Rural health advocates have nominated equitable access to high-speed broadband as a critical election issue.

It was the top priority recommendation from the recent National Rural Health Conference in Adelaide, where delegates stated that high broadband speeds are crucial for facilitating new and emerging best practice models of healthcare.

As well as its importance for enabling improvements to healthcare, the NBN is critical for economic and social development, says Daryl Sadgrove, Chief Executive Officer of the Australasian College of Health Service Management,

In the article below, he says:

“It is a shame that our Opposition has decided to take such a short-sighted policy position on such a fundamental piece of infrastructure, which based on the current election polls, might be a decision which we all soon have to live with.

The NBN is a public good that drives our economy, provides a global competitive advantage, enriches relationships, entertains us and will be a major driver of reform in our healthcare system. The return on investment for these major investments are never realised in a political cycle, what we need is vision. “

This article was first published at the ACHSM blog.

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The NBN: Too expensive or are we being shortsighted?

Daryl Sadgrove writes:

The impact of the Internet on Australian business over the last two decades has been profound.

The Australian Bureau of Statistics (2012) reported that Australian Businesses received orders valued at more than $189 billion in the 12 months to 2011, and this was primarily achieved using low speed broadband.

The introduction of a national high-speed broadband network in Australia is likely to open up a wide range of new opportunities for businesses and the economy as a whole. 

In a report to Telstra Corporation Ltd, Access Economics (2009) estimated that the net impact of introducing the NBN could contribute as much as $9.5 billion to the Australia’s gross domestic product (GDP) between 2008 and 2020, and although early days, it was suggested that the NBN could potentially have the single biggest impact on the economy of any government investment in the last two decades.

The NBN is likely to have a significant impact on the growth and sustainability of business in Australia.

The literature identifies two key mechanisms will drive business development; the first is by making existing production processes more efficient (i.e. by improving the quality and reducing the cost of inputs), and secondly by creating new business models that fundamentally change the way business is done (through the globalisation of markets, facilitating a better allocation of resources, and improved supply chain management).

The OECD (2008) says that “broadband facilitates the development of new inventions, new and improved goods and services, new processes, new business models, and it increases competitiveness and flexibility in the economy”.

Today we can see that businesses are already harnessing these benefits by conducting a wide range of activities using broadband including the recruitment of staff, marketing, ecommerce, supply chain management, communications, market research and even the creation of completely virtual businesses.

Of course the net benefits to business from the NBN will be contingent on the precise technology used, the approach used in the rollout, the regulatory framework adopted, as well as the prevailing economic conditions.

In consideration of recent media concerning the differing policy positions of the two key political parties regarding how the NBN should be rolled out, let me say that my support is squarely in the camp of the Labor party on this one. Although there may be short-term gains achieved by paring back the speed and access to the NBN, in the medium term the evidence suggests that our economy and productivity will suffer.

I believe we should stay on course to rollout a full fibre-to-the-premises (FTTP) strategy which aims to reach 90% of homes, schools and healthcare facilities achieving speeds of up to 100Mbps (supplemented by fixed wireless and satellite technology for those premises not reached by fibre).

This is in fact not the fastest speeds available (up to 1Gbps is currently possible), however 100Mbps was the level that most of the evidence suggests that the greatest returns on investment are achieved in the medium to long term.

If the Liberals do not take responsibility for providing fibre directly to the premises, all it will do is shift the cost to consumers and create an equity and access issue for those that cannot afford to connect fibre to their home, and hence a significant proportion of our population will not benefit from the social and economic opportunities that will evolve.

By having a reduced number of people participating in the evolving high-speed broadband digital economy, this in turn reduces the connectivity and ‘network’ benefits for us all.

The NBN and healthcare

As we are well aware the healthcare industry is facing a range of unprecedented challenges over the next 40 years.

In 2010-11 the healthcare industry represented a significant proportion of Australia’s GDP (9.4%), and the costs associated with its delivery continue to rise at an unsustainable rate of 8% per annum, which is almost three times the rate of CPI (AIHW, 2011).

Between 2010 and 2050 the population over the age of 65 will nearly double (Access Economics, 2010b) and more than 80% of healthcare costs are driven by those over the age of 65.

If we continue business as usual demand for health services are expected at least double over the same period. Based on current trends the proportion of GDP spent on healthcare will increase from 7.5% to 12.8% by 2050 (Treasury, 2010).

Escalating state health expenditure is predicted to overwhelm the budgets of most state jurisdictions by 2035, and the availability and distribution of the health workforce is expected to fall a long way short of current demand projections (Health Workforce Australia, 2012a).

Therefore considering the size of the healthcare sector and the significant financial and resources challenges expected, even modest improvements in productivity could be expected to have profound economic benefits for the healthcare sector.

The NBN enables a wide range of opportunities for the healthcare sector to achieve financial, productivity and societal benefits in the future. In 2003 Access Economics (2003) estimated that the net economic benefit of proving the NBN to hospitals without broadband would be $190 million over 10 years.

In addition to the significant economic benefits that could be achieved from the roll out of high speed broadband in healthcare, Access Economics (2003) suggested that the most significant gains would be made from the implementation of telehealth services.

Lobley (1997) outlined a number of potential cost savings from telehealth including reducing the costs of patient movement (ambulances, aircraft etc.), reducing the costs of moving staff (transport, travel and accommodation), reducing the opportunity costs of time spent travelling, reducing the rates of diagnostic testing, savings from more appropriate and effective care delivery, and reduced travel and service costs to patients (including out-of-pocket expenses).

In 2003 it was projected that the net cost savings from a limited range of telehealth services (including telepsychiatry, teleradiography, foetal ultrasound and staff education & training) to be nearly $2 billion. However unsurprisingly the study also showed that there were diminishing returns based on the extensiveness of the network (Access Economics 2003).

Following these early studies, Access Economics (2010b) was later commissioned to undertake a cost benefit analysis of introducing telehealth interventions (including telemonitoring and teleconsultation) in existing aged care programs.

After evaluating the financial cost benefits for only three sites, excluding costs related to the burden of disease, the benefits totalled $17.4 million (or a 61% return on investment), if burden of disease costs are included the total gross benefit of the trial increases to $26.9 million or a 249% return on investment (Access Economics, 2010b).

Despite these impressive gains, we must understand that telehealth services are not for  everyone. Botsis and Hartvidsen (2008) suggested that not all patients are suitable for telehealth including as alzheimer’s patients as they had difficulty using the technology and associated devices.

Nevertheless this shouldn’t preclude the wider use of such technologies for the majority of us. I know that I for one would be prepared to have 30-50% of my GP consultations conducted by videoconference. This would not only save my GP time and money, it was save ME time and money and also minimise the opportunity cost lost from the waste.

The evidence suggests that the implications of the NBN on the Australian economy, and particularly healthcare, are likely to be significant.

It is a shame that our Opposition has decided to take such a short-sighted policy position on such a fundamental piece of infrastructure, which based on the current election polls, might be a decision which we all soon have to live with.

The NBN is a public good that drives our economy, provides a global competitive advantage, enriches relationships, entertains us and will be a major driver of reform in our healthcare system. The return on investment for these major investments are never realised in a political cycle, what we need is vision.

I’d be interested in your thoughts.

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References:

Access Economics (2003), ‘The economic impact of an accelerated rollout of broadband in hospitals’, report prepared for the National Office of the Information Economy, accessed 13/4/13, http://www.archive.dbcde.gov.au/__data/assets/pdf_file/0003/48351/Broadband_in_Hospitals.pdf

Access Economics. (2010b), ‘Telehealth for aged care’, Report to the Department of Broadband, communications and the digital economy, accessed 13/4/13, http://www.dbcde.gov.au/__data/assets/pdf_file/0014/131900/Telehealth-for-aged-care.pdf

Allens Consulting Group. (2010), ‘Quantifying the possible economic gains of getting more Australian households online’, Report for the Department of Broadband, Communications and the Digital Economy, Canberra.

Australian Bureau of Statistics. (2012), ‘Australian businesses connecting with the internet’, Media Release 26th June, accessed 7/4/13, http://www.abs.gov.au/AUSSTATS/[email protected]/Latestproducts/8166.0Media%20Release12010-11?opendocument&tabname=Summary&prodno=8166.0&issue=2010-11&num=&view=

Australian Institute of Health and Welfare. (2011), ‘Health expenditure Australia 2009-10’, Health and welfare expenditure series no. 46, pp77, accessed 13/4/13, http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=10737420254

Health Workforce Australia. (2012a), ‘Innovation and Reform Strategic Framework for Action’, accessed 13/4/13, http://www.hwa.gov.au/work-The rprograms/workforce-innovation-and-reform/strategic-framework-for-action

Lobley, D. (1997), ‘Economics of telemedicine’, Journal of Telemedicine and Telecare, vol. 3, no. 3, pp17.

OECD. (2008), ‘Broadband and the economy’, Ministerial Background report, accessed 20/4/13, http://www.oecd.org/internet/ieconomy/40781696.pdf

 

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