Last year the federal government asked my colleagues and I to investigate the state of health and medical research in Australia and make recommendations about the strategic direction of the sector.

After months of consultations with researchers, clinicians, hospital managers and governments in every state and territory, we are today releasing the Strategic Review of Health and Medical Research consultation paper.

Stronger connections

The overarching message from this paper is that Australia needs a stronger connection between health and medical research, and the delivery of health-care services. Embedding research into health care will ensure government investment in research benefits all Australians – through better health outcomes – and delivers the greatest economic value.

The National Health and Hospital Reform Commission noted the role of research in driving innovation in its final report in 2009:

“Valuing clinical leadership and embedding a culture which frees health professionals to invest time in quality improvement may be as important as structural change in achieving health reform … Providing health professionals with opportunities to combine teaching and research with their service responsibilities builds a culture of quality and is demonstrated to lead to better uptake of new knowledge and better outcomes.”

While we perform ground-breaking health and medical research within our research institutes, universities and companies, the growing pressure on health services has restricted research activity in the health system. This has also created barriers for research translation into evidence-based clinical and health interventions.

Rising health costs

Our review found that while Australia’s health system compares well with other countries in terms of life expectancy, the cost of health care is escalating at an unsustainable rate. And there is a significant opportunity to reduce inefficiency and improve performance.

Australia’s national expenditure on health is estimated at over A$130bn in 2011-12. Of this, total government expenditure is currently over A$90bn and 7% of GDP, but will grow to over A$450bn and 13% of GDP by 2049-50, according to Treasury projections.

Simply increasing health-care expenditure does not necessarily lead to improved health outcomes. For developed countries, there is little correlation between total health system expenditure and health outcomes such as life expectancy. A more strategic investment approach is required to improve outcomes and control costs.

Health and medical research is the R&D function of Australia’s A$130bn health system. Investment in research has underpinned the improved quality of health care for Australians over the past 50 years, and has a fundamental role in improving the future effectiveness and efficiency of the health system. An additional dollar spent on research has a multiplier effect by driving efficiency and new practices, compared with an additional dollar spent on general health care.

One area of opportunity for improvement is the cost of inefficiency and adverse events in the health system. In the United States, this is estimated at between 20% and 30% of health expenditure. And while the equivalent Australian number is not known, it is likely to be significant. Health services research on the Australian health system must be a priority to identify and target more efficient ways to deliver health outcomes.

Steps to reform

Initially, the focus of health and medical research reform must be on realigning existing investment in two main areas: the National Health and Medical Research Council (NHMRC) and the health system.

The NHMRC’s current budget allocation should be optimised, including ring-fencing a portion of funding for priority-driven research. A set of eight to ten national health research priorities should be funded and an expert committee established for each priority area that determines and leverages spending.

We also must provide greater control, transparency and accountability of the approximately A$1.5bn annual research investment in the health system. This includes investment in preventing inefficiency and adverse events to deliver savings.

A well-designed program to address post-operative infections, for example, could provide significant savings that would more than fund the proposed increase in investment.

Once the appropriate controls and mechanisms are in place to track, monitor and ensure accountability of research, new investment programs over three to five years will deliver further health system improvement, support high quality research and stimulate new investment.

Investment of an additional A$2bn to A$3bn a year on research in the health system is required within eight to ten years to attain our recommended target of 3% of the health budget.

Retaining international lead

The Australian research sector is world class. If there were a Health and Medical Research Olympics, Australia would be sixth on the medal table of most prolific creators of research output.

This research has delivered a steady stream of clinical breakthroughs, from the purification and mass production of penicillin by Nobel Laureate Howard Florey in 1942, to the Gardasil vaccine for cervical cancer more recently.

Australians benefit strongly from this activity, with both local clinical breakthroughs and research on topics where we need particular focus such as Aboriginal health and skin cancer.

And when research is carried out in a hospital or by health-services providers, the standard of care increases regardless of the focus of the research itself.

It’s also important to note that commercialisation of research has underpinned a medicine and medical device industry that employs 40,000 people, exports A$3.8bn of goods, and will soon surpass the size of the automotive industry.

Summary of recommendations

The Panel has developed a draft ten-year strategy that has 21 recommendations, including:

• Investing at least 3% of Australian and state and territory government health expenditure (an additional A$2bn to A$3bn per year by mid 2023) to drive research activity within the health system as an embedded component of the Australian government’s health reforms

• Establishing “Integrated Health Research Centres” combining hospital networks, universities and medical research institutes to create globally relevant centres of excellence and drive translation of research into clinical practice

• Creating up to 1,000 competitive practitioner fellowships for leading clinicians that protects 50% of their time to further embed research within patient care

• Providing increased sector leadership by a rejuvenated NHMRC

• Supporting focused research based on priorities of immediate clinical relevance to Australians, and in key areas such as Indigenous health, rural and remote health, and application of genomics to personalised medicine

• Maintaining research excellence by making research a more attractive career path with improvements in people support, career flexibility and granting processes, and by strategic investment in infrastructure such as biobanks and data linkage networks

• Advancing clinical trials, public health research and health services research

• Providing clear pathways to translate research evidence into clinical practice, including a matching Translational Development Fund for early stage development and commercialisation

• Incentivising high end philanthropy to invest in identified health priorities

A full set of draft recommendations can be found in the Strategic Review of Health and Medical Research consultation paper. Feedback on this paper is welcome until 31 October at www.mckeonreview.org.au.