Health reform challenge in Australia: Repairing the fundamentals and building on stronger foundations

Australia’s Prime Minister praises biomedical research at the University of Queensland as an example of what can be achieved when government, universities and philanthropy work together in partnership.

It is good to be back home; it’s good to be back in Brisbane; good to be back in Queensland; good to be back at this great hospital; good to be back at a part of this hospital which is a part of a great university, a great Australian university, the University of Queensland, and thank you all for taking some time out this morning to be with us as we continue to expound our vision for the future of the National Health and Hospitals Network and the importance of reform, and the importance of placing this system of ours onto a sustainable basis for the long-term future.

It’s been great this morning to see some of the work done here in this hospital and as part of the research work of this university. We’ve seen the Centre, whose world-class clinical research has a strong focus on patient-oriented care.

The work being done here testifies to what can be achieved when governments and universities work together in partnership and work together in partnership with private philanthropy, as well. I congratulate the Queensland Government, Atlantic Philanthropies and the University of Queensland for what you have achieved in just two years since the Centre was formally opened, and I wish you the very best for your ongoing work.

Can I say also to you more broadly as a medical profession, a nursing profession, those who are concerned about the wellbeing of humans, dealing with the range of physical and psychological challenges which our human family faces, how much I admire your profession. The fact that you’re out there, at the coal face, assisting people in what are very dark and troubling times for many: the human consequences, the human face of physical illness and the uncertainties which that brings to so many families on a daily basis; the fact that you, as nursing professionals, allied health professionals, the fact you as medicos, general practitioners, specialists, working to improve the lot of our fellow Australians and our fellow human beings is a tribute to your profession, and for those of you at the cutting edge of medical research and science, can I say how much we hold you in admiration as well.

I’m constantly stunned when I look at the vibrance of the medical research in Australia. Given that we are a country of modest population against the other great centres of population around the world, it’s still from this and this great medical research tradition that we have in this country constantly producing world leaders, world-class research, out there ahead of the field, prompting others around the world to follow in our path, collaborating with others around the world who are the best in their field

So, as I begin my remarks today, can I simply use this opportunity to salute the profession for its professionalism and its dedication to the care of the sick in our community.

Today I want to take forward the national debate on the future of Australia’s health care system. I am pleased to do this in the presence of so many clinicians, researchers, academics and other health professionals because in the process of driving a long-term agenda for healthcare reform, the Australian Government has been listening intently to the voices of people like you right across the country.

Together with Nicola and with Justine we have visited more than 100 hospitals across Australia in the last six months or so – big ones and little ones, every state of the Commonwealth and in both territories. Myself, I’ve conducted seminars of three hours at a stretch in about 20-25 hospitals across the country, myself. I am now, I am told, being invited to become officially a member of the AMA and of the Australian Nursing Federation and now will be asked to provide minor procedures myself in various A&Es across the country. That was a joke, but I feel as if I am now so part and parcel of how hospitals work on the ground and the great work which is done in them that when I turn each corner I am now greeting something which is no longer foreign to me but entirely familiar.

What we have done in developing this national reform plan is not simply pick an idea of a shelf. We commissioned Christine Bennett to undertake an 18-month long review of the entire system – the National Health and Hospital Reform Commission, which went around the country, which comprised of folks from right across the professions associated with our health and hospitals system. They delivered us a report in July of last year with 123 recommendations. That was step one.

Step two was then to take those 123 recommendations, as Nicola and Justine and I have done, and road test them with health and hospital communities right across the nation, and through multiple presentations asked ‘what are your views on how this would work in your hospital, in your health community?’, and frankly, that’s the basis of what we’ve put forward to the Australian People in this new National Health and Hospitals Network – not an idea plucked out of space, not an idea plucked off the shelf somewhere, not an idea just plucked abstractly out of a foreign health system, but one which has been crafted from the ground up and tested against you, the health and medical professionals of our nation.

The message we’ve heard from these consultations has been loud and clear, and the message is this: Australia’s health and hospital system is crying out for reform. Its foundations are fractured, and its foundations must be fixed. This requires fundamental structural reform – reform that restores financial integrity to the healthcare system and makes it sustainable for the long term future, and reform that tackles the continual cost-shifting and blame-shifting which takes place between the different levels of government.

The problems of cost-shifting and blame-shifting are direct consequences of this system’s current structure. The system that we currently have is fragmented. It has no clear lines of responsibility. It is a system that wastes resources. It leaves too many patients waiting at the end of longer and longer queues. It is increasingly unable to cope with the strains under which it operates, despite the best efforts – the absolute best efforts – of our dedicated frontline doctors, nurses and allied health professionals. It often leaves key decisions in the hands of bureaucrats far too remote from the communities that health professionals serve. It is built around institutions and hospitals and not around the needs of patients, and it is unprepared for the challenges of the future: the challenges represented by an ageing population; the rise in chronic disease rates; the challenge of workforce shortages; and the rising cost of medical care.

These are challenges bearing down on the Australian health and hospital system now. They are bearing down on the health and hospital systems of all advanced economies around the world.

That is why we must therefore embrace fundamental health and hospital reform. We must repair the fractured foundations of the system so that we can build better hospitals and better health services for the future.

The Health Reform Commission, the Bennett Commission, concluded last year after 18 months of work the system itself, right now, is at tipping point and existing funding and functional arrangements simply do not add up to sustainable arrangements for the medium- to long- term future. Simply increasing funding – as some have suggested – without fundamental structural reforms will just perpetuate cost-shift and blame-shift and financial waste.

The Australian Government is not prepared to simply offer the states a big, blank cheque in a system riddled with overlap, duplication and waste. That would not solve the problem. That would just add another expensive bandaid to the problem and it would be financially irresponsible to do so.

Our approach is clear cut: first, reform the system to eliminate overlap, duplication and waste with the establishment of a new National Health and Hospitals Network – one that is funded nationally and run locally.

And second, then fund the system properly for the future with the Australian Government for the first time becoming the dominant funder of the hospital system for the future, the exclusive funder of the primary care health system for the future, the exclusive funder of the aged care system for the future. These are the two elements of our reform program – fix the structure, fund the future. That’s what we’re on about.

But, if we can get this in place, the fundamental reforms that is are necessary to repair the system, to eliminate overlap, duplication and waste and to make the system financially robust for the future, the Australian Government can and will increase its investment in current areas of critical need in the health and hospital system today.

Today I am announcing how primary care will be better co-ordinated and fit with our commitment to Local Hospital Networks in the future. I will also be outlining the same for aged care. I will also be outlining new investments in aged care as well. These are significant additions to the package of measures that is already on the table ahead of the meeting of the Council of Australian Governments in Canberra one week from today.

As we announce these measures today, I reiterate this core point: we cannot deliver these new investments without the fundamental, structural reform of the National Health and Hospitals Network. If we are to allocate increased funding to our health system’s future needs – like the $15 billion of growth in health care costs over the decade ahead – we must have the confidence that the foundations upon which we build are sound, are robust and are properly planned. We must be sure that our increased investments in our National Health and Hospitals Network will deliver real improvements to patient care on the ground.

This morning I want to set out why the Government’s plan for the National Health and Hospitals Network – the NHHN, a network that is nationally funded and run locally – provides the strong foundations for these new investments to occur. The shift to a nationally funded health network represents a major financial reform for our Federation. Crucially, it will create a secure funding base for the health system for the future. It is a major financial reform that firstly, will help to end the blame game.

Some have been calling for additional resources without any change to the structure of the fundamental structure of the health system. Premier Brumby’s health proposal seeks around $40 billion over four years or $150 billion over 10 years, but it is not a financially responsible blueprint for the future of Australia’s healthcare system. It does not grapple with the need for fundamental reform of the system which at present encourages ineffective duplication and waste and it would require a massive increase in taxes.

Let me also recap what this Government has done in the two years that it has been in office:

• Firstly, we have already made record investments, some $64 billion for the health and hospitals system starting from last year – delivering an additional $20 billion compared to the previous agreement. That is a 50 percent increase on the previous Australian Health and Hospitals Agreement;
• Secondly, $750 million in separate investments to lift the performance of our Emergency Departments;
• Thirdly, $500 million in investment in sub-acute care;
• Fourthly, investments also in elective surgery, delivering some additional 62,000 procedures across the country;
• Fifthly, $2.3 billion for cancer care, including, for the first time, $1.3 billion in cancer care infrastructure and a network of regional integrated cancer networks across our nation so that those suffering from cancer in major communities outside our capital cities can have the large part of their treatment delivered in the regions much closer to home;
• We’ve also invested in some 2,000 transitional care places;
• We’ve made a $275 million investment in 36 GP Super Clinics across the country to expand the network of primary care, and;
• We’ve begun the largest ever investment in preventative health care;

But, ladies and gentlemen, this is just the start. This is what we have sought to do in our first two years in office. We have not been standing still, waiting for the Bennett Commission to report. We have not been standing still waiting for the deliberations that we have made as a Government in response to Bennett’s 123 recommendations. This is what has been occurring on the ground over the last two years.

When I was last at the RBH I saw the practical manifestation of that through the investments that we are making to elective surgery through the enhancements to the operating theatres here in this hospital – two of them.

That sort of work is happening right across the country right now, as it’s occurring in emergency departments right across the country right not – but this is just the beginning. We have much more to do.

Our blueprint for the National Health and Hospitals Network will substantially increase the Commonwealth’s funding for health and hospitals into the future. The Commonwealth will fund the dominant share of services delivered in our public hospitals, and will do so permanently. The Commonwealth will also provide the dominant share for the future training, buildings, equipment and research costs for our public hospitals – permanently. In the past, Commonwealth provided zero for these functions. We now become the dominant funder for the future.

This would see the Commonwealth take on the lion’s share, also, of growth in the public hospitals system and relieve state and territory budgets of around $15 billion over the decade ahead. Without this reform, the Treasury, the Commonwealth Treasury, estimates that health budgets of the states and territories will consume the entire revenues of the states and territories by the time we reach the middle of the century, progressively from 2035 on. In other words, not a single dollar left to spend on anything else other than health and hospitals. That is why this is a fundamental financial reform for the federation and its future itself.

This major financial reform will also allow us to improve the quality of patient care in Australia with tough new national standards, backed up by increased transparency across the health system.

The shift to a national funding model will repair our federation and make sure our health system does not buckle under the weight of its own pressure. Just as significantly, the shift to a locally run model of Local Hospital Networks will also repair the fundamentals of how hospitals are run. Local Hospital Networks will deliver the services most appropriate to their communities. They will reflect local clinician knowledge and expertise. These clinicians, together with local nurses and allied health professionals, will have a core and expanded role in the local governing councils of local hospital networks. We want local needs to be reflected in the decisions taken by our clinicians.

The Commonwealth is prepared to shoulder the lion’s share of future hospital growth over the coming decades but only if there are greater levels of transparency of where taxpayer dollars are being spent. Paying Local Hospital Networks directly rather than through the states will achieve this for the first time.

The Commonwealth’s funding will be directed to hospitals that are responsible for delivering services. Let me state that again – the Australian Government will be funding Local Hospital Networks direct, rather than simply translating that funding through the health bureaucracies of the states. That is a core part of the reform that we are proposing. This would also reward innovation and efficiency, since those Local Hospital Networks that eliminate waste will have extra resources to deliver extra services.

My conclusion, having been around so many hospitals like this great hospital around the nation is that the competence and the leadership of local clinicians, nursing professionals, allied health professionals, is that they actually know where savings are to be made in their systems and in their structures. They actually know how to better deliver health services within their communities, and they actually want some head room to be able to do that and then to re-invest what they save from that in the expansion of the services they provide. That, I believe, is a core part of this reform, as well.

Another fundamental structural reform is the Australian Government’s commitment to take full responsibility for primary health care. For most Australians, GP and GP-related services are their most frequent point of interaction with the health care system.

GP care is critical to Australians of all ages. Last year, there were more than 110 million GP visits in Australia. For 22 million of us, that’s a lot of visits to the doctor, yet access to GP and related services differs widely across Australia. Many Australians cannot see a GP when they need one. When they do, services – not always – often poorly coordinated, with too many patients waiting weeks for an appointment, then given the run around from GPs to specialists to allied health professionals.

The way we fund health services does nothing to support the coordination of GP and related services, nor prepare us for the challenge of managing the growing burden of chronic disease, and when our GP and related services let people down, there’s one part of the system that always picks up the tab – our hospitals, and that’s the most expensive part of the system. That’s bad for the system, bad for the proper use of the taxpayers’ dollar, but also bad for the patient.

Australia’s hospitalisation rates prove that fact, with Australia recording significantly higher hospitalisation rates than comparable nations like the US and the UK, a rate higher than the average across all the advanced economies represented by the OECD.

Improving primary care, therefore, is a core priority to fixing our healthcare system. With better primary care, we would substantially reduce the estimated 441,000 potentially preventable hospitalisations that burden our health budget at an average cost of $4,230 per episode of care. Let me run those figures by you again: we could substantially reduce the estimated 441,000 potentially preventable hospitalisations that burden our health budget at present at an average cost of $4,230 per episode of care – and we can achieve better health for Australian families.

That is why under the plan for the National Health and Hospitals Network that will go to Council of Australian Governments next week, the Australian Government will assume full responsibility for primary care health services, and to that end, today I can announce a key part of the governing arrangements of the National Health and Hospitals Network: the establishment of local primary health care organisations, a new network of primary health care across Australia.

These local primary health care networks will have a key role in linking up the different parts of our health system beyond local hospitals. They will be built from the existing network of Divisions of GPs so that they don’t create additional bureaucracy. They will have strong links to Local Hospital Networks, servicing common communities of interest to the Local Hospital Networks. They will also be strongly linked to local communities, health professionals and service providers, including GPs, allied health professionals and Indigenous medical services.

The responsibilities of these new networks will include:

• Working with Local Hospital Networks and GPs to assist with patients’ transition out of hospital, so that they can continue to receive all the care they need, of the type that I’ve seen at work here in the Royal Brisbane and Women’s Hospital this morning;
• Secondly, ensuring allied health care is available for people with chronic conditions, as identified in personalised care plans prepared by GPs;
• Third, working with local health care professionals to ensure services co-operate with each other so that patients can easily and conveniently access the full range of services that they need;
• Fourth, identifying groups in local communities that are missing out on GP and primary health care services, or services that a local area needs; and
• Fifth, delivering also, at a local level, health promotion and preventive health care programs targeted to risk factors in communities in cooperation with the new Australian National Preventive Health Agency.

With the Australian Government taking responsibility for primary health care services we will be able to achieve better coordinated health care, greater innovation in health service and ultimately better outcomes for patients. Together with Local Hospital Networks, local primary health care networks will improve patient care and quality of health and hospital services.

For example, they will have a key role in delivering enhanced patient services for the 1.1 million Australians suffering now from diabetes, expected to rise to 2.2 million over the coming decades ahead. This is part and parcel of a particular program announced by the Health Minister during the course of the last week.

In addition, to ensure that older Australians are served as best as they can, the Government will move towards establishing aged care networks that better integrate aged care with other parts of the health system in primary and acute care. They will ensure a community of services which work with one another to provide better integrated and more efficient care across the entire health system.

In other words, if you look overall at the scheme of the system that we are seeking to build as part of this new National Health and Hospitals Network, you will have local hospital networks, you will have primary care networks, and you will have aged care networks servicing broadly common communities of interest. The longer term ambition of our reform is to further integrate the delivery of integrated health care across common communities of interest.

At present, these networks, informally, perhaps, talk to each other. In many part of Australia, regrettably, they don’t talk at all. Therefore, the guiding philosophy of what we’re seeking to do here is to integrate the best form of health care, integrated care, for a patient, be it in the primary system, the acute system, post-acute or in fact in the aged care network, and that is to be done through the system of structural reforms that I’ve outlined here today.

Furthermore, today I am announcing major new investments in aged care.

The rationale for these new investments is better patient care for Australians and better integration of aged care with other parts of the health and hospitals network. When we announced our reform plan, the Queensland Premier rightly pointed to the need for further investment and reform in aged care. She was right, absolutely right. We agree, and we value her input to these practical initiatives.

The aged care system today is fragmented, with divided responsibilities between Commonwealth and state governments. This makes it difficult for older people and their carers to find and access the care that best suits their particular needs.

Too many older Australians spend more time than they need to in public hospital beds because of a shortage of aged care beds – in 2006, there were 2,400 patients in hospital beds waiting for an aged care place despite having been classified for an aged care place, but no aged care place was in fact available.

Too many older Australians are unnecessarily admitted to hospital because of a lack of adequate GP and primary care in aged care homes. It is estimated that 31 per cent of transfers from aged care homes to hospitals, about 27,000 admissions per year, could be avoided through better GP care in aged care homes.

The Government will therefore invest $739 million in aged care to better support older Australians. This investment will support around 5,000 aged care places or beds, and help to end the blame game that hurts hospitals and aged care services at present.

These investments are possible because the Australian Government is taking full policy and funding responsibility for aged care for the future. In other words, because we’re repairing the foundations of the system we are able to invest confidently in new services and expanded care.

As part of the package being announced today, we will help make navigating the aged care system easier for patients by investing $32 million in creating a network of one-stop shops across the country, providing a central point of contact for older Australians and their families needing information and access to aged care. These will form part of future Aged Care Networks which will ultimately ensure that aged care is coordinated with hospitals and GP and primary health services as I outlined before.

We will expand capacity in the system by investing $143 million to provide an additional 2,500 aged care places through the Zero Real Interest Loans Program. We will build on the successful Multi Purpose Service model in rural and regional communities by providing new capital funding of $120 million for 286 sub-acute beds or their equivalent. This investment will strengthen the provision of hospital services and aged care in our rural communities.

We will increase financial incentives to encourage GPs to provide services to patients in aged care homes – adding 105,000 extra services for aged care patients over the next four years. Improving aged care must be an ongoing priority for the Australian Government.

I want to be very clear – and absolutely clear – about today’s announcement: this is not a panacea for aged care in Australia.

The truth is aged care has been poorly planned in the past. That’s the absolute truth of it – including the proper planning and remuneration structure of the aged care workforce. The Australian Nurses Federation has been very clear in raising these concerns with the Australian Government and the Government intends to deal with these concerns one by one as part of the overall reform of the national health, hospital and aged care network.

This will take time, but we are determined to undertake this work.

Today I have announced the first step in that reform with an investment of some 5,000 more beds, and with, for the first time, the announcement of the Commonwealth’s intention to take full funding and policy responsibility for all aged care services.

But this will not solve, as I said before, all of the challenges of aged care, particularly in the face of increasing demand. We understand that reform is needed in the future – in particular, reforms to the aged care workforce, including the nurses that are the backbone of the aged care sector.

Day and night, it is the Registered Nurses and personal carers in aged care facilities who care for our older Australians. Without supporting our hard-working nurses and personal carers, our aged care system – already under pressure – cannot be expected to cope with the demands of an ageing population.

The measures I have announced today are a very important first step. We must address the challenges facing the aged care sector to place the sector on sound footing for the future. That is why we have asked the Productivity Commission to undertake a major inquiry into the aged care system and as the Productivity Commission undertakes its work, we will continue to work with our partners in the sector to confront the challenges facing our aged care system.

I will have more to say on this in coming months, but I want to make clear our very serious commitment to reform for the aged care system is there on the record, and this includes our fundamental commitment to ensuring that frontline staff who care daily for our patients and grandparents in aged care facilities around the country are supported in their most important work.

To conclude, coming back to this hospital brings back to me many personal memories. I remember coming here as a child. My father was admitted here having suffered road trauma, and he died here, so for many Australians hospitals are not just clinical institutions. They embody within them memories, memories which are deep and memories which are personal, and it’s that human dimension to health and hospital reform which we must never lose sight of. Hospitals, for so many people, represent hopes, they represent fears, they represent joy and they represent tragedy – but they are therefore an important and critical part, frankly, of the Australian fabric of life.

The Government has outlined a comprehensive plan to repair the fundamentals of our health and hospitals network and on the new stronger foundations of the National Health and Hospitals Network we can build better hospitals and better health care for the future.

As I have said from the start, we recognise the scale of the challenge that we have taken on. These are the most significant changes to the health system in three decades, since the introduction of Medicare. We recognise, too, that there is still further work to be done in other areas of the health care system – including mental health, dental health and preventative health care.

But, as I have made clear today, as a matter of basic fiscal responsibility, as a matter of basic financial responsibility, we cannot and will not make new investments into our health care system without fixing the system first. Let me repeat – we cannot and will not make fundamental new investments in the future of our health and hospitals system unless we fix first the structure of that system.

That is why we must have the support of the state and territory governments in advancing the national health reform agenda. With the further details we have set out in the past two days we are presenting an even better deal to every state and territory government and for all Australians.

I will continue to press this case forcefully with premiers and chief ministers over coming days as we continue working together in building this new National Health and Hospitals Network, not just for this generation of Australians, but for those who come after us as well.

To conclude, you as health professionals, you who have a passionate commitment to nursing, to medicine, to the various allied health professions that you represent, to those of you who are hospital administrators, to those of you who are administer various health regions across our nation, across this state, you are also part and parcel of this reform process. This is not simply to be an exercise transacted by politicians. Were that the case it would be doomed to failure.

When I say you as health professionals are absolutely fundamental to the reform process, if you believe the system needs fundamental reform, if you support the broad direct of reform I’ve outlined today, we need each and every one of you to get on the bus with us. This is going to be a difficult exercise in reform. There are some people that are holding out against it. I understand some of the reasons why, but can I say what I hear across the nation is a deep cry from working people, working families, from pensioners, from carers, but also those who work at the coal face themselves, the need to get on with the business of building better hospitals and a better health service for Australia’s future.

I would invite you to be reformers with us in that process.

I thank you.