Hospital funding: durable solutions required

Friday, July 24, 2015

The Australian Healthcare and Hospitals Association (AHHA) welcomes the consensus reached at the COAG meeting this week on the imperative for healthcare funding reform. Work on efficient pricing models must continue, building on the work already undertaken by the Independent Hospital Pricing Authority in developing activity-based funding.  While the AHHA supports the call for better coordination between primary healthcare and hospitals, the proposal to extend Medicare into our hospitals system must be approached with a view to developing sustainable and durable solutions.

“The funding of public hospitals cannot remain exposed to short‑term budgetary decisions, such as we saw in last year’s Commonwealth Budget,” said AHHA Chief Executive Alison Verhoeven. “We cautiously welcome the proposal to extend Medicare to directly include hospital services, but more details are needed on how this would be implemented.”

“While the various proposals around changing the rate or coverage of the GST and increasing the Medicare levy need to be examined carefully to ensure low and medium income earners are not further disadvantaged, it is a positive step forward that Australia’s First Ministers are unanimously acknowledging that fiscal sustainability of public services cannot be achieved by top line funding cuts alone. Removal of waste and system inefficiencies are important, but funding responses on the revenue side of the Budget are an essential component of ensuring that Australians have continuing access to an appropriately funded healthcare system.

“As part of these deliberations, it is also vital that low income and other vulnerable Australians are protected to ensure that they are able to access the healthcare they need.

“The proposal to fund hospitals directly through Medicare is an idea worth exploring, but the setting of payments must be independent of all governments. A funding mechanism such as this should not become a policy lever like we have seen with Medicare and the freezing of indexation of schedule payments, producing a cost‑shift to consumers and rising out‑of‑pocket expenses,” said Ms Verhoeven.

The Prime Minister has described this process as the start of a conversation with the Australian people, but we have had many conversation starters – and too many interruptions.

“We have before us the opportunity for meaningful change in the way our healthcare system is operated and funded to meet the challenges of the future and the reasonable expectations of all Australians on their healthcare needs. Ongoing discussions on reform of health funding must be conducted in an open and consultative manner, recognising that a strong health system accessible to all citizens is fundamental to a healthy productive society,” said Ms Verhoeven.

The AHHA represents Australia’s largest group of health care providers in public hospitals, community and primary health sectors and advocates for universal high quality healthcare to benefit the whole community.

Media enquiries:

Alison Verhoeven

Chief Executive, The Australian Healthcare and Hospitals Association

0403 282 501