Forget the blame game, let’s focus on making health dollars go further

We need to reduce waste and inefficiency in the health system. Image from

The latest round of the health blame game is in full swing, with service cuts to Victorian hospitals, and neither the state nor federal government taking responsibility. Commonwealth and Victorian health ministers Tanya Plibersek and David Davis met in Canberra on Wednesday for more talks, but were unable to come to a resolution.

Promises that the current round of health reforms would eliminate the blame game are yet to be realised. Even if the National Health and Hospitals Reform Commission had its way and the Commonwealth provided 100% of hospital funding, funds would still be scarce and local politicians facing cuts would blame the Commonwealth.

There will always be fights about money and funding in any health system in any country. These fights may be more politicised in Australia, given the structure of the federation and health-care funding arrangements. But rather than getting caught up in the political arguments, we should be looking more closely at how we can use the health-care resources we have to save more lives.

Time for real health-care reform

The real reasons why hospitals seem to be in continuous deficit are simply not yet being tackled by the current health-care reforms. Adjusted for inflation, public hospital expenditure in Australia increased by an average of 8.2% a year between 2009 and 2011. Yet there are no clear signs that productivity or health outcomes are increasing at the same rate.

The current health-care reform process is, nevertheless, very important, as it is making some “architectural” changes to the system that may alter the way we think about costs (through activity-based funding) and performance (through the National Health Performance Authority). More transparent measurement and reporting of costs, outcomes and performance is essential for progress, but reform still needs to go a long way before any real differences are made on the ground.

Workforce inflexibility

One of the key reasons for inefficiency in our health workforce is that doctors, nurses and allied health professionals are shackled by professional silos that dictate what tasks (prescribing, tests and procedures) they can and cannot do, regardless of their ability to perform these tasks.

Australia’s health workforce is also imprisoned by a fee-for-service system that discourages teamwork, discourages task-shifting, and creates the wrong incentives for treating burgeoning levels of chronic disease. If doctors were able to spend less time undertaking tasks that nurses or other health professionals could competently do, their time could be devoted to those who would benefit the most – at very little additional cost.

Though these inflexibilities are sometimes justified by arguments about maintaining safety and quality of care, this needs to be balanced against the additional illness and the lives lost from an inflexible workforce. Giving up a few tasks will not put doctors out of a job; after all, there are plenty of other patients on waiting lists for care.

Waste and over-diagnosis

Part of the problem is waste and over-diagnosis. Many activities in the health system are being undertaken with no or little benefit to patients. This includes screening for abnormalities that will never cause symptoms or death, or for which treatments may cause more harm than good (such as PSA testing for prostate cancer).

A study published recently in the Medical Journal of Australia found that 150 potentially ineffective or unsafe services were currently funded by Medicare. This type of inefficiency is inexcusable and hugely costly. Local data isn’t available but at least 20% of health expenditure in the United States is lost to waste.

Waste and over-diagnosis continue for a range of reasons. Psychological biases mean health-care providers are much more likely to trust their own intuition and past experience when considering treatment options than adopt new evidence, making behaviour change slow and difficult. The dissemination of new and existing evidence should be fundamental to clinical practice.

Optimistic bias is another reason health policymakers and clinicians are more likely to over-emphasise the likely benefits of new treatments and not think too much about the costs. This explains the regular Medicare cost blowouts and the march of technological advances into screening, new pharmaceuticals, and e-health. Arguments about the potential to save lives are pervasive, while arguments about costs are viewed as negative.

Other solutions

It’s clear we need to stop funding services and tasks that are of no benefit to patients. Releasing these funds and directing them to more cost-effective services will save more lives. This seems to be a no-brainer, yet Australia’s health system still struggles to make real progress in this area.

Though many health policy experts tend to discount the role of financial incentives, this is one area that deserves further investigation. But linking good performance to financial incentives seems a long way off; first, we need to routinely measure health outcomes and the value of services.

The most important and potentially most intractable issue is that measures to reduce workforce inflexibility, waste and over-diagnosis need to be led by clinicians and supported by governments if they are to work and be adopted.

It is not the blame game that causes inefficiency and leads to cuts in services. Seemingly random cuts to health services could be avoided if progress was made on the real issues facing the health system. Doing things differently and doing less can save lives.