The likelihood of a “federal takeover” of health (as mooted by Kevin Rudd in 2007) looks ever more remote. However, there seems to be a growing chorus of support for this in Tasmania. Earlier this month, the independent MP Andrew Wilkie joined the Tasmanian Premier’s calls for a federal takeover of public hospitals in that state.

A recent paper by a longstanding consumer health advocate, Martyn Goddard, argues that a federal takeover is needed to avoid collapse of the Tasmanian health system, and outlines how this could be achieved. A summary of the paper, called Saving Health, follows below, and the full version can be downloaded here.

Goddard says the paper was written on his own behalf, “because nobody else seemed likely to do it”. Goddard was once a journalist but became involved in health policy in the early 1990s, having been diagnosed with HIV and having gone to far too many funerals. He was a member of the Australian National Council on AIDS and Related Diseases and its clinical subcommittee, was the first consumer member of the Pharmaceutical Benefits Advisory Committee (which evaluates drugs for the PBS), and was health spokesperson for the Australian Consumers’ Association. He has written many policy papers and submissions for Commonwealth and medical bodies, and now lives in Tasmania.


Why a Commonwealth takeover of Tasmania’s health system is needed and how it could work

Martyn Goddard writes:

Tasmania’s health system is on the brink of collapse. The causes and the solutions go far beyond the present budget cuts and are best illustrated by one simple set of figures.

In the ten years from 2000-01 to 2009-10, the amount spent by the state government on public hospitals rose, year-on-year, by an average of 11%. For the same period, spending on everything other than health rose year-on-year by an average of only 5.7% a year and total government revenue by 6.1%.

No state or territory government, in Tasmania or anywhere around the nation, can manage forever the relentless budget pressure of health unless its income rises by just as much. Tasmania’s situation is fundamentally no different from that of the other states, particularly the non-mining states with weak economies being damaged by the high dollar and low consumer spending. Tasmania has got there first but others are not far behind.

A new structure

This paper contends that the present split of funding responsibilities between the states and the Commonwealth does not work and is not likely to work; and that the health and hospitals system will not function effectively until responsibility is removed from the states, which cannot afford to pay, to the Commonwealth, which can.

A new, Commonwealth-funded structure for Tasmanian health services must:

• Keep day-to-day administration located in Tasmania: the Commonwealth Department of Health and Ageing has no history of performing these practical functions and cannot do so;

• Maintain health employees in the state industrial relations and superannuation systems: they and their unions would block any move to put them into the federal systems;

• Ensure the Commonwealth has enough sense of ownership and political responsibility to give it no option but to fund and nurture the system properly;

• Attract the support of the major stakeholders.

The solution proposed in this paper involves establishing a single funding stream, with the Commonwealth both as the sole funder and as the owner of the physical assets presently owned by the state. The Commonwealth would purchase health, hospital and administrative services from agencies staffed by Tasmanian state employees. The state would surrender a proportion of GST equal to the amount it has historically spent on health. Despite the various legal and functional complexities, this structure will be relatively straightforward in terms of its practical operation.

Salvation will not come in the form of special payments from the Commonwealth. Unless these amounts are given to all states and territories in line with their assessed GST entitlements, the Commonwealth Grants Commission will deduct any money that it deems to upset existing relativities between the states. Tasmania presently receives 3.5% of the national GST pool; if it is given more than 3.5% of any Commonwealth specific-purpose payment program, that money will be taken back by the Grants Commission in the form of lower general GST payments. In the long run the state would be worse off because it would have had the right to spend GST money as it wishes; the specific purpose money from the Commonwealth comes with many conditions and can only be spent in ways the Commonwealth stipulates and involves significant compliance costs.

Demographic realities

On average, Tasmanians are older, poorer and sicker than their fellow Australians. They are therefore more likely to need health interventions and less able to pay for it themselves. Death rates are higher, life expectancy shorter, and wages lower. Tasmania has more children in one-parent families, lower labour force participation, more smokers, more obesity, older average ages and more avoidable deaths than the national average.

A constant state of crisis

When hospitals are underfunded for decades, as Tasmania’s have been, the system becomes not only unable to cope with its sick and vulnerable population but its economic and clinical efficiency plummets. An inadequate system will focus increasingly on the most seriously ill people, starting with those who will die without immediate care. Less urgent cases are neglected, even though this neglect may result in expensive, dangerous and distressing complications. Earlier intervention, which is almost always cheaper than later emergency treatment, is no longer possible.

Tasmania’s two major hospitals operate constantly with bed occupancy rates well in excess of those generally considered safe. In mid-2011 average occupancy rates at the Royal Hobart Hospital stood at 98% and at the Launceston General at 97%. This indicates substantial periods in excess of 100% and almost no capacity at all to cope with surges in demand. The usually quoted safe occupancy figure is around 85%.

The result is increased levels of infection, more mistakes by overworked staff and poorer treatment outcomes for a variety of conditions. It also causes patients to be backed up in emergency departments, a situation known as access block or bed block. This adds immensely to the workload of ED staff and costs more than being accommodated on a ward.

It is also associated with a higher death rate: people affected by bed block are 20% to 30% more likely to die. In Tasmania, this is likely to account for 90 to 100 avoidable deaths annually, three times the road toll.

The resultant overcrowding in emergency departments leads to patients being unable to be discharged from ambulances, a situation known as ambulance ramping. This is also likely to have a cost in mortality and disease complication but the most easily documented result is that ramped ambulances are unable to respond to new calls. To maintain response times, more ambulances must be bought and more paramedics employed at a considerable and avoidable cost to the health budget.

Bed occupancy rates are unsatisfactorily high not mainly because insufficient public acute beds exist – there are just as many per capita in Tasmania as in other states – but because there are too few cheaper, more patient-friendly alternatives to acute inpatient care. But these cheaper alternatives cannot be afforded partly because so much money is spent on a system unduly focused on acute care, whether or not that style of care is best for the patient. Developing alternatives will cost money the state does not have.

Elective surgery

Even before the recent astonishing cuts to elective surgery, public hospitals have been forced for decades to concentrate on emergency and life-saving treatment while neglecting those surgical patients whose procedures can be delayed. Waiting times are far greater than anywhere else in Australia, and now will quickly get much worse. Some patients will suffer serious and occasionally fatal complications as a result of these delays.

Waiting times for a first consultation with a surgeon – the waiting list to get on the waiting list – are often even longer. At the Royal Hobart Hospital, surgery clinic waiting times range up to two and a half years.

Although elective surgery waiting times and bed occupancy rates in the major public hospitals are unsafe and seriously unsatisfactory, beds in private hospitals – which account for almost half the acute beds in the state – are seriously under-utilised. A possible scheme for cost-effective and noninflationary direct government funding of these facilities is outlined in the final chapter of this paper.



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