AMA President on Government health funding announcement

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ANDREW PESCE:   Okay, good afternoon everyone.  Thanks for coming.  There's been a big announcement we've all been waiting for.

It's been very pleasing for the AMA to see the Prime Minister stand up and take responsibility. For the first time we've got a Prime Minister taking responsibility for major health reform in this country … for over 30 years … and it's a necessary step.

The focus on improving patient care, through changing the structures in our public hospital system is a very important one and I think the announcements are focused on that.  It's very, very important also to acknowledge that the Prime Minister has heard the problems as he's gone on his consultation sessions with the doctors and nurses who work in the hospital system and it's very important to incorporate the solutions that they have suggested, so their decision-making can play a role in the reform of the health system.

It's very, very important and gratifying to see that the decision to be the dominant funder is balanced by a decision to maximise local decision-making and that was always a balance that the AMA said was very, very important.

It seems that from the announcement - and we still have to look at the details – there is nothing in the announcement that continues the artificial capping and inappropriate capping of patient services.  And the announcement of funding to follow patient care means that health services in hospitals can grow to meet growing patient demand where that's appropriate.

So we need to have a look at the detail.  There's a lot to digest, but it's very gratifying to see a government and a Prime Minister standing up and taking responsibility for major health reform and major reform is needed, not just tinkering around the edges.

QUESTION:    Can you briefly outline what problems you think this would fix?

ANDREW PESCE:    Okay.  Look, at the moment activity at hospitals is very much artificially capped by historical budgets.  The move to casemix funding means that when the amount of services needed to change because of patient growth in population, changing demographics of patients’ mix in the hospital, then funding will follow that.

It's gratifying to see that that is being determined by an independent body to establish the efficient funding price and that that price will be varied in areas such as rural and remote areas where the cost of delivering those services is always going to be higher than in high-volume metropolitan hospitals.

So there are a number of self-correcting mechanisms to take account for potential changes into the future, which is a significant shift from the historical budget funding of our hospital system.

I think there's also a need to recognise that States need to have an interest in the hospital system and the fixed funding split between the Commonwealth and States will provide for that, although the Commonwealth becomes the dominant funder of health.

There is also a good announcement in terms of the local hospital networks.  The AMA is receptive to the various suggestions that could empower local workforce, the nurses and the doctors to provide the decision-making capacity and have input into decisions at the hospitals. So, these are all things that the AMA has been emphasising as very important and they look to have delivered.

QUESTION:    Is there a danger Dr Pesce that this new efficient price will end up a bit like the Medicare rebate and it won't keep pace with the [indistinct] inflation and it won't [indistinct] the real cost of an operation in 10 years time?

ANDREW PESCE:    There's no doubt that unless that fair price is set properly - and we were given some hints as to how that might happen - it included an independent panel, which was going to look at the cost of providing services.

There was mention that there was going to be consultation with the providers of those services, including the doctors and nurses, so that presumably this independent panel would take that into consideration.  And it gives a framework for a fair price for services.

If, however, the mechanism does not provide for that then, of course, there is a risk that over time the real value of this case payment basis for funding will be eroded.

QUESTION:    The big challenge now though is convincing the Premiers and the States to agree to the plan.  What are your thoughts on that?

ANDREW PESCE:    Well, I'm not a politician, so this has obviously got a political dimension.  It seems that by giving the States a significant share of the running of the hospitals and the funding of the hospitals, means that they will have an incentive to maintain an interest. 

I think that the States do want to maintain an interest.  They've indicated that quite clearly.  But, you know, how the Prime Minister and the States will come to find, you know, the right balance there, well that's up to them.

QUESTION:    It's $50 billion that will be stripped away from their GST funding over four years, which they may baulk at.

ANDREW PESCE:    Well it depends whether or not there's a replacement of that through the Commonwealth contribution to the funding of the hospital system, which they're currently not funding, as the Prime Minister indicated.

Over recent years, the share of Commonwealth funding of public hospitals has fallen to less than 35 per cent at times and now they're offering to pick up 60 per cent of the ongoing costs of clinical care, as well as 60 per cent of ongoing capital costs, which they've never paid for except in one-off grants, 60 per cent of teaching and research.  There are a whole lot of swings and roundabouts.

Now as I see it, we need some time to digest all of this, to see a bit more detail.  But certainly there is a framework there to suggest that the right balance can be achieved, and hopefully that the appropriate concerns of the States are addressed.

QUESTION:    Would you have preferred a 100 per cent take-over - would you have preferred the whole amount be funded by the Commonwealth.

DR ANDREW PESCE:    The AMA was looking at a model that would give clarity of funding and avoidance of blame-shifting.  The move to 60-40, which has been announced today, is not there, but it's certainly an improvement on what we have now.  The improvement is based in the fact that it is a fixed split, so no party can fudge their contribution, because it's fixed by the - that agreement, if it's reached, to fund at 60-40. 

So hopefully it provides certainty.  It apportions a fixed and defined proportion of expenditure that both arms of government can be held accountable for.  I suspect that there is still some potential that if not looked at carefully, and if there aren't mechanisms in that to avoid some gaming around the edges, there might still be some cost and blame-shifting. 

But it's certainly an improvement on the current system, where nobody knows who's responsible for what and the first excuse of a hospital service not being provided is blame the other government.

QUESTION:    How much of a concern is it for you that if the States and the Commonwealth can't come to an agreement on [indistinct] literally after this sort of a radical change that you've supported broadly, how much of a concern is it for you that the States may not agree?

ANDREW PESCE:    Well, look, if the States don't agree we stay at status quo.  So, we're no worse off but it just means that we won't be better off. 

I think one other important aspect of this is that the funding proposal means that even in the initial period, and in the transition period, there is nobody who's worse off.  Current funding arrangements are maintained and in the transition there is no dollar for care that won't be paid; there is no bed that'll have to be closed; there is no clinical care that won't be able to be delivered because of the transition arrangements.

So, we need to wait and see.  Now at worst, we stay where we are, and there is however a lot in this proposal that has the potential to significantly improve our hospital services.

QUESTION:    Dr Pesce, you work in a New South Wales hospital.  We have some of the most inefficient hospitals in the country.  We - it costs more to do an operation in New South Wales than the national average.  Could we be losers under a system that funds [indistinct] costs?

ANDREW PESCE:    Look, I think that a lot of the hospitals where that's the case, there's been an unmet cost which has been exposed through this, for the teaching and the training, for the complexity of the cases that are coming through the hospital.

Now, I work at Westmead Hospital, which on what I believe is not a very fair comparison, seems to say that we can't treat patients as efficiently.  But I know we get the highest risk pregnancies there.  I know that we get the worst motor vehicle accidents.  I know that we get the most complex liver and kidney transplants.  I know there are a whole lot of things which I don't believe are adequately being measured and aren't being accurately compared.

The devil is always in the detail, and the success or failure of this depends on those comparisons being done properly and accurately reflecting the clinical complexity that the care that's being delivered.

QUESTION:    Dr Pesce, how does this plan compare to what the Opposition's proposing, to have local hospital boards?

ANDREW PESCE:    Look, we were happy to support the Opposition's announcement on local hospital boards because that also was a credible response to our request for re-engagement and re-empowerment of the doctors, nurses and communities in the running of their public hospitals.

But the Prime Minister has announced an alternative structure.  I think both have merit.  We still need to see the detail of actually both proposals.  We still are waiting to see the detail behind the Opposition's proposals and how that's going to work in detail.  And, of course, we now have to see the detail of the Government's proposals.

Both have merit and both have the significant chance of improving the re-engagement of ourhospital workforce and the local communities in the running of the local hospitals.

QUESTION:    Is it a concern for you that this plan doesn't really talk about extra funding anywhere?

ANDREW PESCE:    We need to have a look at that.  I think that it's a fair comment to say that the Prime Minister's discussions today acknowledged the need for extra funding in the health system, both now and in the future as the patient demographics change.  We have an ageing population with more chronic and complex care needs.  It seems that there a lot of mention today of acknowledgement of that.

I haven't yet seen the detail which reassures me that the extra funding will be injected but certainly the framework is there that if we do have increased need for services on the casemix system, there should be an injection of extra funds for clinical services.  If it's done properly, I think there is the capacity to improve the funding of the healthcare system, but I've yet to see the detail.

Okay.  Thanks very much.

3 March 2010

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