Improving the Australian Health Care Agreements

In March, Russell McGowan and I attended a workshop on how to improve the Australian Health Care Agreements. This workshop was run by the Australian Health Care Reform Alliance. HCCA is a member of this Alliance.

The Australian Health Care Agreements (referred to as the ‘the AHCAs’ elegantly pronounced ‘Ackas’) are bilateral five-year agreements between the Australian Government and each state and territory. They a way of transferring funds from the Commonwealth to the states and territories to provide free public hospital services to the Australian community.

John Deeble, Emeritus Fellow at ANU, provided an historical overview of the AHCAs. The AHCAs have been in place since 1974. In this time major changes have occurred in the community that have led to an increased demand in the public hospital system. He spoke of the increase in demand for public hospital services. For example, in 2005-6 public hospital admissions increased by 190 000. Prue Power, CEO of the Australian Heathcare and Hospitals Association said that there has been a 25% increase in the admission rate in public hospitals in the last ten years.

When the AHCAs were first negotiated health care was provided to patients in hospital. Now there are many types of care that are provided in a range of community settings, including in the patient’s own home, or community clinics or outpatient clinics. Our population is aging. Currently, there are 1.9 million Australians aged 70 and over, comprising 9.3 per cent of the population. Within 40 years the number of people aged over 65 will almost triple, from 2.8 million today to around 7.2 million in 2047, or from around 13 per cent of the population today to over 25 per cent. Technology has made spectacular advance resulting in a range of effective, less invasive procedures.

There was strong support at the workshop for the scope of the AHCAs to be broadened to a ‘whole of system’ approach to include community based health services in addition to these services performed in public hospitals.

John Deeble gave an overview of who uses the public hospitals. In very general terms he divided admissions into three categories:

• 50% admission through the emergency Department
• 25% serous and acute episodes that are life threatening
• 25% related to chronic illness.

There was agreement by many of the participant that chronic disease management was an area that could be targeted within the funding agreements. If the AHCAs are to be scoped then there is a great opportunity to have funding tied to health promotion and health prevention aspects in the continuum of care.

There is a significant need for health reform. We currently have a silo funding of hospitals, caged care and primary care. This series of disconnected programs and fragmentation has resulted in poor coordination of services for consumers. It has a negative impact on continuity and integration of care. (And of course there are issues with transferring patient information as a result.)

There is room to consider alternate models of health funding. One idea that was put forward is the potential to have perpetual agreements between the Commonwealth and states and territories. These could then be supplemented by particular project funding to promote innovation in practice. There can be five year review points.

Many of these matters will be considered by the National Health and Hospitals Reform Commission. The Commission is calling for submissions to help design Australia’s future health system. Submissions are due by 30 May. HCCA will be working to complete a submission for consideration. We welcome your thoughts.

Queensland Health has put together a interesting paper on the health care agreements. They provide useful background but also explain why the AHCAs are inadequate in the way in which they fund the states and territiories. A pdf of this report is available online ...