election campaign – health.

The government was elected on a platform to reform the health system – a sweeping mandate to deliver real changes to families and communities around Australia now, and to reform the system to ensure it remains strong and sustainable into the future. Health has always been regarded as a Labor strength. Think of the Pharmaceutical Benefits Scheme and Medicare.

It’s often forgotten that these earlier Labor health reforms were achieved despite strong opposition – and in the case of Medicare, threats of the socialisation of medicine and the downfall of the doctor patient relationship. What is so striking about our reforms to build the health workforce, expand services to the regions, introduce technology for the 21st century, give more local control, introduce national quality standards and pay efficient prices, is the broad stakeholder support.

Yet the conservative political opposition remains steadfastly opposed – and has not mapped out any bold agenda of its own, instead appearing to vacate the field altogether. Even on the weekend, Mr Abbott’s “contract” with the people (I’d be taking it to the lawyers myself!) his 12 point plan had merely platitudes and a holding pattern on health – less than a few hundred words. And certainly no fine print about the cuts already announced in their budget reply.

We started work immediately after the election, with major investments to relieve pressure within the health system and are now delivering on long term, strategic reform. We increased Commonwealth funding for public hospitals by 50 per cent, targeting pressure points in the system like elective surgery and emergency departments, and we started training more GPs and nurses. We reformed rural incentives for doctors, have been rolling out regional cancer centres and targeted mums and bubs programs to help turn around indigenous disadvantage. We expanded the MBS to midwives and nurse practitioners. We’re building GP Super Clinics.

These investments are now starting to deliver results – just last week all governments released a progress report showing that the proportion of elective surgery patients treated within the clinical appropriate time jumped to 86.3 per cent in the nine months to September 2009 after being at only 79.4 per cent in the same period in 2007, as a result of the government’s elective surgery waiting list blitz.

At the same time, we also set course to tackle the demographic challenges confronting the health system in the longer term – the explosion in the last two decades of rates of chronic preventable diseases such as diabetes; the ageing of the population and the growing cost of providing health care to the community.

We were also determined to confront the underlying structural problems with the health system itself: the fact that Australia has one of the highest hospitalisation rates in the developed world, with 9.3 per cent of all hospitalisations in 2007/08 were potentially preventable; that our hospitals are 20-25 per cent less efficient than they could be; and that divided responsibilities within the structure of our health system was leading to too much waste, duplication, cost-shifting and buck-passing.

My predecessor as Health Minister once said that health is such a “dog’s breakfast of divided responsibilities that sooner or later someone will have to sort it out”. Despite his prognosis, Mr Abbott left that job to us, having wasted four years as one of the least reformist health ministers in recent history. A dubious honour when his legacy left a woeful shortage of GPs, a severe shortage of nurses, and hospitals desperate for money after significant cuts from his government.

So that “dog’s breakfast” is exactly what the Labor government has spent the last few years persistently and somewhat relentlessly working on, ably assisted by the work of Dr Christine Bennett and her team of Health Reform Commissioners. We’ve taken on this task despite being warned by many that it was too hard, too complicated, and too politically dangerous. Just like the PBS and introduction of Medicare, the Labor Party is delivering on its reform agenda because we believe in building a better health and better hospital system for all Australians.

Our work on this important task has been so comprehensive, so consultative and so detailed, that I think the community has not yet been able to absorb its scope and scale. That’s why I want to call today’s speech – from little things, big things grow. I want to take some time to explain how piece by piece, the jigsaw of health reform is creating a grander picture than many imagine:

– to show how the techno sounding activity based funding and national pricing will create a more efficient system, with more potential for strategic and effective funding and competitive distribution of health funding into the future

– to explain why local clinical involvement, national clinical standards and a quality commission will save lives and change the quality of care – to explain why reorganising and heavily investing in primary care will improve health outcomes

– why financing and accountability reforms will arm consumers with information and confidence about the way their money will be spent.

The list could go on. The point I’m making is that our reforms are building foundations for the future. They each deliver change in themselves, but together they allow us to move to a sustainable, better quality, more coordinated type of care with the patient at the centre – at a better cost to taxpayers. It is true – some people wanted even more and some people wanted even faster change. But reforms must be built on a strong base. Each and every step of our strategy is carefully planned, and is practically possible. The system can’t be tipped upside down on day one, and it wouldn’t help if it was.Without the bedding down the wide range of these major foundational reforms, further reforms would fail.

So I use the words of that song by Kev Carmody and Paul Kelly “from little things, big things grow” – not to diminish the vast scope of our reforms – but to encourage people to see the many seeds that are being planted now across the system will grow into broad and lasting future benefits. The “big things” are why we are so determined to carefully nurture each seed of reform along the way, while delivering improvements now.

National Health and Hospitals Network: A brief recap

The Agreement struck with states at the COAG meeting in April was one of the biggest achievements of Kevin Rudd as Prime Minister, and I would like to acknowledge his personal contribution in securing these historic reforms.

The Gillard Government has the privilege and responsibility of delivering these important reforms – a responsibility that we are deeply committed to fulfilling. For those of you not intimately familiar with the deal that was struck at COAG in April and the reforms included in the May Budget, let me take you on a brief tour.

First, the National Health and Hospitals Network will fundamentally reform the governance and financing of our health system:

• under the NHHN, the health system will be funded nationally – with the Commonwealth becoming the majority funder of health services, including permanently increasing its share of funding for public hospitals to 60 per cent (up from under 40 per cent when we came to government), and taking on policy and funding responsibility for all GP, primary care and aged care services;
• to fund these changes in responsibilities, we will dedicate around one-third of annual GST allocations to a National Hospitals Fund – a major change to federal financial relations;
• health services will be run locally – through Local Hospital Networks stablished to run acute services, and primary health care organisations, to be known as Medicare Locals, to improve access to care and drive integration across GP and other primary health care services, such as allied health and community health;
• there will be strong national standards set by the Commonwealth as the majority funder or majority “shareholder” in the system; and there will be clear accountability for performance. This will be achieved through a permanent Health Quality and Safety Commission, which will drive improved clinical standards and performance across the system, and through a massively enhanced performance reporting regime, including through never-before national reporting on individual hospital performance;
• for the first time public hospitals will be funded on the basis of the services they actually deliver through the introduction of activity based funding. No more block grants or blank cheques. This might sound like I’m speaking in “policy wonk” but it’s a very important microeconomic reform, because of its capacity to improve the efficiency and transparency of the public hospital financing.

Second, we’re investing in pressure points in our health system now, to deliver more services today. For example:

• we’re improving access to public hospitals through more investments in emergency departments, elective surgery, and sub-acute beds – building on the investments we have made in these priority areas for the community since 2007. Just in NSW for example this will mean 427 extra sub acute beds, 7140 additional elective surgery procedures a year by 2013-14, and the equivalent of 261,300 emergency presentations a year in 2013-14.

• But we’re not just tipping money in and hoping for the best – states will be held to tough national performance standards, and they’ll suffer financial consequences if they don’t perform;
• we’re boosting the health workforce, by training more GPs and specialists than ever before, and providing more support to nurses including in critical areas such as aged care; and
• we’re investing more in mental health services, especially those targeted at young people, and aged care – though we know both of these are areas where we have a lot more work to do if we were reelected.

The third piece of the puzzle is the important reforms we are pursuing in areas like primary health care and e-health. Just last week we passed the first federal legislation to establish a unique health identifier for all Australians – an essential foundation for an electronic health record system that improves safety and efficiency. For example, every year about two to three per cent, or 190,000, of hospital admissions result from medication errors – at an estimated cost of $660 million per annum.

In combination with reforms to financing and governance, these changes will fundamentally change the way health services are provided to the community. And that is why we proudly describe the National Health and Hospitals Network reforms as not just the biggest changes since Medicare, they are bigger than Medicare.

Medicare fundamentally changed Australians access to medical care and put an end to debt collections and bankruptcies for unpaid medical bills. In putting an end to poor Australians forgoing care due to lack of money – it was quintessentially Labor. So its importance should never be diminished. The reform to deliver Medicare, and its predecessor Medibank, however, were essentially financing mechanisms – a clever method devised to pay Commonwealth subsidies for private medicine, ensuring universal access.

But today’s reforms require change in so many different ways – financing, yes, but also much beyond that. They represent genuine, sweeping, root and branch reform of the entire health system – financing, governance, workforce training, national clinical standards and accountability, devolution to local clinicians and managers, technology changes and more focus on front end care.

The reforms will fundamentally “reset” the underlying structures and incentives within the health system, thereby driving changes in how health care is actually delivered in Australia, both now and over the longer term.

Changing the way health services are delivered now and into the Future

I’ve always been clear that I want to bring a greater focus in the health system to both primary care and prevention. It’s an abiding passion of mine, because all the evidence shows that if we change the focus of our health system in this way, we can get better outcomes for patients. Longer to live at home, less hospitalisation for preventable illnesses and better use of scarce resources – what is not to like for a Health Minister in that scenario?

It is by providing better access to services designed around patients’ needs, and a greater focus on preventive health and the provision of care outside of hospitals, that we can keep people healthier, for a lesser cost. This way we secure universal access to high quality health services – something that comes under threat if we over utilise expensive hospital resources at times when they are not truly needed.

So it is true that I am pretty proud and pretty excited that our health reforms are really delivering in this area, along with so many others that have already received more attention – like improving hospital waiting time.

Let me talk you through some of the major primary care and preventative reforms in this area. These are the things, that when up and running, will help us break our reliance on hospital treatment – both expensive surgeries and emergency department care. We’ll always need our hospitals, but I want to keep people healthy and out of hospital as much as we can – and free them up for those times we really need them.

First, we’re establishing primary health care organisations, to be known as Medicare Locals, to better coordinate and integrate access to primary health care services in local communities and regions. Currently, there is limited planning for GP and primary care services – including poor identification of and responses to gaps in services. And there is often little integration of services provided by a patchwork of different providers – private GPs, privately practising allied health professionals, and community health services funded by state governments.

Medicare Locals will have a mandate to work with GPs and local health professionals to ensure services cooperate and collaborate with one another so that patients can access the full range of services they need. For instance, in the beginning they’ll be specifically tasked with ensuring adequate access to after hours services in local communities – which individuals and families are crying out for, but will also take pressure off hospital emergency departments.

Medicare Locals will also fill service gaps – something that few mechanisms currently address. One way they might deliver this is by facilitating access to allied health services such as dieticians in an area where there might be a high incidence of diabetes, or psychologists in an area where mental health problems are prevalent. So in establishing Medicare Locals we’re aiming to deliver improvements in the way primary care services are organised in local areas – to ensure they are better responding to the needs of local communities.

Once bedded down there is enormous potential to further coordinate, for example, local mental health services or regional health promotion programs. Second, as well as changing how services are organised, we’re also delivering changes to how primary care services are delivered – through the establishment of a coordinated care program for patients with diabetes, and through investments in primary care infrastructure to leverage changes in models of service delivery.

Our “voluntary enrolment” program for patients with diabetes will give these patients the option of registering or “enrolling” with a GP practice to receive a “package” of coordinated care. Right now, Medicare funds primary care services for patients with chronic disease on a fee-for service basis – which is appropriate for one-off care, but which does not necessarily encourage long term, coordinated care covering all of a patient’s health care needs.

Under our new package for patients with diabetes, GP practices will receive a bundle of funding which will support coordinated care for their enrolled patients. And, for the first time, rather than being paid on the basis of how many patients are in and out their doors, GP practices will be paid in part on the basis of their performance in keeping patients healthy and out of hospital. This is a fundamental change to primary care in Australia – designed to drive better health outcomes, rather than just reward throughput as the current system is essentially designed to do.

Our investments in primary care infrastructure are already delivering through the now expanded GP Super Clinics programwhich will also drive changes to service models over time – by encouraging more GPs and other health professionals to co-locate, making it easier for, and therefore more likely patients will, be able to access the range of services they need.

Our early workforce investments are backing this up by training health professionals in setting like aboriginal medical services or aged care facilities. The old way is to train people only in hospitals. The new way is to train them and employ them across the whole sector. Third, we’re investing more than ever before in building the primary care workforce – by training more GPs, but also by supporting other health professionals to provide primary care services where they are qualified to do so. We’re supporting practice nurses – who work under the supervision of GPs – so that GPs can be freed up to treat more patients with more complex needs.

And we’re recognising the skills of highly trained Nurse Practitioners and midwives by making them eligible for Medicare funding in their own right. These changes are all designed to boost the capacity of the primary care workforce by recognising the contribution a wider range of health professionals can make to the provision of health care services.

In doing so, we are also correcting a longstanding historical anomaly whereby funding for health services has been organised almost entirely around doctors, despite the fact that many health services are now safely and ably provided by other health professionals – as most doctors themselves recognise. This is an area which has been the topic of some fiercely contested battles in the past. But a modern health reform agenda needs to move beyond old contests like these.

Fourth, we’re investing nearly half a billion dollars in the development of a national system of electronic health records. E-health will enable much better communication and integration between health care providers – by, with a patient’s permission, making health information accessible to different health providers at the touch of a button. Last Thursday, despite the spectacular events underway, we managed to get the legislation establishing unique health identifiers – the core backbone of the e-health system – through the parliament. In fact, it was the last piece of legislation the parliament passed before rising for our 8 week winter recess.

E-health records will also give patients more control over their health information – by making all of it available to them through their own personalised e-health record, rather than locked up in filing cabinets. Of course, e-health will have far reaching and significant benefits within hospitals, aged care, mental health, diagnostics, pharmacy and more – but it will be particularly important for driving the integration we are seeking as part of our primary care reforms.

Getting the incentives across the system right

The Commonwealth’s role as the majority funder across the system is a critically important structural reform – it lays the foundations for a health system which keeps Australians healthy and out of hospital. This is because, by becoming the majority funder of hospital services, the Commonwealth will have a direct financial interest in driving better integration of care and better allocating resources across the system.

In other words, we’re giving ourselves a very stiff financial incentive to ensure patients get the right services, in the right setting, in the most efficient and effective way. If we don’t get primary care services outside of hospitals right, we will now foot the majority of the much more expensive hospital bill. This will end a key flashpoint of the “blame game” which has bedevilled federal-state relations in health for too long: where one government does not have to worry about the consequences of poor performance, because the impact is felt by another level of government.

Underinvestment in GP services by the Commonwealth increasing demand for emergency departments is the classic example. By changing the financial incentives within the system, we’re ensuring there is a genuine incentive for one level of government – the Commonwealth – to properly invest in prevention, early intervention, and management of chronic disease. This has never existed before.

This is the classic example of something that seems little or obscure and technical – but goes to the heart of what we are trying to achieve for the benefit of the community.

It’s not structural reform to the system for its own sake – its reform which will drive reforms and improvements to services for patients, now and over time. And this, after all, is the point.

Conclusion: where to from here?

Of course, it’s critical to have not just the right health reform ideas, but also the determination and ability to deliver them. We’re now singularly focused on getting on with the job of implementing the reforms:

• just last week the first two pieces of National Health and Hospitals Network legislation were introduced into the Parliament – to implement the changes to the federal financial relations system agreed to at COAG, and to establish the permanent Australian Quality and Safety Commission which will drive improvements in national clinical standards and performance;
• as I mentioned earlier, the first federal legislation on e-health was also passed by Parliament last week – establishing a unique health identifier, so that all Australians can be safely and accurately identified for health purposes, reducing mistakes and inefficiencies.
• in the last week I opened applications for the 425 primary care infrastructure grants which will allow GPs around the country to upgrade their practices in order to provide expanded primary care services;
• From 1 July, new rural incentives will be paid to doctors to encourage them to move to and remain in rural and remote areas. 500 communities and 2400 doctors will become newly eligible for the incentives, which are based on up to date census information on local communities.
• From around 1 July, the money starts flowing from the Commonwealth for more elective surgery and better emergency departments and subacute care, to drive performance and deliver more appropriate care is provided.
• In the near future, we will be opening consultations with local communities on the potential shape and boundary of each Medicare Local and Local Hospital Network, so that local communities can have a say in how these organisations are established for the future

It is no small task ahead of us – and such are the scale of these reforms, there will be some years of hard work ahead of us to see them fully implemented. But, as well as relieving immediate pressure points, these are fundamental reforms for Australia’s health system – and taking the time to get it right is vital. We’ve been straight with the public that these changes will take time, but will ultimately be worth it.

The reforms restructure the financing, so that our health system has a secure funding base for the future. The reforms establish better incentives, so that governments will have a strong interest in ensuring care is provided in the right place, as efficiently and effectively as possible.

The reforms will change how services are delivered, so that they are more focused and responsive to local needs, coordinated around the patient and of a higher and more consistent clinical standard. They will deliver better health and better hospitals, now and into the future.