Public hospitals

16 Feb 2011


A capable and safe public hospital system is a core requirement for the delivery of high-quality, safe and accessible health services.

The public hospital system currently has insufficient capacity to ensure that patients are treated in the emergency department or admitted into hospital within safe, clinically appropriate timeframes. The AMA estimates that across Australia 3,870 additional beds are needed for the public hospital system to operate at a safe 85 per cent average bed occupancy rate.

Research and development are key parts of the mission of the public hospital system. Support for research, development and training ensures that we can continue to improve patient care and training for future generations of doctors. Most public hospitals also undertake research and training as part of their normal functions.

Doctors working in public hospitals can contribute essential expertise to the management and operation of the hospitals. Local knowledge from local doctors is essential to improve clinical care and decisions about strategic planning, budgeting and resource allocation.

Key issues for patients

Public hospitals must have the capacity to meet the demands of a population that is growing and ageing, and experiencing chronic conditions that inevitably require acute care.

Monitoring hospital performance against service delivery targets and standards of care informs the community about how well public hospitals are performing. But we need to ensure that targets and standards do not interfere with decisions about the best care for patients. Such targets are not useful unless public hospitals have the resources that are required to meet them, as well as the flexibility to use resources to the greatest clinical effect.

Patients will continue to experience inappropriate waits in emergency departments and for elective surgery and other specialist medical care unless capacity in all areas of public hospitals is expanded to allow more patients to be treated and admitted within clinically recommended times.

Key issues for the Government

While the Government’s health reform agenda should ensure that all health care resources are used efficiently and effectively, the rejuvenation of public hospitals – through better targeting of the additional health reform funding and better governance arrangements – is a priority.

Unless public hospitals are properly funded and governed they cannot deliver the acute care services that communities need, nor can they meet expected national standards for quality and timely access to hospital care.

Public hospital financing arrangements must accommodate future growth in the demand for public hospital services.

Hospitals need to be supported to deliver a range of services and perform a range of functions to high standards. Performance standards and monitoring are important but must not introduce perverse incentives that compromise good patient care.

Doctors involved in patient care can make a significant contribution to the effective and efficient management of public and private hospitals. Doctors can contribute to better management of health costs while ensuring quality patient care and outcomes by being involved in decisions about resource allocation and the purchasing of services for the provision of patient care.

The management of hospitals works best when doctors are engaged in clinical and corporate governance.


Public hospital beds

Every public hospital must have sufficient capacity to operate at an average bed occupancy rate of 85 per cent. Expanding the capacity of the public hospital system will result in more timely access into hospital for patients, and safe occupancy rates once patients are in the hospital.

There must be a transparent mechanism for tracking whether or not any new funding commitments by the Commonwealth actually result in an increased capacity in public hospitals to meet the demands of the community. The Government needs to:

  • commission a monitoring system called Bedwatch to report publicly on the number of new and existing beds available in public hospitals;
  • ensure that Bedwatch also monitors important factors related to hospital occupancy rates such as access block in emergency departments; and
  • require the State and Territory Governments to report the number of available beds for each public hospital, and their average occupancy rates, as part of their obligations to report against performance benchmarks.

This information should be included on the MyHospitals website.

Secure funding for research and training in public hospitals

Research and training are integral parts of the role of public hospitals in improving patient care and in training junior doctors. The Government must ensure that:

  • there is sufficient funding allocated for research and training undertaken in public hospitals;
  • doctors are involved in how this funding is distributed and used at the local level; and
  • funding for research and training in public hospitals is linked to transparently reported and independently audited performance indicators.

Public hospital governance

Doctors must be genuinely involved in decision-making at the local level. Governments must ensure that:

  • local doctors are represented on the governing councils of Local Hospital Networks;
  • members of Local Hospital Networks are selected using an open and transparent process that is free from political interference;
  • the Local Hospital Networks have the power to hire and fire the CEO of the hospital; and
  • decisions made by Local Hospital Networks are transparent and publicly available.

The roles and functions of the bodies that are established to oversee hospital performance, financing and governance should be complementary - and there should be a minimum of duplication.

Public hospital funding

The goal of hospital funding systems should be to support effective health care services, rather than just the cheapest services. A nationally efficient price risks underestimating and oversimplifying the complexity of hospital services in different hospitals and different geographical areas and, therefore, their capacity to meet demand. The Government must ensure that:

  • hospitals are paid on the basis of the effective cost of care rather than an arbitrary ‘efficient price’. This will require more funding for public hospitals, not less;
  • the effective price is indexed annually at a rate that recognises real increases in operating costs, such as wages and equipment;
  • the effective price allows variation for local flexibility and incorporates sufficient loadings and adjustments to reflect the variable geographic and other circumstances of individual hospitals;
  • the effective price does not compromise or limit clinical decisions that doctors make for their patients;
  • effective pricing is available to cover the real cost of care; and
  • funding models support the maintenance of outpatient services to ensure comprehensive patient care in the most appropriate clinical setting and provide access to this essential component for teaching and training of medical students and future specialists.