Reimagining health reform in Australia: Taking a systems approach to health and wellness

Chris Bartlett, Sarah Butler, Les Haines
May 2, 2016

Executive summary

A smart and sustainable health system is in the interests of all Australians. It can enable a more informed population to make better lifestyle choices and enjoy happy productive lives, reducing the incidence of debilitating chronic diseases. Citizens would have greater control over their care and access to services that are better tailored to their needs. They would also be better able to harness new services such as eConsultations, remote monitoring, better access to health data and other benefits of the digital revolution.

The last decade has seen a number of significant initiatives implemented to improve the performance of Australia’s health system. These include the Federal Government’s reforms between 2010 and 2012, including the introduction of activity-based funding and National Partnership Agreements, which were inspired by the recommendations of the National Health and Hospitals Reform Commission. In addition, the states and territories have downsized their centralised health bureaucracies and devolved funding, planning and delivery responsibilities to the local level. The current Federal Government has established a Mental Health Commission, recently announced a “Healthy Medicare” package aimed at reforming care for chronically ill patients, as well as setting up the new Australian Digital Health Agency.

These reform efforts, while significant, are in our opinion insufficient to ensure the future sustainability of Australia’s health system with Australia in transition. As noted in the 2015 Intergenerational Report, Australia’s growing population is living longer. The cost of health services is also rising at twice the rate of GDP. An ageing population, sedentary lifestyles and an escalating chronic disease burden is likely to increase the demands on our health system. Australians will also want to benefit from the latest medical advances such as personalised medicine. While the cost of Australia’s health system currently represents 9.8 per cent of GDP, real federal health expenditure per person is projected to more than double over the next 40 years unless we think differently about healthcare.

These challenges urgently require a new approach, especially if we want to avoid rationing services or increasing taxes. A rejuvenated national health reform agenda must tackle the system’s existing complexities. These include the current fragmentation of responsibilities for administration and funding between different layers of government, as well as the need both to allocate efficiently the funding that already exists and attract new funding from other sources. Reform must also involve all significant players in the sector. This means offering a seat at the table to private players, including private hospitals, insurers, pharmaceutical companies, technology suppliers, nutrition and fitness players, as well as employers, schools, universities and research institutions. We also need to recognise the social determinants of health, which means taking a broader whole of government approach.

It is the health consumer who has the biggest stake in ensuring the future sustainability of our health system. Putting the consumer at the centre of reform by applying customer-focused models will ensure that Australia more consistently delivers quality outcomes for its people including better patient health outcomes, satisfaction and lower costs. A concerted focus on wellness and prevention (including encouraging changes in individual behaviours) offers exciting potential to reduce mortality rates from heart disease, diabetes, cancer and stroke. Fostering innovation across the healthcare value chain – including greater use of public-private partnerships – will also ensure the system’s long-term sustainability. Australia’s health sector can serve as a model for other countries and contribute to economic growth as an export market, particularly in Asia.

It is clear that tinkering around the edges will not deliver serious, effective and sustained health reform. By contrast, an approach that considers the system as a whole is most likely to optimise its effectiveness and efficiency and actually improve Australians’ health. Such an approach would seek to understand and enhance both the way that every element of the health system works – on the supply and demand sides – and how these elements interact. The aim should be to deliver an integrated program of reforms that are coherent, transparent and aligned.

In our view, reforming Australia’s health system will involve five central policy levers.

  1. Consumer Empowerment and Responsibility: Encourage Australians to take greater responsibility for their own health by improving health literacy and transparency, with incentives to adopt smarter lifestyles and more patient-centric care.
  2. Wellness and prevention: Place much greater emphasis on preventive approaches to slow the growth in demand for health services, and tap areas such as prescriptive analytics to assist with prioritising interventions and catchment area planning.
  3. Integrated funding and management: Move to a single or pooled source of government funding to eliminate bureaucratic cost shifting and duplication, combined with more private sector contributions and alignment to outcomes.
  4. Optimised care pathways: Design and implement optimised pathways to help ensure ‘the right care, at the right place, at the right time’. This will provide a basis for public and private re-investment in a more efficient care setting mix with multi-disciplinary teams, building on and extending the concept of integrated care.
  5. Information-enabled health networks: Adopt widespread application of integrating technologies to empower consumers, help clinicians improve patient outcomes, embrace non face-to-face channels and harness the power of analytics, whilst ensuring protection from cyber-security risks.

Reimagining health reform around these five principles will enable Australians to continue to have universal access to quality affordable healthcare, with a high performing health system that is a vibrant and productive contributor to Australia’s future, and a model to which other nations can aspire.

Contact us

Sarah Butler

Sarah Butler

Senior Partner, Strategy& Australia

Chris Bartlett

Chris Bartlett

Partner, Strategy& Australia

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