The privatisation of Australia’s Medicare organisation has become a hot issue in this election with the Labor party accusing the Liberals of wanting to privatise Medicare.
The Liberal Government earlier this year earmarked A$5 million to fund consultants to review the digital payment services of Medicare. This was with a view to cutting costs on Medicare’s processing of A$50 billion in annual claims.
The “digital payments services taskforce”, which promised to examine how Medicare’s systems could be modernised, no longer seems to be running.
Prime Minister Malcolm Turnbull has also stated there are no plans to proceed with a privatisation of Medicare’s payment systems.
It is misleading to talk about Medicare’s payment system as if it was a single system that could be easily outsourced to a private company. Medicare’s IT systems are the product of an evolution of government policy that dictates who is to be paid for health service encounters and under what circumstances.
The payments service is further complicated by the fact it has to interface with thousands of different providers and millions of end users.
Medicare processes medical expense claims for potentially every encounter between an eligible Australian and a health professional or organisation. There are a series of rules that govern what can be claimed and whether the organisation, health professional or individual is responsible for making the claim.
Some of these payment claims are handled through software provided by any one of dozens of different vendors. These software companies have all gone through a process whereby their systems are certified to interface with those of Medicare’s.
Medicare also manages the issuing of cards, identifiers and runs a “public key infrastructure” which provides health professionals with cryptographic signatures that can be used in conjunction with the payments system.
From Medicare’s perspective, its major goal is to provide a reliable service so the entire system processes payments correctly and with an acceptable timeframe. The secondary role would be to provide a digital interface to its customers, especially the general public.
Medicare has certainly been very slow to fulfil this latter role. Its moves in this direction have missed the mark when compared to the slick and user-friendly apps most modern tech companies are now providing.
However, this is also true of some of the private companies that were put forward as possible providers of Medicare’s payment system. Companies such as Telstra and Australia Post are not that far behind Medicare in terms of the technology they have provided their own customers.
The problem all companies face, especially those that aren’t technology companies, is their internal IT is usually underfunded. It is also often set with expectations of reliability and security that run counter to being able to innovate and move quickly. Often, the technology produced by these departments is a reflection of how the companies do business, so clunky mobile apps reflect the same lumbering processes.
Changing culture in these departments is very difficult because new leaders have to make do with staff who have become “acculturated” to a specific way of doing things. They can therefore be reluctant to change their practice through fear of change or lack of ability.
When a system is as complex as Medicare’s, it is extremely expensive to rebuild. It is not possible to simply “retrofit” an off-the-shelf product from another company.
IBM’s attempts to redevelop Queensland’s payroll system, for example, were plagued with delays and budget blow-outs, resulting in a system that didn’t work very well. In large part this was caused by the complexity of the system’s arcane rules and a lack of real understanding of these rules by the people interfacing with IBM and others.
Attempts to privatise Medicare’s systems would be met with similar challenges.
IT is often a reflection of the underlying company business models and processes, so improvements to IT systems cannot happen unless there is a change to the underlying processes they implement.
Medicare has a much greater challenge. Not only are business processes an issue, the politics that drove these policies and processes would need to change. Given the politics of Medicare as a public good, it is very difficult to disassociate tackling any part of that service from being seen to be challenging Medicare’s role in public life.
As a result, it is unlikely very much will change to any significant extent in Medicare’s IT services, even if there was a technological way forward and a team of people, internal or otherwise, to implement them.