Re­source al­lo­ca­tion at the root of pre­vail­ing in­ef­fi­ciency

The Weekend Australian - Travel - - Health - STEPHEN LEEDER

THERE is a search on for the witch that dis­turbs our health­care sys­tem.

The dis­tur­bance that has led to the re­cent re­sponses of Prime Min­is­ter John Howard and of Op­po­si­tion Leader Kevin Rudd to health care is dubbed ‘‘ in­ef­fi­ciency’’.

This evil en­tity is said to be cost­ing us at least $2 bil­lion a year, or per­haps even 10 times that amount.

Pub­lic hos­pi­tals are al­ready highly ef­fi­cient as judged against any re­al­is­tic stan­dard. They do not ex­hibit zero in­ef­fi­ciency, but com­pared with many gov­ern­ment and private en­ter­prises, they are trim and run to time.

Ef­fi­ciency bud­get cuts have been ap­plied to them an­nu­ally for decades, lead­ing ex­ec­u­tives to dim hospi­tal light­ing, cut staffing lev­els, de­fer the re­place­ment of worn car­pets and re­move free sand­wiches from the tea rooms in op­er­at­ing suites where sur­geons re­lax be­tween cases.

Economists re­fer to this form of ef­fi­ciency achieved within ef­fi­ciency.

Any­one think­ing that pub­lic hos­pi­tals can be milked for more tech­ni­cal ef­fi­ciency is out of touch.

Sim­i­lar ef­fi­cien­cies have been achieved in gen­eral prac­tice, with solo doc­tors group­ing to­gether to achieve econ­omy of scale.

The per­cent­age of gen­eral prac­ti­tion­ers with a com­puter in their of­fice has leapt from 10 per cent a decade ago to nearly 100 per cent.

So where can ef­fi­ciency sav­ings now be made? They can be made in the sys­tem, not to the el­e­ments — by tak­ing more care with




tech­ni­cal re­source al­lo­ca­tion ser­vice com­po­nents.

In­ef­fi­ciency at present in the health sys­tem is prin­ci­pally what is termed al­loca­tive in­ef­fi­ciency.

Al­loca­tive in­ef­fi­ciency is over­come by en­sur­ing that the com­po­nents of the health sys­tem mesh with one an­other and that the al­lo­ca­tion of re­sources en­ables each com­po­nent of the sys­tem to func­tion as well as pos­si­ble and to sup­port the oth­ers.

While state-funded health ser­vices can be, and are, co-or­di­nated by the state, there is no man­age­rial abil­ity to co-or­di­nate th­ese ser­vices with gen­eral prac­tice and Com­mon­wealth-funded ser­vices.

The lion’s share, per­haps 75 per cent, of the to­tal health bud­get goes into man­ag­ing peo­ple with chronic ill­nesses.

If th­ese suf­fer­ers can­not re­ceive ad­e­quate care in the com­mu­nity, and by de­fault are ad­mit­ted to hospi­tal, then al­loca­tive in­effi-



the ciency fol­lows. Only about one in eight peo­ple leav­ing hospi­tal af­ter a heart prob­lem are en­rolled into pro­grams of con­tin­u­ing care.

Th­ese pro­grams which help keep heart pa­tients healthy and pre­vent read­mis­sion to hospi­tal de­serve a higher level of re­source al­lo­ca­tion.

How has this al­loca­tive in­ef­fi­ciency come about?

It has oc­curred be­cause there is no over­all man­age­ment of the health sys­tem.

Gen­eral prac­ti­tion­ers re­ceive their in­come from fee for ser­vice care through the com­mon­wealth-funded Medi­care, pub­lic hos­pi­tals are run by state gov­ern­ments us­ing funds from both lev­els of gov­ern­ment, private hos­pi­tals from private in­sur­ers and pa­tients’ pock­ets, (and also Medi­care and the PBS), and com­mu­nity ser­vices for the aged, men­tally ill and dis­abled from both state and com­mon­wealth. With so many pay­ers it is no won­der that there is dishar­mony.

In ad­di­tion, the mi­cro­man­age­ment of the state hos­pi­tals and other gov­ern­ment ser­vices has meant that com­pe­ti­tion and in­no­va­tion have been sup­pressed: no new so­lu­tions have been ven­tured be­cause in the bu­reau­cra­tised en­vi­ron­ment, one must not take risks.

Health sys­tem al­loca­tive in­ef­fi­ciency might not have been no­ticed be­fore the era of chronic ill­ness, the chief char­ac­ter­is­tic of which is that it goes on and on, of­ten over decades, and re­quires dif­fer­ent modal­i­ties of care — gen­eral prac­tice, hospi­tal and com­mu­nity ser­vices — at dif­fer­ent times.

If this care is not avail­able be­cause of cost or ge­og­ra­phy, is not co­or­di­nated, or if there is not enough of one el­e­ment of care to match need and keep up with the other ser­vice com­po­nents, then the over­all ser­vice is in­ef­fi­cient.

It is here that the fed­eral ef­forts must be ap­plied.

The out­come would be a dis­as­ter if, in seek­ing a bet­ter deal for pa­tients us­ing the health ser­vice, we de­vel­oped ever more in­ter­nally ef­fi­cient com­po­nents of health care but ne­glected the need to link them in the best pos­si­ble way.

This is where re­gional health gov­er­nance, that re­sponds to lo­cal needs and en­cour­ages in­no­va­tion and ex­per­i­men­ta­tion, even com­pe­ti­tion, in meet­ing those needs is crit­i­cal for suc­cess.

And it will be a dis­as­ter if the fo­cus on the prob­lems of pub­lic hos­pi­tals is so nar­row that is­sues like the avail­abil­ity of a gen­eral prac­ti­tioner af­ter hours, the af­ford­abil­ity of den­tal and spe­cial­ist care and the need for aged care beds and res­i­den­tial men­tal health ser­vices are ne­glected and not seen as fac­tors that con­trib­ute to health­care ef­fi­cien­cies. Pro­fes­sor Stephen Leeder is di­rec­tor of the the Aus­tralian Health Pol­icy In­sti­tute and codi­rec­tor of the Men­zies Cen­tre for Health Pol­icy at the Univer­sity of Syd­ney

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