Report: Practitioners, patients and insurers are all at fault

"Reform to our health system could save $140 billion over 20 years."

The Productivity Commission has completed a comprehensive five year review of Australia's health care system and found that while Australia's health is generally tracking well, there's clear room for improvement in almost all areas, with doctors, patients, hospitals, insurers and legislators all needing to make a change.

"Reform to our health system could save $140 billion over 20 years" concludes the report.

Key challenges highlighted by the commission include:

• Many doctors and practitioners are set in their ways at the expense of patient health.
• Patients are poorly educated about their own healthcare and could be doing a lot more.
• Funding systems are counter-intuitive and do little to incentivise effective preventative healthcare.

Education for patients and practitioners

The commission found that "Australian procedure rates are markedly higher than other comparable OECD countries," and that "there are too many unjustified medical procedures."

This was tracked to a lack of ongoing education by practitioners.

"...surgeons perceive the procedures they recommend to be effective – otherwise their colleagues wouldn't be doing them, right?" writes orthopaedic surgeon Ian Harris whose work was cited in the report.

Patients aren't off the hook either though, and the report recommended expanding alcohol taxes to cover wine, and potentially soft drinks as well.

Patient convenience matters

The report also noted that poor patient experiences, bad communication and inconvenience also contributes to poor health outcomes.

One of the specific recommendations was that telehealth takes more of a role in patient care, with the commission saying that simply using telehealth for 10% of consultations could save $300 million a year. The upshot of this is that Australians are good at seeing the doctor when they need to though.

The report also suggested that patient convenience should be given a lot more weight when determining their health care and treatments, as this has a demonstrable impact on outcomes. Health insurance can cover necessary travel and accommodation expenses when needed, but that's no substitute for not needing to travel at all.

Another recommendation already set to go ahead is that My Health Record be made an opt-out rather than opt-in scheme.

Fix the financial incentives

One of the main recommendations was a renewed focus on preventative health from individual practitioners, hospitals and insurers, but none of them have any real incentive to do so.

• Fee for service – Practitioner fees for specific services means there's no incentive to promote preventative health and encourages "playing ping-pong" by bouncing patients between practitioners.
• Activity based funding of hospitals – The goal is to keep patients out of hospital, but when a hospital's revenue is tied to activities they carry out, a hospital risks losing funding by promoting preventative health measures.
• Risk equalisation – Risk equalisation in Australia's health insurance is what prevents an insurer from charging more for any individual based on their age or health. However, it means there's no motivation for insurers to promote preventative health care because if their customers are less healthy than the rest, other insurers will pick up the slack. You can still find extras cover for benefits like gym membership and similar though.

Other insurers without this risk equalisation requirement have independently started taking steps to encourage healthy living among their customers. For example, life insurance brands that offer substantial discounts for healthy lifestyles.

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