Commission of Audit should know costs but appreciate value

Four of the five members of the Commission of Audit during a Senate hearing at Parliament House in January. AAP Image/Lukas Coch

The Senate Select Committee into the Commission of Audit is holding its third Hearing in Canberra today. Witnesses include the Consumers Health Forum and Australian Health and Hospitals Association, so health is clearly the order of the day.

Instituted by the Abbott government soon after it came to power, the Commission is charged with finding savings by eliminating waste and duplication of functions, and the consolidation of Commonwealth agencies. And the Australian National Preventive Health Agency (ANPHA) is widely held to be an easy target for it.

The agency was established as part of the raft of reforms under the 2011 National Health Reform Agreement, to lead in preventive health through surveillance and monitoring, policy advice, national social media campaigns, and by sponsoring research.

Eliminating the ANPHA would, of course, look like a positive contribution to the savings and agency reductions needed to justify the Commission of Audit. But the 40 or so ANPHA staff will not contribute significantly to the Commission’s targeted reduction of 12,000 public servants.

But let’s assume the Commission is less concerned with justifying its own existence and more focussed on the wise investment of government resources (that’s our taxes). In that case, there are a number of issues it should bear in mind.

Neither easy nor quick

The goal for the ANPHA is to reduce the prevalence of preventable disease. According to the Australian Institute for Health and Welfare (AIHW), 32% of the current national burden of disease is due to preventable risk factors. And that’s set to grow with rising national levels of obesity and falling fitness.

One could say preventable disease is a big target, so it shouldn’t be that hard to make an impact. Unfortunately, what’s preventable in theory is not so preventable in practice.

Take one of the top risk factors of preventable disease according to the AIHW – intimate partner violence. It’s one thing to say there’s a significant national burden of injury and disease due to violence in relationships; it’s quite another to actually stop the dominant partner acting violently.

Much the same applies to obesity, lack of physical activity and poor diets. To paraphrase Shakespeare’s Brutus from Julius Caesar (I,ii, 140-141):

the fault lies not in our health system. But in ourselves…

In many areas, Australia has done well in reducing the prevalence of preventable disease and, to some extent, that’s now reflected in our improving life expectancy and expected life years without disease or disability.

Clearly, action on prevention didn’t start in 2011 with the establishment of ANPHA; the 2008 COAG National Partnership Agreement on Preventive Health committed A$872m over six years, which is a pretty serious investment.

The problem is the payoff period for such action is long – it takes a lifetime of good habits to enjoy their health consequences. Investment and performance in one period will influence performance in later periods.

The issue for the Commission, then, is what value has been added by the existence of a national agency, and how can that be judged when it’s barely three years old.

Better than cure?

Recent inquiries and reviews, such as the National Health and Hospitals Reform Commission and the Preventative Health Taskforce have made the case for stronger investment in prevention, as they have in other developed countries, including the United Kingdom and the United States. And in much policy development, there’s an implicit view that “prevention is better and cheaper than cure”.

But systems research from the 1970s shows while that may well be the case, prevention often increases costs because it must be directed toward large groups, if not the whole population, while treatment is targeted at relatively few.

What’s more, not all preventive strategies are cheap, and their success will be reflected in a growing elderly population.

The policy issue then isn’t whether there should be more investment in reducing preventable disease, but which programs are “good buys” when considering both effectiveness and cost. And effectiveness must reflect the very human goals of adding years to life and life to years.

Both the National Health and Hospitals Reform Commission and the Preventative Health Taskforce recommended that preventive strategies be subject to economic evaluation in much the same way that new medical procedures and pharmaceuticals are.

But the evaluation of broad-scale prevention is more challenging than therapeutic interventions. There are significant issues around which benefits to select for evaluation and what value to assign them, and modelling risk factors with multiple effects (on several diseases), as well as modelling the multiple risk factors for many chronic diseases.

So it’s not clear that the guidelines that have served so well for appraising immediate treatment effects will work as well for long-term preventative programs.

Things to keep in mind

The Commission’s terms of reference stress that its role is to find efficiencies and savings that will reduce duplication and improve the budget position. For this, it’s important to remember that Commonwealth doesn’t equal national; this country has six state and two territory governments, as well as the Commonwealth government.

Successful public health campaigns require political agreement, sufficient funding and national campaigns backed by local initiatives and action. The Commission must distinguish complementary efforts from duplication.

The Commission’s terms of reference also mention the need to improve value for money – it would do well to remember that while knowing the cost of agencies and programs is simple, appreciating their value is considerably more complex.