Health services administration

Objective: To compare changes in the costs of statins following patent expiry in Australia and England, and to estimate projected savings for Australia based on the government and consumers paying prices equivalent to those in England and increased use of generics.Design: Review of administrative data and predictive models based on recent trends.Setting: Administrative price and quantity data for the Pharmaceutical Benefits Scheme between January 2002 and October 2009, and comparable information from England.Main outcome measures: Total government and consumer expenditure on statins whose patent has expired, and projected expenditure on all statins from January 2009 to December 2019 under various scenarios regarding pricing and prescribing trends.Results: From January 2005 to October 2009, the cumulative loss to the Australian community from paying more than the English price for generic statins was more than $900 million. Expenditure could have been reduced by a further $1087 million if Australia had increased the proportion of generic medications prescribed to match trends in England. Future savings depend on the proportion of statin prescriptions that are subject to lower generic pricing. From January 2009 to December 2019, potential savings from paying English prices could be as high as $3.21 billion, and savings of up to $9.31 billion could be made by paying English prices and using generic statins only.Conclusion: The current arrangement for pricing statins places a considerable burden on the Australian community. Alternative pricing arrangements that provide incentives to lower statin prices and increase the proportion of generic prescriptions could be highly advantageous.

Philip M Clarke PhD · Edmund M Fitzgerald BSc, BCom

Objective: To assess how much Australian research is available to inform reform of hospital services.Design: Bibliographic analysis using a MEDLINE search to locate all research publications focused on the organisation and delivery of Australian hospital services for the period 1996 through 2007.Main outcome measures: Number of peer-reviewed articles published by year and categorised by: study design (descriptive, methodological, intervention); type of intervention; clinical focus; and funding source.Results: 679 articles on the organisation and delivery of Australian hospital services were published in peer-reviewed journals from 1 January 1996 to 31 December 2007. Of these, 57% were empirical research reports and 43% were commentaries. There were, on average, 32 empirical research articles per annum. Of the empirical research articles, 70% were descriptive, 23% tested an intervention, and 7% were methodological. Research output increased over time with increases in commentary and descriptive research being the main contributors to this trend. The main funding bodies for this research were universities and government departments.Conclusion: A small but growing amount of local research is available to support reform of Australian hospital services. To boost the amount of relevant research evidence, we need to: build formal partnerships between researchers, policymakers, clinicians and health service managers; make targeted investment in health systems and services research; and increase the use of routinely collected data for research.

Mary Haines PhD · Sally Redman PhD · Louisa R Jorm PhD · Teresa M Wozniak PhD · Sanja Lujic MBiostats

Incorrect revenue amount: In “Cost-effectiveness of volumetric alcohol taxation in Australia” in the 19 April 2010 issue of the Journal (Med J Aust 2010; 192: 439-443), there was an error in the taxation revenue amount specified in the Abstract and Results section. In the Abstract (fourth sentence of Results paragraph), the wording should be “a tax on all alcohol at a spirits rate would reduce consumption by 23.85% and increase revenue by $3094 million”. In the text of the article (first paragraph of Results section), the wording should be “A volumetric tax set equal to the current spirits tax rate provided a substantially greater reduction (23.85%) in consumption of alcohol and an increase in taxation revenue of $3094 million”.

Joshua M Byrnes · Linda J Cobiac · Christopher M Doran · Theo Vos

Objective: To examine the impact of a government income management program on store sales.Design and setting: An interrupted time series analysis of sales data in 10 stores in 10 remote Northern Territory communities during 1 October 2006 to 30 September 2009, which included an 18-month period before income management; a 4–6-month period after the introduction of income management; a 3-month period that coincided with a government stimulus payment; and the remaining income-management period.Main outcome measures: Trends in (i) total store sales; (ii) total food and beverage sales; (iii) fruit and vegetables sales; (iv) soft drink sales; and v) tobacco sales.Results: Modest monthly increases indicative of inflation were found for all outcome measures before the introduction of income management, except for soft drink sales, which remained constant. No change from the increasing rate of monthly sales before income management was seen in the first 4–6 months of income management or for the income-management period thereafter for total store sales, food and beverage sales, fruit and vegetable sales and tobacco sales. The rate of soft drink sales declined significantly with the introduction of income management and then increased significantly thereafter. The 3-month government stimulus payment period (during the period of income management) was associated with a significant increase in the rate of sales for all outcome measures.Conclusion: Income management independent of the government stimulus payment appears to have had no beneficial effect on tobacco and cigarette sales, soft drink or fruit and vegetable sales.

Julie K Brimblecombe BSc, MPH, PhD · Joseph McDonnell BSc(Hons), MSc, GradDipCompSci · Adam Barnes BSc, MSc · Joanne Garnggulkpuy Dhurrkay GradCertEducAdmin · David P Thomas DTM · Ross S Bailie MD(Community Health), FAFPHM, MPhil(MCH)

Objective: To identify policy strategies that are perceived by researchers active in Aboriginal and Torres Strait Islander health as effective in increasing the amount of high-quality intervention research undertaken in this field.Design and setting: A cross-sectional study using a web-based survey was emailed to researchers based in clinical, public health and other academic institutions.Participants: Researchers who had published more than once in Aboriginal health between 1 January 2005 and 1 August 2009, based on a MEDLINE search.Main outcome measures: Participants selected and weighted 17 strategies that were, in their opinion, important for increasing the amount of high-quality intervention research being conducted in Aboriginal health.Results: We invited 157 researchers to complete the survey, and received 74 completed surveys. The most highly weighted strategies were: for research funding bodies to give funding priority to intervention research proposals that target Aboriginal populations (median weighted score,15%); for peak bodies representing Aboriginal communities to clearly specify intervention research priorities in a national Aboriginal health research agenda (median weighted score, 10%); for research funding bodies to fund research to develop reliable measures of health for Aboriginal people (median weighted score, 9.5%); for health care organisations to participate more in intervention research targeting Aboriginal populations (median, 8.5%); and for research review panels to accept intervention research designs other than the randomised controlled trial (median weighted score, 8%).Conclusions: Researchers who are active in Aboriginal health research perceive that improvements in funding mechanisms, priority setting and research systems are required to increase the amount of high-quality intervention research being conducted in this field. A national intervention research agenda that encourages multidisciplinary research teams and community partnerships may offer a solution.

Jessica M Stewart BA/LLB, MPS · Rob W Sanson-Fisher PhD · Sandra J Eades MB, PhD · Nicole M Mealing BSc(Adv Maths)

Patients need to make an informed choice about their pathology referrals In February 2010, despite representations from the Royal College of Pathologists of Australasia (RCPA) and the Royal Australian College of General Practitioners (conveyed via letters, meetings and discussions), the federal government introduced legislation into Parliament to require all pathology request forms to be marked with the advice to patients that they may be taken to any pathology provider.1 Pathology services underpin modern health care, playing a role in 70% of diagnoses and medical decisions.2 The key concern of health professionals is that the “non directed” pathology referral will put patient safety at risk and undermine the quality of information that pathologists provide to patient care. The proposed legislation arose from an interdepartmental review of pathology funding led by the Australian Department of Finance and Deregulation and is touted as creating patient choice.3 However, from the health professional’s perspective, the initiative may seem, at best, disingenuous. Patients have always had the right to take part in choosing their pathology provider — as they do for other medical specialist referrals. Shared decision making between doctor and patient is the strength of the medical specialist referral system, and is of particular importance in making choices about pathology (the “invisible” medical specialty). Amending the request form with a clause advising patients that it may be taken to any pathology provider encourages patients to make the decision on their own, after they have left their doctor’s surgery — thus making this a “patient choice” initiative that threatens fully informed choice. Patients may infer from this government directive that it does not matter which pathology provider they use — that they are all the same. In fact, this is not the case. Although all pathology providers are required to meet a national standard of accreditation, they differ in the range of expertise of their pathologists and laboratory teams, their test catalogue and technologies, the content of reports, their second-opinion networks, their access to pathologists for advice, their turnaround times and notification of urgent results, and their after-hours services. Little of this variability may be apparent to patients, who may instead make their “choice” on the convenience of sample collection and price alone, without due regard to the nature of the pathology consultation their doctor sought or whether the important information will be effectively communicated to their doctor. Patients may choose to shuttle between various pathology providers without understanding the effect this journey may have on the type and usefulness of information provided by pathology testing. For many diseases, a unique diagnostic opportunity arises from testing being carried out in one laboratory over the course of a patient’s acute illness. Pathologists can integrate the findings of a range of tests over time to make a diagnosis and can identify disease progression, remission and recurrence earlier, and with more certainty, from a complete and continuous pathology record. Patients with chronic diseases may understand the importance of serial pathology testing, but may not realise that the tests performed and their reference ranges may vary between laboratories, to the extent that the use of multiple pathology practices could compromise their doctor’s efforts to monitor results and could even affect their treatment. Even laboratories that use the same reference ranges may use their own cumulative or graphical reports of test results to highlight changes in the control of common diseases such as diabetes and cancer and in warfarin therapy. Thus, significant changes in a patient’s disease status may not be recognised if they are presented by a new pathology provider independently of previous data gathered on the patient. Lastly, patients may not understand the effect that their independent choices about pathology providers may have on the communication and traceability of their results. The information required for critical decisions may be delayed or lost because the pathology practice cannot deliver reports to an unknown doctor and the doctor cannot pursue them because he or she does not know which practice the patient chose to attend. A large medical indemnity organisation has indicated that it will need to provide risk management advice to its members should this measure be implemented (David Nathan, Chief Executive Officer, Avant Mutual Group Limited, in a letter dated 3 November 2009 referring to an RCPA letter sent to medical indemnity insurers on 17 September 2009 to acquaint them with this measure). Is this good health policy? Can it be good if it cuts across pre-existing good policy on quality, safety and connectivity (ie, delivery of medical information by information technology systems). The federal government seems intent on proceeding with this legislation, despite the establishment of a Senate inquiry into the risks it poses to patient safety.4 Why is this? Why is the government seeking to interfere in and weaken the doctor’s role in advising patients about their health care? If this is about patient choice, then surely patients would universally choose to be safe? So, if it is not about patient choice, what is it about? By portraying pathology services to the Australian public as being all the same, with no distinction made between the levels of service or expertise offered by different providers, the Department of Finance and Deregulation would be sending a message that pathology is a commodity, to be bought at the lowest price. This premise could be used to justify fee cuts and tendering, both of which are on the federal government’s radar.5 All Australians (including patients and doctors) need to be aware of the risk to patient care once the case has been made that pathology is a commodity rather than a medical service. This risk is not merely theoretical. In Ireland, after a recent government-led tender, all Pap smears from Irish women are now to be reported by a pathology service in the United States — effectively putting an end to training (and the destruction of competency) of Irish pathologists in this area of pathology.6 In New Zealand over the past decade, tendering of pathology in each of the 21 district health boards has disrupted not only patient care but also the pathology workforce.7 There has already been significant government disinvestment in Australian pathology over the past 5 years, with the proportion of the Medicare dollar spent on pathology falling significantly despite a dramatic rise in test numbers over that period (Ed Wilson, Principal, EW Consulting P/L, personal communication). A further government review of pathology funding is underway.5 It is aimed at saving more money and will bring us closer to the line beyond which funding is no longer sufficient to allow pathology practices to maintain the standard expected by Australian doctors and their patients. In recent years, this line has probably already been crossed in Canada, where chronic underfunding has been identified as a major cause of the widespread failure of diagnosis of breast cancer, with resultant government inquiries being conducted.8 The proposed changes to legislation cannot be justified on the spurious grounds that pathology is a commodity and that patients are being offered “choice”, when in fact the choice already existed. If the federal government’s agenda is to reduce funding for pathology services, it needs to take responsibility for its decision and the consequences of that decision for patient care.

Beverley J Rowbotham MD, FRACP, FRCPA

Objective: To evaluate the assessment and treatment outcomes of a prison hepatitis service.Design and setting: A retrospective, observational cohort study of prison inmates who attended hepatitis clinics from 1996 to 2005 at correctional centres in New South Wales.Patients: Inmates who attended the clinics, including a nested case–control series of patients who received antiviral treatment and age- and sex-matched patients who did not receive treatment.Main outcome measures: Demographic and clinical characteristics of patients who attended the service; correlates of selection for antiviral treatment; and clinical and virological outcomes of treatment.Results: Of the 1043 inmates who attended the clinics, 851 were men (82%) and 994 (95%) were referred for HCV infection; the mean age for this group was 33 years (range, 18–74 years). In the case–control series (185 treated and 186 untreated patients), selection for treatment was not biased by culturally and linguistically diverse background, current methadone treatment or psychiatric status. In the treated group, 76 of 138 genotyped patients had a genotype that is predictive of favourable treatment response, and a small minority of those with available liver biopsy results had established cirrhosis (7/119 patients). Of treated patients for whom complete follow-up data were available, 55% achieved sustained virological response and 100% adhered to therapy. In addition, treatment episodes were not especially complicated.Conclusion: Although the prison population has high rates of injecting drug use and poor mental health, imprisonment offers an opportunity for assessment and treatment of chronic HCV infection.

Leng Boonwaat RN, MPH · Paul S Haber BSc, MD, FRACP · Michael H Levy MB BS, MPH, FAFPHM · Andrew R Lloyd MB BS, MD, FRACP

“Funded nationally, run locally” The Rudd Labor government came to power in November 2007 promising to enact “the single biggest health reform in a quarter of a century”.1 The political rhetoric became reality in March 2010 with the release of the reform plan, A national health and hospitals network for Australia’s future,2 and the essence of the reform is evident from its catchcry, “funded nationally, run locally”. The plan outlines a scheme for funding the new order that supposedly will banish the blame game that has debilitated health care delivery in this country for far too long. The kernel of the reform is an ill-defined national health and hospitals network, but, overall, the reform package consists of three areas for reform: funding, structural changes and national standards. As to the first of this triumvirate of reforms, the federal government will fund 60% of the efficient price of services provided to public hospital patients. The states will inherit the remaining 40% of the cost. This financial support will be funded through reallocation of revenue raised by the prevailing Goods and Services Tax. In addition, there is also a commitment to provide funding support for research and teaching. Details of the structural proposal of local hospital networks are vague, but will consist of networks of public hospitals and other health services aggregated according to geographic or functional links. A board made up of local professionals, including doctors, nurses and other health professionals, will govern this cluster. As a major driver of quality and performance, the federal government will introduce a code of standards, which will have both negative and positive rewards for compliance. Since its release, the proposal for national health and hospital reform has been extensively dissected and debated in the mainstream media, including in a debate at the National Press Club between the Prime Minister Kevin Rudd and the Leader of the Opposition Tony Abbott, which screened live on 23 March 2010, and was adjudicated by the notorious “worm” (which uses audience opinions to indicate which leader’s argument is the most appealing). To join in this community-wide debate, the Journal has sought the views of six prominent medical and health leaders, which were published as rapid-online articles in March in the eMJA, but are now also published in this issue of the Journal. All commentators raised issues and uncertainties with the reform package. Overall, the verdict was that the plan lacked comprehensive details, but it is time to seek the opinions of the profession at large — the vox populi of doctors! In a lecture to Harvard medical students in the 1920s, Francis Peabody, the famed Bostonian physician, coined a phrase that captured the essence of health care: “the secret of the care of the patient is in caring for the patient”.3 The Rudd reform package is more about the structural processes and mechanisms of health care delivery than caring for the patient. We await the verdicts of our readers.

Martin B Van Der Weyden MD, FRACP, FRCPA

It is the long term that matters — not a quick fix Kevin Rudd’s election commitment in November 2007 to take over the funding of public hospitals and fix them has led to a bold and courageous plan,1 unveiled after a 15-month review by the National Health and Hospitals Reform Commission (NHHRC) and further extensive consultations. Some pillory the delay, but with such a complex system and so much at stake, caution is admirable. The real questions are whether the solution offered on 3 March 2010 for public hospitals1 will work, and what problems will it solve? Further debate is urgently needed. The NHHRC report2 had worthy features and intentions, but fundamental flaws as a basis for reform. Public hospitals must be seen in the wide context of health care, not in isolation. No doubt further statements on primary care and prevention are to come, but the 3 March statement only covers hospital reform. Many unanswered questions remain. What were the serious flaws in the NHHRC report and do they matter? First, the report saw health care as a series of silos with separate control, regulatory processes and funding streams covering public hospitals, primary care, aged care, mental health, health workforce education, preventive care, research, quality and safety oversight, and so on, when the imperative is to bring all these to effectively overlap and intertwine at the local level. This is what the community needs. Second, it saw control of public hospitals, as developed over the past 15 years, as a matter of external numerical control of “casemix” numbers and budgets, and regulation based on waiting lists and waiting times in emergency services. The disasters in Bundaberg3 and at the Royal North Shore Hospital,4 and even in the trauma unit at the Alfred Hospital in Melbourne,5 all occurred in hospitals performing well on numbers and budgets! Third, the report paid little attention to clinical governance. Good and safe care, research and development, so the best care is offered to all, and good education of health professionals (the investment for future care) depend on professionals taking pride in the quality of services offered. This is a powerful resource if wisely used. Clinical governance is needed to secure safety and quality when difficult judgements have to be made every day in caring for acutely ill patients. Some mistakes are inevitable. Involvement of professionals with management is vital. External agencies based in Canberra, or even state departments, cannot deliver this. Finally, its consideration of aged care did not focus on the critical community sector. The escalating costs of an ageing population will create huge problems, as shown in the Treasury’s 2010 Intergenerational report.6 However, care of older people does not belong in Canberra, as recommended by the NHHRC. Every sector needs to work together to keep people at home as long as possible, supported by good e-health, using community nursing and local pharmacists, as well as general practitioners, subacute (rehabilitation) hospitals and nursing homes. These institutions are far cheaper to build and operate than acute hospitals. Acute hospitals have large numbers of older people in beds, blocking elective surgery and supporting emergency care. Devolving national responsibility for hospital management all the way to small Local Hospital Networks, with Australian Government performance indicators and casemix funding of 60% of “efficient costs”,1 will leave many hospitals in dire straits in those states where unit costs are far higher that in Victoria (the model for casemix funding). States will have to pick up the tab for much more than the 40% envisaged in order to keep many hospitals solvent. Even in Victoria, there are 40 regional hospitals that have to operate on block grants because casemix cannot adequately recognise services they need to provide for their communities. There will be a need for continuing state health department roles to supplement a new federal health bureaucracy in every state, with the Local Hospital Network boards having to respond to both. The NHHRC thought it had ended the “blame game”, but with two tracks for funding and decision making on every issue, including major equipment, hospital capital and maintenance, let alone separate tracks for the many aspects of aged care, there is huge potential for blame shifting. I urge devolution to larger regional clusters, each built around a public university with a Faculty of Medicine and Health Sciences, which can bring understanding of the roles of the professions. These would have the capacity to build an interface between hospitals and primary care, and to integrate the role of nurses — not only in hospitals but in community care of older people — and of physiotherapists, who have much to offer in rehabilitation and aged care, especially as cheaper subacute (rehabilitation) hospitals are developed. The prime role of the Department of Health and Ageing in Canberra should be policy. The regional clusters should represent a tripartite relationship between federal government, state government and university, with the state health minister having a role in governance and in coordination of statewide services. The clusters would then be the one-stop shop for major decisions, and blend the several streams of funding. Clusters should be free to contract for services from either the public or the private sector on the basis of cost and quality, and major hospitals across the country should become incorporated entities competing for contracts, with incentives to control burgeoning administrative staff numbers. The system would take several years to settle down, but it is the long term that matters — not a quick fix. Details of the model proposed here can be found at <http://www.grattan.edu.au/publications/011_penington_health_cluster_proposals.pdf>.

David G Penington AC

Starting with the basics of public hospitals and federal–state financial relationships The Australian Government’s policy statement of 3 March 20101 is the first of what will be a series of announcements on health policy and funding. It is nearly all about public hospitals and federal–state financial relationships. We will have to see if and how the later announcements interact. However, access to hospitals is the biggest single issue in the public mind. The basic issues are clear. The states and territories own and operate public hospitals under 5-yearly cost sharing agreements with the federal government. The initial shares were 50%–50%, but the Australian Government portion had steadily fallen to a low of 42% by 2007–08, and will be only slightly higher by the end of the current agreements in 2012–13. The policy report correctly identifies the major problem as the inability of the states to fund their share from their own resources. The Australian Government has the money and it must pay more; but that has been obvious for years. The Australian Government’s response is the one that, short of a complete takeover, gives it most influence and power. It intends to increase its contribution to 60% of “efficient cost” for all public hospital services, initially for inpatients but later also for outpatient and emergency department visits. Hospitals would be paid directly, not through the state health departments. For inpatients, payment would be determined by casemix, and for outpatients and emergency visits by some as yet unknown formula. The states would meet the remaining 40%. To recover the cost, the federal government has signalled a reduction of 30% in the states’ and territories’ Goods and Services Tax (GST) revenue, leaving the status quo intact. For the first time, the Australian Government will share in actual utilisation growth. But none of this will happen quickly. Until 2013–14 — two elections ahead — total funding will be the same as in the current Australian Health Care Agreements. The so-called $50 billion reform package is largely spin, derived by summing the higher federal government share of specific service payments over 15 years, and ignoring the fact that it is already paying that money through the distribution of the GST. The projected gain of $15 billion to the states and territories may be an overstatement too, because shortening waiting times for elective surgery — as the government is promising — will require more admissions and more money, of which the states will have to find at least 40%. The same basic problem, redefined. How does the reform plan hope to get more out of the system? Shorn of all the hype, there are only two measures available — casemix payment and the devolution of administration. Casemix payment is the new health economics religion. It is supposed to reward hospitals that treat most patients for a given amount of money and penalise those that treat fewer patients. Financial incentives rule. However, casemix numbers are only an approximate indicator of hospital output, and no large system, here or overseas, has ever paid hospitals exclusively on the basis of casemix. There is always a block grant component — for some hospitals, almost entirely. That is where the state administrations come in. They moderate the casemix evidence with other information and, unless the Australian Government intends to also prescribe how they must pay their 40% share, they will continue to do so. Casemix is a very useful analytical tool — it is not a panacea. The second measure is the creation of Local Hospital Networks that would be independent statutory authorities with which the state health departments would contract for the delivery of services. The arguments are much the same — this would encourage innovation and arrangements that suit the local community. However, that is not the main purpose. The whole thrust of this part of the plan is to assure health professionals, particularly doctors, that their positions would be restored and enhanced under more local arrangements. The barely concealed objective is clear — restructuring the state hospital administrations, particularly the two most centralised ones in New South Wales and Queensland. The idea is probably popular there, although I doubt if it has anything like the same trenchancy elsewhere. There is a good case for more administrative devolution. All organisations atrophy; periodic shake-outs are no bad thing, and it would satisfy many vocal groups. However, the proposed Local Hospital Networks are both vaguely defined and impractical. They would be absurdly small. Contiguity is not the prime consideration — structural relationships are, and every state has well defined referral patterns of a vertical kind. The small-scale model might make some sense in rural areas, but it is impossible to see it working in the major cities where 70% of Australians live, the big teaching hospitals dominate, and the whole city is effectively a region on its own. Will all this reduce the blame game? Of course not. This policy document is full of it. There is some conflict with the concept of federalism agreed by the Council of Australian Governments (COAG) in 2008, under which the federal government would set outcome targets for broad programs only, leaving the states free to manage them. The new proposals will retain state management but force some organisational changes on them. However, that may well be inevitable and the consequences would be much less radical than the political rhetoric on both sides suggest. It is a significant bureaucratic change though, and, with the next COAG meeting scheduled for 11 April, it is a big ask to seek acceptance in a month.

John S Deeble AO

Health is complex and so is health reform The final report of the National Health and Hospitals Reform Commission (NHHRC), published in June 2009,1 provides a blueprint for major reform of the Australian health system — reform that is long overdue and that is vital if we are to meet the future health care needs of the Australian people. The release of the Australian Government’s national health reform plan2 on 3 March 2010 marks an important milestone. After much listening, thinking, debate and deliberation, it is now time to start taking action. This, the first in a series of announcements by the Australian Government, focused on proposed changes to governance and public financing structures. Public hospitals, general practice and primary health care, health workforce and e-health were flagged as key further elements of the reform plan to be released over the coming weeks and months. As pointed out in the NHHRC report, “we have a fragmented health system with a complex division of funding responsibilities and performance accountabilities between different levels of government”.1 The current separation of responsibilities means that no level of government has a detailed understanding of all aspects of the health system. It is therefore not surprising that this first part of the plan sets out “major structural reforms to establish the financing and governance foundations of a National Health and Hospitals Network for Australia’s future”.2 However, high-level structural changes alone cannot and will not rectify all the current problems and emerging challenges faced by our health system. The NHHRC concluded that fundamental structural reform is required to remove obstacles and enable the system-wide reforms presented in its final report. A key message of the NHHRC’s work on governance is that we need to move beyond the blame game and create “one national health system” with local flexibility and innovation in delivery. The NHHRC presented a pathway, similar to that described by the government, with clearer roles and accountabilities for governments, and with the Australian Government taking greater financial responsibility, which could be increased over time. This would enable the states to continue to plan and operate public hospitals and health services. Local clinical and community engagement were emphasised, and system-wide clinical governance and a teaching and research-led quality agenda were recommended. A number of these features are reflected in the national health reform plan’s approach to restructuring governance and financing arrangements. Under the new arrangements, public hospitals and health services would be funded nationally and run locally. The Australian Government would be the dominant funder of health care, with responsibility for 100% of public funding of primary health care, and 60% of hospital activity, including teaching, research and capital costs. This represents a significant exposure for the Australian Government, which is important in sustaining public financing of the system. The reform plan’s clear statement about state government revenue growth not being able to keep pace with growing health care costs is critical, not only as one of the reasons why greater federal funding responsibility makes sense, but also to acknowledge the financing pressures that states, and therefore public hospitals, have faced and will continue to face without such change. The planned Local Hospital Networks provide a mechanism for local flexibility and innovation, with greater clinical and community engagement and control. States would have a key role in service and capital planning, determining network structures, and appointing the governing council. The size, range of services and geography of Local Hospital Networks would be determined by the states with consideration of local needs and circumstances. One “size” will not fit all. A hospital activity-based funding system will contribute to consistency, transparency and efficiency. The proposed “arms-length” expert pricing body that will be responsible for determining a nationally consistent approach to hospital funding is a welcome feature. The establishment of this body recognises that a range of issues will need to be addressed, including cost weighting for rural and Indigenous health care needs, and establishing funding mechanisms for areas of service not suited to an activity-based funding approach. Direct payment to Local Hospital Networks, as flagged in the NHHRC report, will increase transparency and radically change the dynamic of public hospital management, from one of avoiding activity to contain costs to one of optimising activity to attract direct payment. National standards should also offer greater transparency, increase accountability, reward good performance and better inform the community about the quality and outcomes of our public and private health services. The NHHRC recommended that these standards be developed with clinical, economic and community participation, and that they should cover all aspects of the health service continuum — such as getting access to a general practitioner, timely response in a mental health crisis, and getting to see a specialist or access a rehabilitation service — so that surgical and emergency waiting times alone do not dominate the agenda. These reforms would arguably be the most significant changes to governance and public health financing in Australia over the past 30 years. While good governance and sustainable funding are critical enablers, they are not the whole reform story. The next chapters of the reform plan must demonstrate that this framework will ultimately translate into better, connected health care across all settings and for all Australians.

Christine C Bennett MB BS, FRACP, MPaed

There is no certainty that the new finance arrangements will reduce inequalities in access to care After a prolonged gestation, we are now witnessing the somewhat protracted birth of the Rudd Government’s health reform plan. To date, only the head of the new scheme has come into view.1 For those who remain anxious about the overall health of the infant, and indeed whether it has all of its necessary parts, we have been provided with an attractive slogan — “funded nationally and run locally” — rather than a clear blueprint for action. It may surprise and distress many Australians to learn that our health system is ranked 32nd in the world for overall performance.2 The main reason for this rather ordinary outcome is that we have progressively institutionalised a chaotic and increasingly inequitable system. The National Health and Hospitals Reform Commission clearly identified a range of major problems that should be the focus of any proposed changes.3 These included: lack of sustainability, which included finance, infrastructure and manpower; lack of access to key services, specifically highlighting mental health, dental and aged care services; divided responsibilities for care, not only between the federal government and the states, but also across the private–public and hospital–community sectors; growing health service inequalities, notably affecting Indigenous peoples and those who live in rural and regional communities; lack of continuity of health care that results in poor quality, high cost and largely ineffective forms of care for those with chronic illnesses; and lack of routine use of data monitoring to drive increased clinical and financial accountability. The Prime Minister’s first health reform announcement focuses narrowly on increased federal government support for public hospital financing.1 This is an essential first step and will clearly be welcomed by the wider Australian community. There is no doubt that the decline in confidence in our public hospitals is based largely on the belief that they have been starved of funds. The proposal to now extend the 1990s activity-based funding model across the nation responds directly to that concern. Fortunately, it has been updated in 2010 to recognise the need to reinvest in research and training, as well as support ongoing infrastructure development. Although it is not clear when substantial new monies will enter the system, at least we are headed for the situation where the government that collects the most tax will now pay most of the increasing costs. Importantly, governments in Australia now fund only 70% of all health care costs.4 This gap is high by international standards, and in recent years there has been a clear trend towards transferring increasing costs to those who fall ill. Obviously, this has its greatest impact on those with chronic illness and those who have the least capacity to pay. Unfortunately, the new plan provides no details as to the ongoing roles of private hospital, medical or dental services. The ways in which private health insurance (or alternative health savings models) could be better used to supplement universal coverage are also not discussed.1 Consequently, it is uncertain whether the new finance arrangements will actually lead to a reduction in the current inequalities in access to timely care. The other key structural change, namely the introduction of Local Hospital Networks,1 is a direct response to the health professions’ and the wider public’s lack of faith in both federal and state health bureaucracies. While this is obviously smart politics, it is not necessarily smart health policy. The dangers of further Balkanisation of health planning, greater fragmentation between hospital and community-based services, and the promotion of intense local service rivalries are obvious. Unnecessarily, the local network plan is hospital-centric and bound to perpetuate the blame game between these federally funded but state-governed local authorities. As new regional health care organisations are progressively introduced to lead the next round of primary care reform, the existing gaps between local hospitals and community-based services may worsen. We will now have 120–150 Local Hospital Networks that are structurally disconnected from 50–60 new general practice-based primary care organisations. Meanwhile, other more specialised community services such as mental health, alcohol and drug services, and maternal and child health services have been left in limbo. Without a clear national commitment to finance and run these systems, the most likely outcome is that they will be left to rot under the existing state-based funding models.5 Given the increased community focus on these issues,6 the continuing lack of attention to their future sustainability is inexplicable. For the Rudd plan to achieve real credibility, it needs to explain how a 60-year-old man in rural Australia without private health insurance will now get a timely hip replacement or affordable cataract surgery. Even more challenging are questions such as: how will a 50-year-old Indigenous woman with diabetes, arthritis and dental decay get access to the primary care, dental and other allied health services that she really deserves; or how will a 19-year-old man who has recently attempted suicide receive the ongoing help he desperately needs? If Mr Rudd cannot easily explain how the new system will assist these people, then the current round of national health reform may well be stillborn.

Ian B Hickie AM, MD, FRANZCP, FASSA

Key arguments of the recent proposal for health reforms are questionable Prime Minister Rudd is to be applauded for shaking the logjam of federal–state health relations, which for some time has been identified as a stumbling block to improving the health system. But that is all. His proposals as we currently know them have superficial appeal, but from a longer-term perspective they are a poisoned chalice. The alleged advantages of the Commonwealth assumption of power are, at best, overstated. Although the Commonwealth has greater fiscal power and can ensure stable, long-term funding, it would be better to reform the tax system to meet the needs of the health system than compromise health care delivery to match an antiquated tax system. As noted in two articles in the Journal (recently published online), these reforms will not end blame-shifting.1,2 With a political incentive, some argument will be found. For example, the states will be accused of inadequate capital expenditure on infrastructure, and the Commonwealth of case payments that are too low. Diagnosis-related group (DRG) casemix payment for hospitals is undoubtedly a good idea. But there is no reason to believe that it will have a major system effect. It will not balance the mix of primary, secondary and tertiary care, ensure quality in hospitals, integrate programs, improve access to services, or even ensure internal reforms within hospitals. Queuing is a function of funding relative to demand, with or without DRGs. In view of innumerable special circumstances, it is very unlikely that the Commonwealth could run such a DRG system without simply replicating much of the work presently carried out by the states. A direct pipeline to federal funds will further maximise the incentive for special pleading and political pressure and, as clearly demonstrated in the 2007 federal election, this can be highly effective. Former Prime Minister Howard’s intervention in the funding of the Mersey Hospital in Tasmania during that election gives a preview of the special pleading and pressure which might be expected under future governments. However, the chief concerns are the long-run implications of the takeover and the lack of consideration of the relevant arguments and evidence (which were not provided by the National Health and Hospitals Reform Commission [NHHRC]).3 For the past two and a half decades, the major issue in the literature concerning health system reform has been the achievement of a system framework permitting patient choice of scheme (ie, diversity). In Australia, the arguments for this were vigorously promoted by Richard Scotton (one of the two architects of the original Medibank scheme and subsequently a Professor of Health Economics at Monash University)4 and briefly discussed by the Productivity Commission.5 But the discussion of the Scotton plan largely ceased with Scotton’s retirement and his name appears only once in the NHHRC report in a footnote.6 The case for diversity is compelling and draws on insights from the greatest economists, as distinct from the flawed theories embodied in recent orthodoxy. Adam Smith, the father of modern economics, famously summed up the case against centralised control when he argued that: The man of system ... seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board ... but ... in the great chess-board of human society, every single piece has a principle of motion of its own.7 Failure to heed this message led to excessive micromanagement, regulation and control by government, which culminated in the conservative backlash that started in Chicago and led to the Thatcher–Reagan era. John Maynard Keynes — the 20th century’s greatest economist — described a world characterised by uncertainty and unknowability of future context-specific challenges and the need for pragmatic flexibility. He even conceded the possibility of a budget surplus during depression times if, hypothetically, that happened to be the linchpin of business confidence.8 Failure to heed this message gave rise to a theory of finance based on statistical confidences, now discredited by the collapse of world financial markets. The response, at least, was flexible and pragmatic. The take-home message from these great economists is that in the face of technological and other changes, systems and institutions must be adaptive and that this is unlikely, in the long run, when they are dominated by a “master manipulator”. Consistent with this, Eric Beinhocker, Senior Fellow at the McKinsey Global Institute, has described the economy as a complex adaptive system, akin to the brain, the internet or an ecosystem.9 The conclusion of his masterly review in The origin of wealth is that the great lesson of the 20th century for political economy is that monopolies fail. Successful enterprise has been characterised by error learning and reinvention. Rudd echoed this conclusion when he argued that “big departments risk becoming less accountable, less agile, less adaptable and more inward-looking”.10 But this was in the context of homeland security. The historical success of the competitive market has little to do with the static properties taught in economics textbooks and everything to do with creating a flexible, adaptive system characterised by error learning or bankruptcy. Information is conveyed by prices, and price flexibility is the key to long-run dynamic efficiency. No part of the economy is more complex than health care. However, the health sector cannot duplicate the competitive market in its simple form for technical reasons and because of its social role. The long-run challenge is therefore to devise a system which carries out this role with diversity, flexibility and error learning. Concentration of power in a monopolistic Commonwealth system is the antithesis of this. Government has, increasingly, been characterised by error suppression and marketing. With the conversion of the public sector into an instrument for fulfilling political goals — driven by short-run contracts and bonuses — government is increasingly becoming the problem, not the solution. To believe that the federal government is likely to achieve efficiency in the long run requires ideological blinkers and amnesia. A short list of problems which have been known and ignored for decades includes Aboriginal health, quality of care (200 unnecessary deaths per week), geographic and other dimensions of fairness, program coordination, and effective integration of private health insurance into the health system. The rhetorical rejoinder, of course, is that it is because of these problems that we need a Commonwealth takeover. But in addition to their lack of both experience with running hospitals and knowledge of local considerations, the Commonwealth has had the power and resources to effect major reforms in the past but is on record as preferring to ignore the politically sensitive problems.11 Rudd may be different. However, there is little evidence to demonstrate this. And we must not lose sight of the long-term context: what about the next government, and the next? The track record and trend in government gives no reason to believe that policy will cease to be driven primarily by interest group appeasement, with the public mollified by marketing and spin. The process that Rudd has followed reinforces this conclusion. The NHHRC report, which the government ostensibly drew on, offers no serious discussion — evidence or argument — to support the new policy.6 The world literature and experience concerning these issues were largely ignored, at least in the published report. The case against diversity and experimentation in primary health care is simply asserted: “Our recommendations for ... comprehensive primary health care ... require one government — the Commonwealth Government ... Thus we recommend that the Commonwealth Government assumes full responsibility for primary health care services”.6 The balance shown in the NHHRC’s judgements may also be questioned. In one of its few references to adverse events, it notes that “admission to hospital is not without risk”.12 It is also true that the Sahara Desert has dry bits. Alternatives exist which increase the probability of error learning and evolutionary improvement. The key element is a degree of diversity — a non-monopoly. Devolution to large clusters has been recommended, and a model for this has been provided.2 Similarly, I have previously advocated “managed government competition”, in which the emphasis is on de-politicisation and elements largely missing from previous discussions — the creation of governance and information flow that forces error learning and rapid uptake of good new technologies.3 In the long run, these elements are more important than the cash flow and budgetary considerations that dominate much of the present discussion and decision making.

Jeff R J Richardson PhD

We are waiting for the details — without these the plan will fail The Rudd hospital reform plan1 could be better. That said, it does have the potential to be a significant improvement over what we have now. No doubt it would be better to have one level of government assume 100% of health funding. But that was never going to happen. So it’s time to accept that and move on. As others have observed, the devil will be in the detail. It is vital that the detail is right, even if it takes longer than planned. The first bit of detail to get right is what we call a hospital. A hospital is no longer the big white building that sits at the top of the hill. Hospital-in-the-home care is now the norm for many conditions, and the proposed new model won’t work if the new Local Hospital Networks (LHNs) only include the big white buildings rather than the associated community and home care that many patients require. Not everything that happens outside the walls of a hospital can be neatly packaged as “primary care”. Community mental health and palliative care at home are two examples. What we really need are “local health networks”, not networks of white buildings. And those networks need to be organised in support of, and include, primary care. If we don’t improve at managing chronic disease, providing required rehabilitation and preventing complex conditions from becoming worse, then the health system will continue to lurch from crisis to crisis, regardless of who manages it or how it is funded. Effective systems to establish the right balance of investment between acute, subacute and primary care are critical. The second bit to get right is how we plan for the growing and changing health needs of our population and how we achieve more equitable health funding across and within states and territories. The Rudd plan is weak on this point — paying for what’s on offer by the LHNs isn’t good enough. While the LHNs can do the micro-planning, the Rudd plan is silent on who will be responsible for making sure that each community and region across Australia will get its fair share of the pie. There are problems with the New South Wales health system. However, the commitment of successive NSW governments to improving population equity (through the Resource Distribution Formula2) is without doubt one of the strengths of that state. We need something similar on a national basis. Under the Rudd plan, while states and territories will be responsible for “local activity targets, service mix and provision for highly specialised services” as well as “capital planning management”,1 there is no requirement for them to improve equity of access. And the plan is silent on whether the Rudd Government will try to improve funding equity across, as well as within, states and territories. If it is going to, it might want to look in its own backyard and address the current inequity of access to Medicare. Efficiency is discussed at length in the Rudd plan, but it is just one side of the equation. Equity is the other. The principle of population equity needs to be, with efficiency, front and centre in the detail of the Rudd plan. If it is, it will no doubt go a long way to alleviating the current anxiety about the future of rural and remote health care. The catchment size of each LHN will be critical to the equity question. Rather than planning around the number of hospitals (one to four is the current plan1), it would make more sense for LHNs to be planned based on the number of people living in the local catchment area. Each LHN needs to be responsible for meeting the basic health and hospital needs of the people who live locally, with teaching hospitals being responsible for providing more specialised care when needed. For the bush, that implies LHNs servicing populations of 50 000 to 250 000. Regional and urban networks need to be larger, covering typical populations of 250 000 to 500 000, although some densely populated capital cities need LHNs to service populations of up to 800 000. And that leads to the next bit of detail that it is vital to get right. The efficient price at one type of hospital isn’t the efficient price at another. Rural and remote hospitals cost more, not because they are inefficient but because of cost factors beyond their control. Likewise, hospitals in a major expansion phase cost more than those doing the same as what they did last year. The key point is that the pricing model will have to be sophisticated and have the capacity to be adapted to local circumstances. We certainly shouldn’t be rewarding the inefficient. But, on the other hand, we shouldn’t be punishing hospitals for factors beyond their control. Just as we need equity between communities, we also need equity between providers. And there’s more to an equitable funding model than simplistic measures of technical efficiency. It won’t require the wisdom of Solomon, but it will require expert planning and competent technical work. The federal government has no experience in funding or managing hospitals and certainly lacks the technical expertise. At the state and territory level, the expertise is patchy. The state with the most experience in activity-based funding, Victoria, is in many ways the easiest health system to run. With its small geographical size and population concentration in Melbourne, it has no experience in the challenges of funding or running hospitals in remote communities.3,4 It also has one of the smallest Indigenous populations in the country5 and, compared with other states, has little experience in either pricing or delivering Indigenous health care. For these and other reasons, the national efficient pricing model will need to be considerably more sophisticated than the current Victorian approach. Finally, despite all the rhetoric, the plan as proposed so far is a long way from ending the blame game. Instead, the Australian Government will call all the shots, while the states and territories will be blamed for all the problems. While no doubt appealing to federal politicians, this won’t create the sustainable health system needed in the years ahead. The detail we are all waiting for needs to include effective systems for joint decision making and shared responsibility and financial risk sharing between the federal, state and territory governments. Without that, the Rudd plan is bound to fail.

Kathy Eagar MA, PhD, FAFRM(Hon)

In this article, I examine all the attempts to reform Australia’s health insurance system since Medibank was introduced in 1975; there have been seven, and the eighth (which goes beyond just health insurance) is now in progress. I argue that the Rudd Labor government should take heed of history’s lessons and reduce the pressure for ongoing structural reform. The lessons of history suggest that tipping the balance too far in favour of public or private insurance is not sustainable, and nor is setting the two schemes up in competition with each other. The challenge that faces the Australian Government now is to design a health system that integrates the public and private insurance schemes in a way that is economically sustainable. If it does not, major structural reforms to the health system will be needed again in the near future.

Anne-marie Boxall PhD

Putting to rest the myth that emergency department overcrowding is due to a lack of primary care services Australia’s emergency departments (EDs) are dangerously overcrowded, but a study by Buckley and colleagues in this issue of the Journal1 should be the last nail in the coffin of the long-discredited myth that the root cause is a lack of primary care services. This study used a time series approach to identify a real — but clinically insignificant — change in ED workload after the opening of an after-hours primary care service in the New South Wales inland rural city of Wagga Wagga. The Australian public are entitled to receive high-quality and available care in both primary care and emergency settings, but the overlap between these services is not as important as many have claimed.2,3 In a rural location without pre-existing after-hours primary care services, the introduction of such a service, which treated 14 patients daily on average, was associated with an adjusted daily reduction in ED presentations of seven patients with an Australasian Triage Scale (ATS) category of 4 or 5 (lower urgency). As the authors note, because non-admitted low-urgency patients tend to have low resource needs, this reduction of 8% of total ED presentations would correspond to a lesser reduction in workload. Based on published Wagga Wagga Base Hospital data and accepted casemix measures, this reduction would translate to around 3% of this rural ED’s costs and no more than 4% of its ED medical and nursing staff time. These figures are higher than some other Australian estimates,4,5 mostly from studies in cities with pre-existing after-hours services. However, they remain consistent with the observation from these studies that the overall weekly primary care workload in an ED amounts to no more than one patient per hour. In Wagga Wagga, few general practices open for more than 55 hours per week, and the after-hours service opens for 27 hours, but the ED is always open and is the only source of medical care in this community for more than half the 168 hours in each week. It is no surprise that some patients who could reasonably go elsewhere will present to the ED. Buckley et al’s results show that the after-hours clinic treated an average of 3.7 patients per hour. During the hours the clinic was open, the reduction in ED presentations was 1.8 patients per hour and, when it was closed (ie, the rest of the week), the reduction in ED presentations was 0.2 patients per hour. It is unlikely that extending the clinic’s opening hours would make much difference: opening during office hours would probably reduce presentations to existing general practices, and opening later at night would likely be uneconomical. Although, as the study authors note, general practitioners working in EDs in the United Kingdom have been shown to be more cost-efficient than junior medical staff in the same environment, the actual cost of emergency medicine is dominated by infrastructure and staff expenses 24 hours per day.6 EDs have a high average cost per patient and a low marginal (incremental) cost for additional low-acuity presentations, especially compared with off-site after-hours clinics, where expenses are dominated by medical labour, and the average and marginal costs are much closer together. Even if patients were 100% interchangeable, a new after-hours service would likely represent an increase in total cost to the community, because it would not reduce the need for the “public good” of a 24-hour service available at the hospital. Despite its limitations, this study confirms that “primary care patients” and “ED ATS category 4 and 5 patients” are not interchangeable. It is to be expected that there is some overlap between patients who might want to present to an ED and those who might want to go to a GP — just as there may be overlap between patients going to a GP or a gynaecologist for a Pap smear, or between those going to a thoracic surgeon or a respiratory physician for investigation of a lung mass. However, the finding that 96% of the weekly workload of an ED cannot be substituted by an after-hours service confirms that patients are largely presenting appropriately. By comparison, at least a third of average ED staff workload (and more than half in some places) consists of providing care to those who have completed their emergency treatment and are waiting for an inpatient bed,7 sometimes for days. Australian EDs are dangerously overcrowded with patients, many of whom should not be in EDs because they would be better managed elsewhere. But it is not the so-called primary care patients who are blocking ambulances from offloading8 — it is the “access block” patients waiting for beds on the inpatient wards who are inappropriately occupying ED space and staff time.

Drew B Richardson MB BS(Hons), FACEM, GradCertHE

Objective: To estimate the potential health benefits and cost savings of an alcohol tax rate that applies equally to all alcoholic beverages based on their alcohol content (volumetric tax) and to compare the cost savings with the cost of implementation.Design and setting: Mathematical modelling of three scenarios of volumetric alcohol taxation for the population of Australia: (i) no change in deadweight loss, (ii) no change in tax revenue, and (iii) all alcoholic beverages taxed at the same rate as spirits.Main outcome measures: Estimated change in alcohol consumption, tax revenue and health benefit.Results: The estimated cost of changing to a volumetric tax rate is $18 million. A volumetric tax that is deadweight loss-neutral would increase the cost of beer and wine and reduce the cost of spirits, resulting in an estimated annual increase in taxation revenue of $492 million and a 2.77% reduction in annual consumption of pure alcohol. The estimated net health gain would be 21 000 disability-adjusted life-years (DALYs), with potential cost offsets of $110 million per annum. A tax revenue-neutral scenario would result in an 0.05% decrease in consumption, and a tax on all alcohol at a spirits rate would reduce consumption by 23.85% and increase revenue by $3094 million. All volumetric tax scenarios would provide greater health benefits and cost savings to the health sector than the existing taxation system, based on current understandings of alcohol-related health effects.Conclusions: An equalised volumetric tax that would reduce beer and wine consumption while increasing the consumption of spirits would need to be approached with caution. Further research is required to examine whether alcohol-related health effects vary by type of alcoholic beverage independent of the amount of alcohol consumed to provide a strong evidence platform for alcohol taxation policies.

Joshua M Byrnes BComm, MEconStud, MHealthEcon · Linda J Cobiac BEng(Hons), MEngSc, MPhil(Maths) · Christopher M Doran BEcon(Hons), PhD · Theo Vos MSc, PhD · Anthony P Shakeshaft MA(Psych), PhD

Objective: To assess the impact of the opening of an after-hours general practice clinic on the number of daily low-urgency presentations to the nearby emergency department.Design, participants and setting: Retrospective time series analysis of emergency presentation data, from the New South Wales Health Emergency Department Information System, for all patients presenting to the emergency department of Wagga Wagga Base Hospital between January 1998 and October 2008.Main outcome measures: Daily emergency department presentations, before and after the March 2003 opening of the after-hours clinic, of patients triaged as Australasian Triage Scale (ATS) category 4 or 5 (at any time of day, and during the hours of operation of the clinic), and of patients triaged as ATS category 1, 2 or 3 (at any time of day).Results: After adjusting for long-term trends and weekly and annual cycles, the opening of the after-hours clinic was associated with a daily reduction of 7.04 patients (95% CI, 5.39–8.70) in emergency department presentations with an ATS category of 4 or 5. This represented an 8.2% reduction in total presentations (95% CI, 6.2%–10.2%). Presentations of ATS category 1, 2 or 3 patients rose by 1.36 patients a day (95% CI, 0.36–2.35), representing 1.6% of total presentations (95% CI, 0.4%–2.7%). The impact of the after-hours clinic was best modelled by a gradual permanent change.Conclusion: An after-hours general practice clinic was associated with a reduction in low-urgency presentations to the emergency department in Wagga Wagga.

David J Buckley BVSc(Hons), MVSc · Paul W Curtis MB BS, MHA, FRACMA · Joseph G McGirr MB BS, BSc(Med), FACEM

What did we do well in the first year of pandemic (H1N1) 2009, and what can we do better? In Mexico in April 2009, a new H1N1 influenza strain appeared to be associated with a high mortality rate. This fuelled fears that a highly virulent virus would quickly spread internationally and cause millions of deaths. Appropriately heightened surveillance and controls were put in place, and Australia activated its “well-rehearsed plan for response to pandemic influenza”.1 Across the country by mid May, we had in place accurate polymerase chain reaction (PCR) testing for “swine flu”, improved public awareness of infection control and good public health surveillance. By September, Australia was among the first countries with a vaccine available. Now, a year after the virus first emerged, what have we learnt and how could our pandemic response be improved in the future? Swine flu did spread rapidly internationally. However, by late May, data from the United States spring showed that case-fatality rates were lower than those from seasonal influenza (< 0.1%).2 But what would happen in the Australian winter? By mid June, we knew that case-fatality rates here were also low.3 Despite this knowledge, many costly interventions continued, including border control, widespread use of antivirals, school closures and contact tracing, but with little evidence that these made much difference to the overall rate or spread of the virus. Appropriately, when it became obvious that the spread of the virus could not be controlled, the national pandemic plan was modified. A new phase, “Protect”, was adopted on 17 June,1,4 with a greater focus on treating and caring for those patients who were more vulnerable to severe outcomes. The word “pandemic” can evoke needless fear and panic. This term would be best used when a virus not only spreads widely but also has increased virulence — this latter aspect is currently not considered in the World Health Organization definition.5 Virulence needs to be measured quickly and accurately. Pandemic plans seem to assume a case-fatality rate of 1% or more. However, a different approach could be better for a virus such as swine flu with a mortality of 0.01% or less — predetermined responses that take into account different levels of virulence, not just the spread of a virus. The US has such a grading system (similar to that used for hurricane severity),6 but it was not used to guide this public health response. “Real-time” viral spread and activity can be followed with remarkable accuracy using Google Flu Trends.7 In the Australian community, the effects of the pandemic (H1N1) 2009 influenza virus were “at most like influenza circulation in a season of moderate seasonal activity”.8 Rates of absenteeism from work and school were similar to those seen in the winter of 2007.1 The 191 associated deaths were substantially fewer than the 3000 estimated yearly deaths from seasonal influenza in Australia.1,4,9 Although there may have been additional influenza-associated deaths that were not diagnosed by laboratory testing, [a] broader measure of all Australian deaths resulting from influenza or pneumonia currently indicates that there have been fewer such deaths than in other influenza or winter seasons.1 Some groups, such as Indigenous peoples and pregnant women, were more vulnerable. Pregnant women had a tenfold higher rate of severe complications than others of the same age.8 Astute clinicians in Melbourne found that pregnant women with complications were often IgG2-deficient. Thus, we now potentially have a marker that identifies those at much greater risk from influenza and also new, related therapeutic options (using gamma globulin).10 Intensive care units (ICUs) in Australia managed to cope with the larger numbers of generally younger influenza patients, but had major problems and were, worryingly, very stretched.1,4 This demonstrated the lack of spare capacity in our hospitals and ICUs — a problem most apparent every winter. Australia’s population mortality rate from swine flu was 0.9 per 100 000.1,4 If a more virulent virus with a 1% case-fatality rate infected 30% of the population, our hospitals and ICUs could not cope, and we would have to find other ways of managing the problem. Despite the widespread use of costly oseltamivir stockpiles in Australia and elsewhere, there were no obvious effects in terms of slowing or altering the overall epidemic. Antivirals probably benefit individuals who are at high risk of complications, but in the general population the benefits may be marginal.11 In addition, the recommendations for who should receive antivirals changed with the different declared phases of the pandemic (eg, from “Contain” to “Protect” phases). This led to confusion for both clinicians and the general public — were antivirals to be used to reduce transmission by ill patients, limit disease severity by stopping sick patients getting sicker, or for prophylaxis? Testing for swine flu was problematic. Most of those infected had only mild disease, but demand for testing was high. Rapid influenza tests had poor sensitivity, and no specific serological tests were available. PCR was the only reliable form of testing, but it is relatively expensive and labour-intensive. Thus, testing was often not available. Testing was also commonly centralised, which meant results were not readily available in a timely fashion, even for ill patients in many hospitals. Vaccines were also problematic. Australia was one of the first countries to manufacture and distribute a vaccine for pandemic (H1N1) 2009. However, it only became available after the epidemic finished around the end of September, in multidose vials containing thiomersal, and when a large proportion of the population may have been already immune (from recent infection or prior immunity). In vaccine trials, Australian participants had higher-than-expected levels of pre-vaccination cross-reactive antibodies.1 Thirty per cent of children aged > 3 years and 27% of adults aged 18–65 years had protective antibody levels, with 62% of adults having detectable antibodies.12,13 Older people are likely to have even higher pre-existing immunity, given their relatively lower rate of pandemic (H1N1) 2009 infection last winter. In the future, it could be worthwhile to consider another approach to vaccination. Currently, effective vaccines are usually only available “after the horse has bolted”. Because of poor matching, seasonal influenza vaccine efficacy varies from 50% to 80%.14 New vaccines that are safe and more effective, but that only have to be given once every 5–10 years and protect against a variety of influenza strains, could be a useful development. Large amounts of public money and resources were spent on antivirals and vaccines in Australia during the pandemic (H1N1) 2009 outbreak. Pandemic vaccines cost over $120 million here, widely reported and mass immunisation delivery costs for 20 million doses would likely be another $500 million. We also saw that infections spread easily. If people are sick, they should not be at work, school or travelling on public transport. Disproportionate fear generated by media reports resulted in many people presenting to emergency departments or medical practices when they had mild illness and should have stayed at home to recover on their own. However, we do need the ability to quickly assess those in risk groups or those whose condition deteriorates. This may require a phone triage system. Health care workers would then only need to directly assess the much smaller numbers of patients who may need antimicrobials or hospital admission or who are severely ill. Front-line general practitioners and other clinicians faced extreme difficulties because of deficiencies in implementing parts of the pandemic plan.15 This involved resource supply failures, time-consuming administrative burdens, delays in receiving laboratory test results and approval for provision of oseltamivir to patients, and a lack of clear communication about policy changes as the situation progressed.15 We could learn to adapt better as circumstances change and improve consultation with front-line clinicians in any future planning. The core components of current pandemic planning are influenza vaccination and antivirals. This may not be the best approach. Simple infection control measures such as hand hygiene and barrier methods (gloves, masks, isolation) reduce the spread of respiratory viruses.16 In the 1918–1919 pandemic, the vast majority of deaths were probably from bacterial complications rather than the influenza virus itself.17 Effective prevention, treatment and vaccines against bacteria are therefore potentially more effective in preventing deaths. The swine flu outbreak has provided lessons for all of us in the community — clinicians, health officials, politicians and patients. Despite our efforts to contain this virus with pandemic plans, the pandemic (H1N1) 2009 strain behaved like seasonal influenza and spread rapidly throughout the population, and then stopped just as rapidly. We need to devise better ways to decrease the spread of viruses and to identify and treat the small proportion of people infected with influenza who are likely to develop serious disease or complications. Most importantly, we need to establish better trigger points that take virulence as well as virus spread into account before we roll out pandemic plans.

Peter J Collignon FASM, FRACP, FRCPA

Objective: To study the extent of brand substitution and switching in three commonly used classes of drugs available on the Pharmaceutical Benefits Scheme (PBS).Design, setting and participants: Assessment of PBS claim records for a 1-year period from 1 August 2007 to 31 July 2008 for long-term concession cardholders drawn from a 10% random sample of the Australian population. The target drug classes were: statins (pravastatin, simvastatin), calcium channel blockers (CCBs) (amlodipine, felodipine, nifedipine), and selective serotonin reuptake inhibitor (SSRI) antidepressants (fluoxetine, fluvoxamine, paroxetine, sertraline).Main outcome measures: Proportion of patients who were non-switchers (single brand only) and multiple switchers (two or more brand switches).Results: We retrieved information relating to 935 334 prescriptions for 122 000 patients. Of those patients filling at least four prescriptions for a product, 41 174 patients received statins, 27 230 received CCBs and 21 342 received SSRIs. More than half the patients received only one brand during the study period: 57% for statins, 60% for CCBs, and 63% for SSRIs. Multiple switching was recorded for 24% of patients with statins, 19% with CCBs, and 21% with SSRIs, with smaller proportions receiving three or more brands: 14% for statins, 10% for CCBs, and 12% for SSRIs. Multiple switching was more common among younger patients for all drug classes (28% for those aged < 50 years v 18% for those aged ≥ 80 years).Conclusion: Generic substitution with multiple switches is occurring in a small proportion of patients being treated with statins, CCBs or SSRIs. The potential for patient confusion appears to be relatively small, but this may change with recent incentives included in pharmacy reimbursement arrangements.

Michael Ortiz BPharm, PhD · Leon A Simons MD, FRACP · Gordon Calcino BA, GradMedStats

Objective: To evaluate the impact of an acute assessment unit (AAU) on length of hospital stay (LOS), emergency department (ED) waiting times, direct discharge rate, unplanned readmission rate and all-cause hospital mortality of general medical patients.Design and setting: Retrospective comparison of data for general medical patients admitted to a tertiary teaching hospital in Adelaide, South Australia, before and after the establishment of an AAU (reference years, 2003 [before] and 2006 [after]).Main outcome measures: Mean LOS, ED waiting times and all-cause hospital mortality during calendar years 2003 (pre-establishment) and 2006 (post-establishment).Results: Following the establishment of an AAU, the mean LOS shortened (from 6.8 days in 2003 to 5.7 days in 2006; P < 0.001) despite a 50.5% increase in the number of admissions (from 2652 to 3992). The number of admitted patients waiting in the ED more than 8 hours for a hospital bed decreased (from 28.7% to 17.9%; P < 0.001), as did the number waiting more than 12 hours (from 20.2% to 10.4%; P < 0.001). The rates of unplanned readmission within 7 and 28 days did not change. The all-cause hospital mortality for general medical admissions was 4.6% in 2003 v 3.7% in 2006 (P = 0.056).Conclusion: The establishment of an AAU within the general medical service coincided with decreases in both LOS and ED waiting times, despite a 50% increase in admissions. This structural reform in the process of acute medical care may have contributed to the improvement in these key health care performance indices without compromising the quality of patient care.

Jordan YZ Li MB BS, FRACP · Tuck Y Yong MB BS, FRACP · Denise M Bennett RN, RM, MBA · Lauri T O’Brien RN, RM, BN · Susan Roberts RN, BN, MNsg · Paul Hakendorf BSc, MPH · David I Ben-Tovim PhD, FRANZCP, MRCP(Psych) · Paddy A Phillips DPhil, FRACP, FRCP · Campbell H Thompson MD, DPhil, FRACP

Because of the complex aetiology of modern obesity patterns, isolated therapeutic or public health measures will not solve the obesity problem. Consumers must be made aware of the ways in which the food industry influences their food purchases. Government needs to prioritise health ahead of industrial productivity and increased consumption. An obesity intervention wish list is presented as a suggested reform package: prohibit all forms of marketing of energy-dense, nutrient-poor foods; introduce measures such as kilojoule caps, prohibition of bundling, and greater uniformity in packaging design to make energy-dense, nutrient-poor foods less enticing and less amenable to bulk purchase; redesign supermarkets to promote fresh rather than energy-dense, nutrient-poor foods; cease provision of government subsidies to food processing industries; tax energy-dense, nutrient-poor foods to create a disincentive to purchasing of these foods; and regulate the location and number of fast-food outlets by enacting urban planning laws

Bebe Loff LLB, MA(Lond), PhD · Brad R Crammond MA(Hons), LLM

The recent interest in health promotion and disease prevention has drawn attention to the role of the alcohol and junk-food industries. Companies supplying, producing, advertising or selling alcohol or junk food (ie, foods with a high content of fat, sugar or salt) do so to generate profits. Even companies marketing “low-carbohydrate” beers, “mild” cigarettes, or “high-fibre” sugary cereals are not primarily concerned about population health, more so increased sales and profits. In a competitive market, it is assumed that consumers make fully informed choices about costs and benefits before purchasing. However, consumers are not being fully informed of the implications of their junk-food and alcohol choices, as advertising of these products carries little information on the health consequences of consumption. We propose that there should be a levy on advertising expenditure for junk food and alcoholic beverages to provide an incentive for industry to promote healthier products. Proceeds of the levy could be used to provide consumers with more complete and balanced information on the healthy and harmful impacts of food and alcohol choices. Our proposal addresses two of the greatest challenges facing Australia’s preventable disease epidemic — the imbalance between the promotion of healthier and unhealthy products, and securing funds to empower consumer choice.

Todd A Harper BEcon, PGDipHealthProm, MHealthEcon · Gavin Mooney DSocSc(hc)

This short report summarises the proceedings of the international symposium “Precincts, people and places — forging new partnerships”, held in Brisbane on 24 and 25 July 2009 The international symposium “Precincts, people and places — forging new partnerships” was organised by the University of Queensland (UQ) and the Pharmacy Australia Centre of Excellence (PACE) precinct initiative. The PACE precinct is a 1.7 hectare site adjoining the Princess Alexandra Hospital (one of Australia’s largest tertiary referral hospitals) and only 10 minutes walk from the St Lucia campus of UQ. The precinct will encompass the UQ School of Pharmacy and adjacent health-related commercial developments, the Translational Research Institute and BioPharmaceuticals Australia. The UQ School of Pharmacy will open in 2010, and other developments on the site will be phased in over the next 5 years. The location of the precinct offers an opportunity to explore innovative solutions to bioscience developments around translational research, health promotion and diseases prevention and the various forms of e-health platforms. A physical location does not, itself, ensure that those working around that precinct will interact — something else is required. While the PACE precinct offers a significant opportunity for health research innovation in that it links the universities, hospitals and medical research institutes with health industry developments, it is that “something else” we wished to debate in the “Precincts, people and places” symposium. Participants in the symposium were drawn from universities, research agencies and institutes, industry, government, and health service providers, and included architects and designers. Discussion sessions and panels were interspersed with provocations from speakers from the United States, United Kingdom and India. Transcripts of these contributions, videos of special presentations, and copies of selected presentation materials will be available on the PACE website.1 Norman Swan, well known health journalist and commentator, moderated the symposium proceedings with energy and critical probing. Presentations from those working in health “precincts” in Australia, the UK, the US and India were interspersed with small group sessions and discussion. We are grateful for the table facilitators who helped crystallise the outcomes of the discussions. The symposium tackled the role of special precincts as productive hotspots and “living laboratories” for innovation, and examined the particular importance of precincts in the health system as a springboard and case study for discussion. Four broad challenges were identified. How do we move beyond mere collocation to multi-party engagement and deep collaboration? How do we better promote real innovation outcomes, and mark out a place for innovative precincts within the wider innovation system?2 How do we shape precincts that are “fit for purpose” in the 21st century and, in particular, how do we optimise across the physical and the virtual? What, for example, can really only be achieved by a face-to-face interaction and what can be done from a “virtual” perspective? Within the health system, could we envisage a national effort similar in ambition to the one on which the UK has embarked?3,4 The discussion at the symposium was organised around four basic questions. Do precincts matter? What has been our experience: what has worked and not worked? What are the challenges and issues we need to address to get better outcomes? What is an action agenda for moving forward? Why precincts matterThe main conclusions from the group are summarised below. A consensus emerged that precincts matter because they: Provide the scale to attract good people, funding, facilities and global partnerships; Support first-class facilities to support first-class research and learning; Provide proximity and access to people and capabilities that are task-critical, as well as to the end-users of outcomes (thus nesting problem-solving within an engaged community); Facilitate synergies, serendipity, focus and, most importantly, multidisciplinary and transdisciplinary capabilities (allowing unstructured conversations across disciplines and entities); Provide a catalyst for intergovernmental coordination and for economic development strategies (combining new facility and infrastructure development, the coordination of information technology platforms and hubs, and the expression of new business models); Address the inbuilt human need for face-to-face social contact (fostering social capital); Unlock latent intellectual capital and underused assets; Secure better public (socioeconomic) outcomes for the investment of time, effort and money; and Facilitate a more creative, culturally attuned innovation ecosystem. In contemplating the question of the interface between the physical and the virtual, it was concluded that special attention needed to be given to this interface and to focusing on what can only be best done within a physical precinct. The purpose of precinctsThe answers to the basic question about the particular function of precincts were summarised in seven propositions. These were that precincts should: achieve transformative and sustained excellence in science, industry and economic outcomes; provide “living laboratories” and arenas for innovation through embedded practice; set a challenge that hasn’t been set before; shape emerging value chains (accelerating the change to new models) and support innovations across these value chains; shift emphasis from the physicality of place to a sense of social belonging and community; connect and cross-fertilise ideas drawn from deep expertise from different areas of knowledge to resolve complex challenges needing significant economies of scale and scope; and enable smart people to be in close proximity and develop an ecology that keeps them engaged. What can we learn from our experience?A panel of people with experience of a cross-section of precincts from around Australia opened up this discussion. It would be fair to say that, essentially, the overall verdict was that most precincts are currently collocations of convenience, often prompted by the desire for access to, or to support, large-scale facilities or infrastructure. Such collocation typically translates into little else. The implication is that “more of the same” is not going to change things or unleash the potential of significant investments. This led into a productive discussion of how we might describe the critical specifications for a successful precinct. The resulting summary checklist of the views of participants shown in Box 1 is in no particular order of priority. It was generally agreed that there is no “one size fits all” model, but rather a spectrum of models and approaches, shaped around different priorities and emphases. This was illustrated by one discussion group as shown in Box 2. Precinct issues and challengesEight particular challenges were identified as demanding close attention and further work. The process for engaging stakeholders and the community. Calibrating meaningful success factors (including benefits to the community), involving: Performance indicators and milestones; A focus on outcome measures; and Assuring adequate and appropriate contributions by participants. Articulating the governance options on a “horses for courses” basis. Delivering the “curatorial” role in precinct organisation and evolution. How to embed “openness” and inclusiveness in all their dimensions (and noting the tension with focus and differentiation). Avoiding the risk of precincts becoming silos in themselves, and thus inward looking. Articulating the characteristics of a good “precinct leader”. Assuring recurrent as well as capital investment, in order to avoid the brass plaque syndrome which leaves institutions with inadequate ongoing resources. Barriers to progressIn elaborating on these issues, the symposium participants identified and highlighted a number of barriers to progress. These barriers included: risk aversion, inflexibility, lack of ambition, and conflicting paradigms; asymmetric power structures and relationships; stakeholder fear of brand dilution within partnerships and collaborations; use of traditional and inappropriate metrics to represent outcomes; lack of scale and critical mass; the unintended consequences of government regulatory and planning constraints; and the negative impact of perverse incentives. In addressing these issues various participants stressed the need to: appreciate the evolutionary options and pathways for progressive precinct development; recognise the different motivations in play and to accommodate them within inclusive incentive structures; develop new metrics, such as the use of social network analysis to map emerging outcomes and relationship opportunities;5 think big and not be under-ambitious; and provide for transient access and engagement. It was noted that the expertise from business schools, which routinely deal with governance structures and the building of innovative teams, was an underused resource in the discussion of precincts. One table group summarised the enabling and constraining factors as shown in Box 3. Other important issues that were raised included the need to consider precincts in the wider context of the overall ecosystem in which they interact, and the importance of managing the accelerating pace of change so important to their development. We need to build flexibility and adaptability into our systems, to ensure we have appropriate ways of measuring the success of collaborations and to avoid creating silos within precincts. Essentially, we need to be in the business of building new models of collaboration and embedded practice, all within an end-user environment. These need to be unashamedly focused on community outcomes and with community engagement at all levels of the process. At the conclusion of the symposium, distinguished IBM Fellow and Alumnus Nick Donofrio, outlined some challenges which we ignore at our peril. These are listed in Box 4. A number of exciting new bioscience hubs will be developed in Australia over the next few decades. Innovation precincts are emerging around areas such as next-generation manufacturing, marine resources and tropical industries, and it is to be hoped that the discussions reported here will provide some guidance as to how to get the best out of each particular precinct. 1 Summary of critical specifications for a successful precinct as developed by participants at the “Precincts, people and places — forging new partnerships” symposium A clearly articulated and understood mission, with short-term, medium-term, and long-term goals. This needs to be a shared vision, and one that is “owned” by all the interested parties. The tension between what is achievable in the short term and stretch targets was noted. The vision needs “fit for purpose” governance arrangements to sustain it. Shared cultural values around excellence, openness, adaptability, risk-taking and risk-sharing, tolerance for failure, and generosity. Strong and self-assured leadership with “fit for purpose” management and enabling skills. Clear “cross-fertiliser” roles, possibly involving: a curatorial function; funding compacts and incentives; and mobilising functions for program leaders. Clear terms of engagement around resources and roles. An engagement strategy for stakeholders and the community. Pulling power through being on the global radar (and developed through brand, marketing, and communications). A high concentration of appropriate expertise and standing. The capacity to deal with complexity and to ensure diversity of contributions from the major partners in the precinct. An embedded educational role (and learning capacity). Industry connections, connectivity and relevance. Porous, permeable boundaries which promote a clear focus on market and outcome domains (not institutional domains). Incentives geared to outcomes (not inputs). “3D” use of land and space (through tiered rather than linear occupancy categories, with more than one thing in the one space). Shared and creative “play spaces”. Time-based and sequenced development priorities, enabling evolutionary pathways. Sufficient scale to be able to accommodate risk. 2 The spectrum of available precinct models as illustrated by one discussion group at the “Precincts, people and places — forging new partnerships” symposium In this model, the precinct model depends on the intended goal to be achieved. Simple collocations may be appropriate when only critical mass is required, whereas integration of entities may be needed to address issues of coordinated focus. Between these are precincts which either share services to drive limited resources further, or share branding to create momentum around a common vision. 3 Enabling and constraining factors in building and sustaining precincts 4 Challenges discussed at the “Precincts, people and places — forging new partnerships” symposium by IBM Fellow and Alumnus Nick Donofrio Leadership is what it is all about — and that leadership needs to be real and hopeful. Look to developing 21st century models — look for how and where the physical adds value over the virtual to create new hybrid models. Remember that money is not everything — too much may be as bad as too little — and scarcity can help to drive innovation. Precincts need to be dynamic — activities should be allowed to expand and contract. For the right task, at the right time, and within the right environment, the talent will come. A collection of things is important, but to make precincts really work we need a system that works as well.

Terry Cutler PhD, FTSE, FAIM · Michael Still MBA · James B Moody PhD, BEng(Elec), BInfoTech · Peter M Brooks MD, FRACP, FAFPHM

To the Editor: We read with interest Walters and Dawson’s call for a clinical revolution to tackle access block1 and are heartened by the interest shown by general physicians in a problem that primarily affects the emergency department (ED). The efficient management of admitted medical patients is paramount to patient flow within the hospital, and “buy-in” from general physicians is essential. When considering any new model of care, it is important to note that longer patient assessments in ED by emergency doctors has a relatively small effect on access block; the claim that the length of assessments is a significant factor in access block has been established as a “myth” by investigators who have mapped process times.2 Therefore, it is unlikely that substituting one workforce of acute physicians for another would make any difference to overall patient flow through the ED. On the contrary, it is likely to be associated with increased costs3 and adverse effects on the emergency medicine labour supply.4 In addition, the ability and willingness of the general physician workforce to implement and sustain the newer role of “acute physician” is unknown. The root cause of access block lies in ward-bed shortages, ward processes and community capacity, which should be solved by improved flow processes across the continuum of care. Access block will not be solved by a second tier of acute physicians duplicating the role of emergency physicians. However, there are many aspects of Walters and Dawson’s model of change that would improve patient flow, in particular: improved rostering of medical staff; improved access to pathology and radiology services; and, perhaps, specific retraining of medical staff in the efficient discharge of inpatients. These aspects should be rigorously explored as we strive together to tackle access block.

Biswadev Mitra · Peter A Cameron · Pieter De Villiers Smit