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Health care providers are the main obstacle in the path of a needed reform (Image via United Workers via Flickr)

John Menadue proposes some suggestions to reform Australia's health care system in order to place power back into the hands of the people.

THE MAJOR BARRIER to health reform is the power of providers. A succession of Australian health ministers – Liberal and Labor – for three decades have failed in any serious health reform. It is a very sorry story. Any minister, Liberal or Labor, who wants to reform health must be prepared to take on the providers. Otherwise, we can forget serious health reform. 

Aneurin Bevan, who launched the UK National Health Service in 1946 – in my view the best health service in the world – knew a few things about health but, more importantly, he knew much more about political power and how to exercise it in the public interest. He drew on the strong support of the community, a minority of doctors and the majority of nurses. He won the day by outflanking the main body of doctors.

In Australia, recent decades have brought numerous sensible proposals for health reform but providers have invariably run them off the road. The resistance of doctors, for instance, is often based on financial self-interest, but it also aligns with a general fear of change and professional conservatism. It is difficult for those who are "inside" a system – be they administrators, professional providers or policymakers – to conceive of other ways of delivering services. Institutional inertia is a strong force. And in health care, which is a very complex system, it is easy to lose sight of the fact that delivering services is not, in itself, the objective. That objective is serving the community not providers. Vested interests dominate the public debate. The public, patients and consumers are ignored.

The rent seekers are the same groups who so selfishly and ferociously led the opposition to Medibank in 1974. They are still with us today but in a different guise. The Australian Medical Association has a long and dubious history in opposing key health reforms going back to its opposition to the Pharmaceutical Benefits Scheme in 1942. It has not greatly changed when reform is proposed. These vested interests include the AMA, the Australian Pharmacy Guild, the Private Health Insurance funds, Medicines Australia and the state and territory health department bureaucracies. They all have well-resourced lobbyists to promote their interests. In addition, there is a general "pro-business" push to open up more aspects of health care to the private sector, particularly pathology and radiology. And the AMA is turning a blind eye to the growing corporate takeover of general practice and vertical integration into radiology and pathology.

In 2009, the Australian Society of Ophthalmologists had a bruising battle with Minister Nicola Roxon who proposed that the Medicare rebate for cataract surgery be halved in light of major technological advances that dramatically cut time for treatment and reduced costs. The result was the producers, the eye surgeons with their dishonest campaign with media support, won. Again. The Minister backed down. More recently, there was private discussion between some doctors and the Department of Health to move away from fee for service, often known as "turnstile medicine", to remuneration based more on salaries and contracts to provide better care for the chronically ill. The result? It didn’t happen because it was opposed by the Royal Australian College of General Practitioners. It was the same old story — the providers won again and the interest of patients was not even represented at the table for discussions.

In 2018, we have price gouging by many medical specialists. Their anti-social behaviour is being ignored. They are too powerful to challenge. The Pharmacy Guild strongly defends the privileged position of pharmacists. It has the major political parties in its pocket. The Guild strongly defends the many restrictions on competition, such as prohibition on pharmacies in supermarkets, prohibition on price advertising, restrictions on location and ownership of pharmacies and the exclusive rights to sell many non-prescription medications. It treats its members as shopkeepers rather than highly trained professionals.

Through lobbying, faint-hearted governments are also very vulnerable to foreign pharmaceutical firms – Big Pharma – who are able to exploit their power in patents. Medicines Australia, the body representing manufacturers and distributors of drugs, successfully lobbies the Commonwealth to pay very high prices for prescription pharmaceuticals — much higher than in New Zealand. The private health insurance companies are expensive financial intermediaries, benefiting from a $12 billion annual taxpayer subsidy through the rebate and additional support in the form of the Medicare Levy Surcharge, which subsidises those with high incomes to hold private health insurance (PHI). Not even at the height of manufacturing industry protection were people actually given cash subsidies to buy Holdens and Falcons.

Before the 2007 election, Kevin Rudd secretly wrote to the PHI industry shamefully assuring it their taxpayer subsidies would continue under a Labor Government. We learned about it years later. The industry never publicly defends its $12 billion per annum subsidy. It is too ashamed. Instead, it lobbies in private and the private providers win again and again. The public interest seldom gets a look in. The $12 billion annual subsidy to PHI is the real privatisation threat that is aimed at the heart of Medicare.

In an economy where many traditional industries, from manufacturing through to print media, are facing huge competitive pressure and disruption, health care is seen as one last remaining growth sector, offering easy picking for business. A whole gaggle of lobbyists are working feverishly to help providers protect and advance their interests in the large and growing health sector.

Part of the problem lies in the Commonwealth bureaucracy. Commonwealth Ministers for Health are very dependent on the Department of Health and Ageing (DHA), particularly – as is often the case – when ministers are not across the issues and don’t have a clear policy program themselves. The DHA is ill-equipped for policy reform. Its objective seems to be to keep the peace with provider lobbies. The Department is structured in ways that reflects the interests of providers, such as doctors and pharmacists, rather than on the basis of community interests, such as acute care, chronic care or demography. It has expertise in administering existing programs, but it has little economic expertise. Government reports of its performance have been highly critical.

The ministerial/departmental model in health has failed. It is incapable or unwilling to contest the power of the rent seekers. The community is effectively excluded. Health reform is too serious a matter to be left to the Department of Health. It fails time and time again. The providers so often win with lobbying because with few exceptions the media does not really understand health issues. Press releases from pharmaceutical firms, pathologists, health insurers and other rent-seekers provide ready made copy for under-resourced journalists. The Australian and the Australian Financial Review invariably support the view of providers. The public interest is ignored.

To counter the self-interest of many provider organisations, I have advocated for several years a Health Reform Commission composed of independent and professional people to inform and lead a public discussion and advise on important health reform issues. Clinicians should be included, but none of the vested interests. It should include economists and people of good standing in business, trade unions and the community. They should be "outsiders" not "insiders".

The Law Reform Commission established by the Whitlam Government in 1975 is an example of how enquiries and consultations can be conducted with the community in order to make recommendations to government that are well-informed. The Law Reform Commission estimates that over 85 per cent of its reports have been either substantially or partially implemented, making it an effective and influential agent for reform. The Reserve Bank is another example of how a respected, professional and independent body can be a leader in public discussion of important issues. We have no such body in the health sector. The result is that providers have a very easy and often uncontested run.

A major objective of a Health Reform Commission would be to outflank the vested interests and carry an informed discussion with the community. A general remit to the HRC would be to encourage service cost discovery, price discovery and quality discovery, integrity (fraud and abuse) and fairness (access to care regardless of means or location). Most importantly, the whole health system must be transparent and providers made publicly accountable.

In addition to these general responsibilities, there could be specific referrals to the HRC such as:

  • ways to phase out PHI subsidies and get better value from health dollars, perhaps a Medicare dental scheme or a Hospital Benefit Scheme similar to the Medical Benefit Scheme;
  • how to better integrate Commonwealth and State funding and delivery of services;
  • how to establish "medical homes" in primary care which include both private and public clinics that provide a range of services;
  • remove perverse incentives for the remuneration of doctors; and
  • reshape the health workforce to the needs of the 21st century and not the 19th century as we have at present, with myriad restrictive practices and demarcations and denial of opportunities for nurses, allied health workers and paramedics.

One other related model is the "citizen jury", named so because the citizens to be consulted are selected on a random basis and are informed by professional and independent experts. They could be asked to provide their advice back to government on such key issues as how co-payments should be reformed. End of life issues could also be canvassed, as well as many expensive interventions that have limited effectiveness. These citizens' juries in health could be important vehicles for an informed national conversation on health — a conversation that we do not have at present.

Unless we address the issue of provider power and how and who exercises that power in the health sector, we will not achieve worthwhile reform. Power is in the hands of providers. It is not in the hands of the community, patients or even governments. That is the key issue. We need leadership, institutions and processes to focus on how we overcome this blockage to health reform.

This article was originally published on John Menadue's blog 'Pearls and Irritations'John Menadue is a commentator, businessman and former diplomat. You can follow John on Twitter @johnmenadue.

Creative Commons Licence
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License

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