Australian Healthcare & Hospitals Association (AHHA)

1. Australian Healthcare & Hospitals Association (AHHA) ACERH Policy Forum Hospital Financing - Viewpoints 22 February 2008 your voice in public healthcare

2. About AHHA The Australian Healthcare & Hospitals Association (AHHA) is the only national organisation representing the public healthcare sector and the professionals working in it your voice in public healthcare

3. About AHHA your voice in public healthcare Members of the AHHA are state health departments, health services, other providers, individuals; National Councillors are senior health administrators, clinicians, academics AHHA is independent of government and financed through membership and publications Our primary role is to uphold and improve Australia’s public health care sectorthrough high-level advocacy and representation 3

4. Setting the Scene your voice in public healthcare • Public hospitals experiencing unprecedented demand demonstrated by a 25% increase in admissions in the 10 years from 1996 [AIHW Hospital Statistics] • Coupled with pressures created by workforce shortages, there is an undeniable and predictable impact on capacity to deliver safe services • High profile incidents dominatingmedia illustrate this 4

5. Setting the Scene your voice in public healthcare The Commonwealth Government’s share of public hospital funding (through the AHCAs) declined by 3.1 percentage points (45.8% to 42.7%) between 2003-04 and 2005-06 (1st 3 years of current AHCA) State/territory government funding increased 3.1 percentage points from 54.2% to 57.3% [AIHW: Health Expenditure in Australia 2005-06]. 5

6. Setting the Scene your voice in public healthcare The magnitude of this Commonwealth funding shortfall on public hospitals is significant The total amount of Commonwealth funding that public hospitals missed out on in 2006-07 was $1.6 billion [based on Australian Institute of Health and Welfare data, excluding DVA payments) 6

7. Setting the Scene your voice in public healthcare Inadequate indexation factor applied in the AHCA - 1.7% (plus factors for population increase (1.2%) and utilisation (1%)) After allowing for inflation, growth in publichospital expenditure over the last decade (to 2005-06) averaged 4.6 % AHHA is advocating for indexation of at least 4.5% above inflation 7

8. The New Era your voice in public healthcare • Labor’s National Health Reform Plan – aims to end cost-blame shifting (by mid 2009) and to improve health outcomes: • National Healthcare and Reform Commission • Rationalisation of Special Purpose Payments – focus on outcomes and outputs (HoTs) – National Partnership Payments • 2008-2013 AHCAs (?) • Elective surgery waiting lists • Preventative Health Care Partnership (Taskforce mid 2008) • GP Super Clinics • Workforce (nursing package) • Transition care (2000 places) • Dental (1 million consultations) 8

9. The New Era your voice in public healthcare The waiting list reduction strategy is the first new policy to be rolled out Worth $600m in total, funding aimed at reducing lists, extending capacity and ultimately linking to performance Value is small compared to cost of running public hospitals = $25b per year Additional resources welcome 9

10. Elective Surgery your voice in public healt hcare • Ist stage “elective surgery blitz funding” ($150m) allocated and due for completion in 2008 • 2nd stage ($150m) proposals due 25 February for implementation over 3 years on capital and infrastructure. • 3rd stage ($300m) dividend payments to be paid in 2009-10 and 2010-11. 10

11. The Next AHCAs? your voice in public healt hcare • The next major challenge will be re-framing and negotiating the 2008-2013 AHCAs • These new agreements will be crucial in setting the direction for our health system • Must deal with increasing demand on hospitals and incentives for integration by focusing on • Prevention • Chronic disease management • Community care 11

12. Pressure on Public Hospitals your voice in public healthcare • Evidence shows that increased pressure on hospitals is due (in part) to: • Lack of prevention strategies and services • Deficiencies in early diagnosis and treatment services • Poor management of chronic disease in the community • Poor integration of hospital and other services 12

13. Pressure on Public Hospitals your voice in public healthcare • 500 000 + Australians admitted to hospital every year with conditions that could have been prevented or treated in the community = almost 11% of all hospital admissions [Atlas of Avoidable Hospitalisations in Australia AIHW 2007] • Many conditions driving demand for public hospital care are largely preventable [State of our public hospitalsreport Federal Government 2007]: • kidney disease, the single most common cause of admission to public hospitals • other chronic conditions, such as heart disease and type 2 and diabetes. 13

14. Public-Private Funding your voice in public healthcare • Reduction in share of Commonwealth funding for public hospitals is in sharp contrast to increases in the subsidy for private health insurance • PHI rebate has risen sharply in past 5 years with annual increases often above 8% • Only 40% PHI rebate goes to hospital services (60% is spent on administration, anciliary services etc 14

15. Public-Private Hospital Issues your voice in public healthcare • There is a role for both public and private hospitals but this role is generally not inter-changeable • Many public hospital services not generally available in private sector eg • 50% of public hospital patients are emergencies compared with 8% in private sector (2005) • Meet different community demands – not parallel systems 15

16. Public-Private Hospital Issues your voice in public healthcare AHHA has not found any convincing evidence that PHI rebate is an efficient use of public funding Contributes to increasing gap betweenpublicly and privately funded services and access disparities between insured and non-insured Heavily subsidised – mixture of incentives and penalties – where is the scrutiny? 16

17. Conclusion your voice in public healthcare Hospital and health financing system is piecemeal and uncoordinated Imposes uneven cost burdens on consumers Creates perverse incentives that work against the delivery of effective / efficient care Problems will be exacerbated as more people with chronic disease seek care from multiple providers over extended periods of time 17

18. Conclusion your voice in public healthcare What we need is a health system that promotes access to the most appropriate care in the most appropriate setting We must articulate goals for delivery of healthcare – standards for access and equity – and develop a financing system to achieve this May require radical restructure eg responsibility to one level of govt Commitment to address communityexpectations through consultation 18

19. AHHA 2008 Policy Priorities REFORM A new government = fresh ideas Three major opportunities: • Early innovations • The Australian Health Care Agreements • The National Health and Hospitals Reform Commission your voice in public healthcare

20. AHHA 2008 Policy Priorities REFORM A new government = fresh ideas Three major policy areas: • National benchmarking and data • Information management (including but not limited to ICT) • Service integration (between providers; settings) your voice in public healthcare

21. AHHA 2008 Policy Priorities • Topic Priorities • Dental and Oral Health • Chronic Disease Management • Mental Health • Indigenous Health • Rural/Remote Health • Women's and Children's Health • Workforce your voice in public healthcare

22. Events AHHA Think Tank Exchange The Early Health Reform Agenda: AHCAs and Early Innovations When: Friday 2 May, 10am to 4pm Where: Rydges Lakeside, Canberra your voice in public healthcare

23. Events AHHA Congress Reform – A New Era When: 25 and 26 September Where: Rydges Lakeside, Canberra your voice in public healthcare

24. Contact Us P: 02 6162 0780 F: 02 6162 0779 E: admin@aushealthcare.com.au W: www.aushealthcare.com.au your voice in public healthcare