PRIME Minister Kevin Rudd's plan to change the way health services are paid for is fundamentally a good one.
The existing system is riddled with cost-shifting, double-dipping and confusion that stems from having two separate paymasters in the form of the state and federal governments.
Ultimately, of course, the federal government pays all the bills. The problem arises because it pays for different programs in different ways, creating incentives for state governments, area health services, hospital administrators and others to find ways of exploiting the funding system's unnecessary complexity.
As things stand, part of the money for health services is given to the states in block grants that the states are free to spend as they see fit.
Part comes from Medicare and still more comes from supplementary federal programs - such as extra funding for elective surgery.
One obvious problem has been that efforts by federal governments to alleviate particular health issues by providing extra funds have at times been subverted by state governments reducing their own health spending in proportion.
Another problem is that overblown state health bureaucracies - almost exclusively capital city-based - soak up more resources than they should. The excessively bureaucratic model of health administration has tended to creep down the line, producing in some places a workplace culture identified by more than one report as toxic, irrational, plagued with bullying and turf wars and only incidentally focused on producing the best possible health outcomes.
Sensible model
If the Government is serious about putting a new broom through the system it must learn from its early mistakes in large program management.
Perhaps the most sensible model in this case would be direct funding, linked to activity and performance, to existing area health services.
It must be acknowledged that many employees of the state health departments do work that is valuable and perhaps indispensable. It will be important to ensure their expertise is not lost.
The Government appears to favour greater local decision-making and a greater role for clinicians in questions of resource allocation and best practice. On paper this proposal seems appealing. Perhaps it could be implemented, initially at least, by legislating a greater role for the medical staff councils that already exist in most hospitals and areas.
The first and biggest obstacle in the way of health funding reform is expected to be opposition from state governments. Loss of control over the purse strings means loss of capacity to divert funds to other uses and loss of the ability to use health funds to sway votes in marginal seats.
Bearing these factors in mind, state governments should also recognise the potential benefits in not having to wear the blame for the never-failing parade of medical mishaps that often prove such a political liability.
Email a friend