The ‘get sick, get well, go home’ health-care paradigm that flourished over the last century must now change to support an increasing incidence of chronic illness and long-term aged care. Professor Jane Hall, Associate Professor Marion Haas and Associate Professor Rosalie Viney report.
On March 23, 2010, President Obama signed legislation that will overhaul the US health-care system, a feat that, according to The New York Times, will assure Mr Obama a place in history ‘as one who succeeded where others tried mightily and failed’. Less than a month later, the Australian Prime Minister and six out of seven state and territory leaders announced ‘the most significant reform to Australia’s health and hospitals system since the introduction of Medicare, and one of the largest reforms to service delivery in the history of the Federation’. Within two months of being elected, the new UK government declared ‘the biggest revolution in the National Health Service since its foundation more than 60 years ago’. Health-care reform, clearly, is on the agenda of governments across the world and seems to be a key factor in how governments are judged, by voters and by history.
Australia’s new government is facing the implementation of the reforms agreed between the Federal Government and the states in April, in essence establishing the new governance and funding structure for public hospitals. Working out the detail and embedding the changes will take a great deal of policy energy over the next few years. Take, for example, the ‘efficient price’ that is the basis on which Commonwealth funds flow to our hospitals. What factors should be taken into account in determining what is efficient? Higher transport costs in rural areas? Hospitals transferring patients to those hospitals offering necessary specialised services? Longer hospital stays when local communities do not have adequate residential or home-care services?
The experience of other countries in setting up and managing regional health-care structures offers valuable lessons. We must also be able to use the experience of our own reforms, by building monitoring and evaluation mechanisms into the system and by maintaining the flexibility to adjust policy settings in response to the feedback. The need for reform is ongoing, because the pressures on health-care systems in developed countries are increasing and fundamentally changing.
The health-care system we have inherited and the financial structure that supports it are based on what worked last century. Acute infectious disease was the principal public-health challenge, producing a ‘get sick, get well, go home’ hospital system that has flourished for more than a century. In the 21st century, however, things have changed. Real reform is needed to allow a new health-care paradigm to emerge, one that is flexible enough to future-proof the health-care system against an evolving set of patient needs.
Today, more than half the global disease load is in chronic conditions such as cancer, diabetes and heart disease, conditions antibiotics cannot fix and hospital stays do not ‘cure’. The health-care delivery model required by our changing demographic needs will be high-tech and home-based, with an emphasis on self-management.
The pacemaker provides a simple example of how the system needs to work differently. Today, someone with a pacemaker must visit his or her cardiologist regularly to monitor whether the device is working properly and whether a change in medication is required. New technologies will allow a sensor to read signals from the pacemaker, transmitting them via broadband connection to a remote database, which then analyses the signals received, alerting the doctor if something unusual is detected. For patients, this will mean improved quality of life, reduced hospital costs, less travel (particularly in rural areas) and less anxiety – great outcomes all around.
But who pays for all this and how? The costs of internet connections, databases and technical support cannot be classified as ‘medical’ or ‘pharmaceutical’. Within the current financial structure of the health-care system in Australia, there is no way of funding this emerging model of care. Health-care providers must find other ways to cover these costs.
Another question is how we can use financial incentives to encourage providers to help achieve public-health goals. The fee-for-service model has some fundamental flaws in this respect. To quote George Bernard Shaw: ‘That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair of political humanity.’
In both the UK and the US, health reforms are moving away from activity-based payments in favour of incentive-based payments that reward outcomes. In the US, the system is generally known as ‘pay for performance’; in the UK, it is described as ‘outcomes payment’. Both countries combine this approach with a strong emphasis on primary care rather than hospital-based care.
There is some scope for innovative thinking within the proposed Australian reforms. For example, diabetic patients will be given the option of enrolling with a general practitioner, who will be paid a fixed fee for each diabetic patient enrolled. This could be a model for new payment methods in primary care – one that supports managing the growing number of home-based chronic-disease patients through primary carers rather than in hospitals.
That aside, however, the Australian reforms continue to emphasise public hospitals and activity-based funding, and offer too little in terms of better outcomes for patients in the short term. The challenge for Australia is whether reform will stop at the hospital gate or whether these developments can become the foundation of a 21st-century health system, addressing the new problems of chronic disease and using up-to-date technologies.
Public or private funding?
The public debate on health-care reform reverts too frequently to a contest between two models or philosophies – more government intervention versus more market forces – despite widespread international evidence that the mix of funding between the two has little impact on actual health outcomes. This debate distracts from factors that do have a tangible impact on health outcomes and patients’ experiences. It distracts from what matters most to Australian health-care consumers: accessibility, quality, equity and value for money.
In 1984, Australia became the first country to require that new drugs be assessed in terms of their value for money. Value-based research has since had an impact on health-care economic policy in this country and has been the focus of much of the research at UTS’s Centre for Health Economics Research and Evaluation (CHERE).
The Australian approach has ensured that pharmaceutical companies, technology companies and policy bodies focus not solely on what a new treatment may achieve but on what value it delivers. If ‘value’ is defined in terms of all the criteria – not just cost, but also equity, quality of life and accessibility – then a value-based approach offers a rich matrix with which to evaluate health-care developments. It ensures that those funding health care have a better understanding of the social value of any additional health-care dollars they spend.
Though this system has been adopted internationally, notably in the UK’s National Health Service, the issue of value-based analysis has been more problematic in the US. In such a politically sensitive environment, the notion has drawn criticisms of ‘rationing’, with talk of ‘death panels’ being set up to make cost-based decisions on who should and should not receive treatment. To work around this, the Obama administration has put significant funds into research that compares the efficacy of different treatments without specifically considering the financial dimensions.
Get sick, stay home, manage it
Although statistics from the Australian Institute of Health and Welfare rank Australia third in the world in terms of life expectancy, international surveys show that we compare poorly on safety and quality, and access to health care. The current reforms are focused on public hospitals, but further health reform remains a key agenda item. Australia’s challenges are echoed in health systems around the world.
The ‘get sick, get well, go home’ model of health care is no longer valid. A changed global disease load needs different solutions, delivered in a changed social context. As developed countries around the world grapple with these issues, the way forward is to leverage experience gained internationally and domestically to apply global best practice.
While the ‘government versus private enterprise’ pendulum continues to swing, a consensus is building that, regardless of politics, a value-based model with incentive-based payments, preferencing primary care over public hospitals, may well underpin health-care reform for the 21st century. Without doubt, flexibility is a keystone to the future of a sustainable system. The flexibility to research, implement and evaluate new treatments and technologies, and to pay for advances in patient care as they emerge, is crucial to building a model that is sufficiently resilient to cope with the health-care demands of the new century.