Health Department boss: ‘doing nothing is not an option’


vector abstract tech health care innovation concept background

SPEECH: The enormous challenges in health policy are actually an opportunity, the Health Department boss says. He outlines the reform agenda around primary and mental health, aged care and funding responsibility.

We are going through an exciting time of change, of innovation and of opportunity — looking to transform Australia’s health and ageing system to create a dynamic and responsive system that meets modern needs.

I’ve been secretary of the Health Department for 17 months now and I came to the job with quite a different perspective. I spent 12 years working in the health system running hospitals and health services in Queensland and New South Wales and then I left to do other things. So after 11 years out of health I’ve found myself back at the centre of health as the federal secretary of Health.

My time both inside and outside the system gives you an interesting perspective. Coming back, I saw a fragmented and disconnected health system. I saw disconnect between primary, acute and aged care. Between states, territories and the Commonwealth. And between the public and private systems. I saw not one health system, but many.

We are faced with many challenges such as government overlap, inefficiencies in the system and a need to reform systems such as Medicare and private health insurance to ensure they reflect modern Australia.

We currently spend $154 billion across all parts of the healthcare system. Of this 41% comes from the Commonwealth, 27% comes from the states and territories and 32% comes from the private sector in some form.

“… what we actually have is a unique opportunity. One we have not seen for many decades.”

Our biggest concern is undoubtedly the growing burden of chronic disease.  There are also the challenges — but also opportunities — posed by rapid uptake of technology and our need to keep up, our ageing population and increasing consumer expectations.

All of this is fact we can’t escape.

Yes there are challenges, but when you see all this and you take a strategic approach what we actually have is a unique opportunity. One we have not seen for many decades.

As health industry leaders we must be the stewards of our system. We need vision. We already have one of the best health systems in the world but it’s under enormous pressure and continues to fail some of the most vulnerable and disadvantaged Australians. Without change, eventually that pressure could overwhelm it.

We must ensure it remains sustainable for future generations. And that is why a string of parallel and complementary health reform processes are currently under way.

Implementing them will require new ways of thinking — new ways of doing things. We will need to do old things better and innovate. But when we are successful these reforms will bring the biggest change to the health system in decades.

This work will mean new models for funding and delivering primary healthcare, particularly for people with chronic and complex conditions and those living with mental health issues. It will mean the reform of old MBS items — some long past their use by date and others illogical — so we can have a MBS that is both clinically and cost effective.

It will mean realising the enormous potential of personally controlled electronic health records — My Health Record. It will mean changes to the private health system so consumers can get better value for money from the premiums they pay. It will mean, through conversations at the Council of Australian Governments, we are having a serious discussion around the state-federal split of health and hospital funding and responsibilities. And finally it will mean a new approach to mental healthcare that will stop people from falling through the cracks.

A new strategic framework

We have put a lot of effort into creating a Strategic Policy Framework that allows us to develop options for the system. Over the past 17 months I have spent an enormous amount of time having conversations with stakeholders. Listening to them — not always agreeing with them, but giving them a voice.

Likewise, our relationships with the states and territories. I meet with my CEO colleagues on a regular basis and we talk about our stewardship roles. Again, we don’t always agree on some of the detail but there is remarkable coherence on the broad strategic direction of our system. The key players acknowledge that the system is under pressure and we need to do something to ensure the sustainability of our very good system.

Let’s have a look at some of these reforms in more detail. The primary healthcare reform process is now coming to a head. The high level Primary Health Care Advisory Group, headed by Dr Steve Hambleton, has now presented its report to the Minister. Without pre-empting government decision, its focus has been on new funding models for patients with chronic conditions, including mental health issues and the need for alternatives to Medicare’s fee for service payment (a very transactional arrangement).

I think we all agree that people with chronic and complex conditions should have ready access to health services. They should be able to get coordinated and multidisciplinary team care where the different healthcare services and providers are all talking with each other, all working on behalf of the patient. Better responses to complex and chronic conditions — including mental illness — at the primary care level will reduce the need for expensive acute or specialist treatment.

The Medicare Benefits Schedule review, led by Professor Bruce Robinson, is considering all 5700 services listed on the MBS. No small task. Some items have been on the MBS for 30 years and very few have previously been reviewed. Treatments have changed over these 30 years but the MBS has not. The review, being done in stages over a two year period, has already recommended removal of 23 lower-volume MBS items not seen to be clinically effective.

It’s also looking at why some Medicare items are being used at highly varying rates by different doctors and in different parts of Australia. We now have the Atlas on Health Care Variation to help us with this. Just as an example, rates of knee arthroscopy vary by 200% between different regions. The review is looking at how services can be aligned with contemporary clinical evidence and improve health outcomes for patients.

The roll out of Primary Health Networks across the country is also hugely important when it comes to improving how our system works. They are set up as commissioners of service — not providers because we have all seen the problems in the past when you have a conflict of interest around commissioning and provision of services at the same time.

Mental health is getting the attention it needs. The reforms announced last November represent real innovation in the delivery of mental health services. They will transform Commonwealth mental health funding and programme delivery to achieve a more efficient, integrated and sustainable mental health system. A new stepped care approach, coupled with more regionally responsive and flexible funding arrangements will better support patients to get the type of care which suits their needs.

A regional approach, led by Primary Health Networks, will plan, integrate and commission mental health services at a local level, in partnership with relevant services and with a new flexible primary mental healthcare funding pool.

A consumer-friendly Digital Mental Health Gateway will be developed to optimise use of digital mental health services and technology. The gateway will act as a form of triage to assist people to access the most appropriate online and telephone services based on their specific needs.

The Health Department also has responsibility for aged care again, and I think this is where it belongs. There is a lot of reform happening in aged care at the moment — all aimed at increasing consumer choice and control.

From February 2017, home care packages will be allocated to consumers who will be able to direct government funding to their provider of choice. This gives them the flexibility to move if needed.

Since July last year My Aged Care is now the entry point to aged care services. This was a significant change and, inevitably, some clients, assessors and service providers faced unexpected challenges. The department has been responsive to these operational challenges and has continued to work with our delivery partners to ensure that systems and processes reach a steady operational state as quickly as possible.

And now that aged care is back in the fold we are making the most of the opportunity to ensure that the health and aged care systems work together effectively. Crucial to this will be the role of the Primary Health Networks — which have aged care as one of their priorities — in improving the health and wellbeing of older Australians.

We are also working with the states and territories on Public Hospital Funding. Through our stewardship roles we can rethink our health system and make it our joint responsibility for the entire system, no just Public Hospitals. At the end of the day Public Hospitals account for almost a third of our health system.

One of the more interesting options being discussed focuses on patients with multi-morbidities and complex conditions who are high cost and frequent hospital users. The Commonwealth and states and territories would be jointly responsible for funding individualised care packages for these patients. They would also contribute to a pool of funding to provide coordinated care for people with chronic conditions experiencing multi-morbidities. This would align well with the work undertaken by the Primary Health Care Advisory Group.

I’m also pleased that, as a nation, we are now having a conversation about private health insurance. The significant feedback — more than 40,000 responses — from the government’s consultations showed consumers are concerned about the affordability of their premiums; hardly surprising given premiums have increased at a rate of around 6% per year in the recent past.

There is also work to be done around the prosthesis list, with the aim of making it more transparent and better value for money for private health insurers and the government alike. We are certainly keen to continue to work with all parts of the private sector to deliver a better outcome for consumers.

In digital health, we’re on track to having a My Health Record system that works for both patient and doctors. Nationally, the system will be more useable and practice incentives will be used to improve uptake.

We will undertake trials for the automatic creation of patients’ health record.  These trials will be “opt out”, not “opt in”. Slow take-up has been the great failing of the system so far. Just over 1 million people will take part in these trials — one in the Nepean Blue Mountains, the other in northern Queensland. If successful, this will be the breakthrough we need for a truly national digital health record system.

Cultural change and better data

All these reforms require significant cultural change — strategic compromise, not confrontation — a shift from the “us and them” mentality that has divided health for many years. They also require a shift to a consumer service model in which the patients’ needs, not the providers’ needs are at the centre of the system.

There are a lot of things happening right now. One of the under pinning cultural changes required is better data collection, analysis and reporting. We need to put data, analytics, evaluation and research at the centre of healthcare and our strategic policy thinking. We need to get better at sharing our data in appropriate ways.

Let me give you an example. The MBS and PBS provide excellent data on use of healthcare services. Historically, we had been reluctant to share with the states and territories. I can remember this from my time in the states some 15 to 20 years ago.

This issue came up early after my appointment. I asked what I thought was a simple question about why we don’t give it to the states and territories and I got the standard legal response. I said “what if I want to do this — how can I do it?”. It was relatively simple and now the states and territories have the data.

We need to think differently going forward. We need to ask the right questions. We need to understand what is truly private, what can be shared and what should be open to the researchers and the innovators.

We have moved the agenda forward and have now provided a data portal built around the requirements of Primary Health Networks as commissioners of service. This portal provides MBS, PBS, aged care and hospital data and we are looking to further develop this over time. Much of this is now publically available on our website, go there, search for “PHN Portal” — it’s no longer hidden. It’s a free public resource.

This is complex — and we need to be mindful of privacy. But we have vast amounts of data on the services that providers in Australia are delivering to their patients and we need to find the best way that this can be used to improve the health of the Australian community.

Another use of the data that is relevant surrounds our compliance activities. With the machinery of government changes late last year Health picked up the provider compliance functions from the Department of Human Services. I see this as one of our most strategic assets.

I want to move away from the old notion of catching cheats to understanding behaviour and what is really happening in the provider space. If we use behavioural insights technology we can think differently. We have great opportunity to improve provider compliance and at the same time improve patient care.

To ensure we are up for the changes I’ve outlined, I’m very pleased to say that that the department has made great strides in meeting emerging challenges. We had to — because maintaining the status quo in how we were doing business was just not going to cut it.

Organisationally, for the Department of Health, this has meant repositioning ourselves so we can more effectively provide the government with strategic advice on the health reform agenda.

The department is one of many players in the health system. But we need to be more than just a participant. We must be a leader. To be a leader we must focus on the long-term — of course we need to deal with the urgent, but when we allow it to crowd out the important, we all lose.

This shift is made easier by working on a long-term reform strategy that specifies how existing and new policy levers will be used to effect change. This way, we can help solve not just the immediate and short-term problems, but set the system up for the longer term with lasting reforms. As part of this, we recognise that we can’t advance the reform agenda in a piecemeal fashion. We must look at the big picture. And we will only achieve change in the system if we can similarly break down our silos across the Department and ensure we are all better connected.

‘We all agree reform is needed’

Over the past 12 months, I’ve seen the health reform conversation go from an argument to an informed discussion. I think it’s fair to say that all of us working in this space now agree that reform is needed.

We understand the compounding pressures I talked about earlier and the strains they are putting on health budgets, whether you’re the national government, a state or territory government, a mum or dad, or an individual. We understand the stats:

  • Growth in Medicare claims that has already outstripped the number of new patients three-to-one over the past decade;
  • Medicare being billed more than 1 million times a day;
  • More than one-third of all Australians now having a chronic condition — such as asthma, heart disease, respiratory illness or mental illness; and
  • And around one in five having at least two chronic conditions.

With stats like these, doing nothing is clearly not an option.

The health reform agenda is a big one. It’s not simple and some of it will challenge long-held norms. There will always be interfaces between health systems — we need to manage them and make them work together to benefit the consumer.

There’s a genuine focus on constructive collaboration, about taking the next steps. With a strategic policy approach we can set out what is possible. We won’t always get there in one go but what we do will be within that long term vision for the system.

We have a unique opportunity — a rare window — for constructive reform to ensure our health system stays among the best in the world. But we need to have the courage to try new and innovative ways of doing things.

It’s not beyond us. Let’s embrace the opportunity.

This is an edited speech delivered to a Committee for Economic Development of Australia forum on March 11