Thursday, November 08, 2012

The Melbourne Institute Attempts To Take A Hard Look At Health Reform - And Skates Over the Surface.

This session was held on November 1, 2012 as part of the Melbourne Institutes

2012 Economic and Social Outlook Conference

Session 4B: Health
Will health reform work? This year has seen major changes to hospital funding and performance management. How will these reforms affect service delivery and deal with the costs? Is there more that needs to be done?
Chair: Professor James Angus AO, Dean, Faculty of Medicine, Dentistry and Health Sciences, The University of Melbourne
Speakers:
Professor Stephen Leeder AO, Professor of Public Health and Community Medicine, School of Public Health and Director, Menzies Centre for Health Policy, The University of Sydney - View presentation
Professor Anthony Scott, Professorial Research Fellow, Melbourne Institute - View presentation
Dr Tony Sherbon, Acting Chief Executive Officer, Independent Hospital Pricing Authority - View presentation
The program for the whole conference can be found here:
The Government’s plans for E-Health as a ‘Reform’ were very briefly mentioned by Professor Leeder but there was no detail or focus on the topic as far as I could see.
Professor Scott pointed out that the evidence as still out on the utility of incentive payments at the hospital level - when hospital management gets the money and it is those at the coal face who decide what is actually done - which really determines cost.
Last Dr Tony Sherbon told is that the ‘efficient price’ had been determined to be $4,808. There is now a thing called a National Weighted Activity Unit (NWAU) which then gets the rebate for each service. e.g. a limb amputation gets 4.8387 NWAU and a Medical Outpatient Visit 0.0588 NWAU.
The flaw in all this - in my view is found here in a FAQ on this reform. (See Page 6)

“How will activity based funding contribute to more efficiency in public hospitals?

Activity based funding will contribute to the efficiency of public hospitals through the development of an independently determined efficient price per service, based on the actual cost of service delivery in a range of hospitals.
Activity based funding will empower those working in the health sector to drive continuous improvement and value for money in the delivery of public hospital services.”
There is no evidence that the stressed out workers at the front lines of our health system have much interest in making the services they offer provide more ‘value for money’. They want to provide the service as best they can and what it costs is a ninth order issue for most of them.
Worse most hospitals do not have the computer systems or the capacity to properly understand which services are too expensive and which are funding winners. Real Activity Based Costing (ABC) is a very complex undertaking and takes years to properly implement - especially in organisations which are not ‘for profit’ - as the Government Health Sector is.
I would argue it is just impossible to determine an efficient price for a service that will be reasonable for a large hospital on the north side and another on the south side of Sydney - let alone more broadly. For cost information to be useful in managing it has to be believed by those involved i.e. the local clinicians and I would argue the approach being adopted is compromised severely by not having really localised cost inputs.
While I could be proved wrong I suspect this is going to be a huge mess which will not have the desired efficiency and cost outcomes.
We will all have to wait and see.
In the meantime browsing all the submissions from the stakeholders that is found on the Pricing Authority web site certainly shows a range of levels of concern and many outstanding issues.
See here:
This is probably an initiative that needed a fair bit of initial piloting before national introduction.
David.

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