Media releases

July 28, 2014

Blog: Dr Andrew Wilson at the 13th Annual Health Insurance Summit

Today's health system woes are intimidating but they are not insurmountable.

In his blog Medibank Executive General Manager, Provider Networks and Integrated Care, Dr Andrew Wilson outlines some immediate steps that would enable better health for all Australians. Dr Wilson's blog is based on his presentation to the 2014 Health Insurance Summit, which explored how patients with chronic illness and complex health issues could be supported to help them co-ordinate and connect their health services and to be aware of the best healthcare options available; and how funders including the private health industry could have greater involvement and responsibility for our health system.

Dr Andrew Wilson:

We are incredibly privileged in Australia to have a first-rate internationally-renowned health system. We have one of the highest life expectancies in the world and universal access to health cover, but our system is not without its challenges.

Despite our universal healthcare system being envied by many countries around the world we see ambulances queued outside emergency departments, patients facing long waits for hospital beds and record elective surgery waiting lists.

Put simply our current healthcare system is not sustainable. In our current environment we are facing an ageing population, an increased use of health services as a result of chronic disease, technology costs are growing and the overall cost of healthcare is spiraling at an unsustainable rate.
Hospital costs alone represent 38% of total expenditure, not including capital costs.

Most significantly, there has been an increase in chronic diseases associated with lifestyle and ageing, which presents a major challenge for Australia's health and hospital systems.

Currently, chronic diseases are responsible for around 70 per cent of total healthcare expenditure and contribute to 50 per cent of GP consultations. In short, they are the leading causes of disability and death in Australia.

We have a situation in Australia where 3 per cent of patients account for 40 per cent of the health budget. For Medibank just 2.3 per cent of our members account for 49 per cent of all benefit outlays.

Our health system was not designed with the foundations to manage the current chronic disease environment, which is hindered by limited connections between tertiary and primary care, and between private and publically funded care. In spite of recent inroads in this arena our system is still very much set up for acute episodic care on a fee-for-service basis.

Medibank research demonstrates that Australia's fragmented health system is of great concern to our members with chronic disease. Patients often feel confused by the range of options and find it difficult to navigate the health system, and are often unaware of the health services available to them. This all leads to an inevitable increase in unplanned and avoidable hospitalisation, the most expensive care setting.

While there have been attempts to address this situation, they have largely proved to be ineffective.

Recently debate has focused on how the system can be reformed to not only control the health cost curve, but to also improve health outcomes.

At Medibank we have called for health insurers to be able to play a greater role in primary care and for regulations to be changed, especially for our complex and costly members.

However, private health insurers can't change the system independently. We must work together with primary care organisations and state and federal governments to achieve the common goal of better and more affordable health outcomes. Evidence internationally and locally shows that properly coordinated primary care, including collaboration across the care spectrum and incorporation of general wellbeing and social services, can have a real impact on disease progression and hospital admissions. This new approach is guided by the "Triple Aim of Healthcare", developed by the Institute for Health Improvement, which focusses on reducing costs, enhancing patient experience and improving health outcomes.

Traditionally, the role of private health insurers has been as a passive payer of services. However, given that 2.3 per cent of our members account for 49 per cent of all benefit outlays, the growth in benefit outlays and increase in chronic disease means it is important that Medibank plays a bigger role in primary care.

We understand that GPs are often the entry point into the healthcare system and see patients on average five times a year. They also drive the majority of decisions around patients long term heath needs

The legislative barriers currently preventing private health insurers from providing effective care can be overcome by insurers working alongside primary Care to develop programs for chronic and complex patients.

Medibank recognises the need to have strong relationships with all key players in healthcare - not just hospitals which has traditionally been the focus.

This space is one that Medibank is already active in. We are currently developing relationships with Primary Care Providers across Queensland to improve access to GP services for our members, with no out of pocket costs and faster access. The pilot recognises the fundamental role that primary care plays in the future of health costs and is aimed at promoting prevention and self-management.

Importantly, the pilot is not about displacing other patients, or creating a two-tier system. Non-Medibank patients will never be cancelled in order for a member to be seen. Rather, it enables GPs to offer more services and encourages people to see a GP when they have health concerns.

A deeper relationship with primary care could help to manage Medibank's members who have the most complex needs, or even prevent people developing conditions.

In addition to the Queensland pilot, Medibank is developing integrated care pilots with two state governments. We are in the process of creating a single service jointly funded by public and private payers which will enable GP-led, system-wide coordinated care for high utilisers, focusing on reduced hospital admissions and re-admissions.

The dramatic increase in the prevalence of chronic disease has created the need for a review of the current health system and the role that all participants - including private health insurers - play in this. Through cross-sectorial collaboration, we can achieve better coordinated and integrated care, to ensure that we really are working towards the better health of all Australians.

Currently, medical providers are funded on a fee-for-service basis with no obligation by the doctor or patient to commit to a longitudinal relationship or health and wellness oversight.

We have the choice of more than 20,000 general practitioners (GPs), plus a range of other medical and alternative therapy providers we can see across Australia.

Medibank research shows these high-need patients would like a program or organisation that could help them "join the dots" and provide them with a holistic understanding of their health. Such a program would mean they would enjoy better treatment continuity, which would lead to better health outcomes with lower exposure to acute care costs, and this in turn would stop wasted funding, which is a by-product of "random care".

For those high-need patients, we should move away from the "fee for service" approach and look at a payment per capita that encourages practitioners to work together and focus on the patient health outcome.

It is essential that doctors and medical providers are responsible for managing the healthcare of their patients and that patients have choice as to which doctor they see. However, there can be vast differences in the quality and cost of healthcare that we receive.

The recent Grattan Institute report, "Controlling costly care: a billion-dollar hospital opportunity", revealed a vast gulf between treatments in high- and low-cost hospitals, with no reason for such variation. The report cited examples such as the difference in the cost of a common gall bladder treatment between the highest and lowest cost hospitals of more than $4000, and the difference in the cost of a hip replacement of more than $16,000.

It can be argued that these variances also lead to significant wastage. Up to a third of healthcare spending in the United States is said to be wasted, and there is no reason to suppose it is any different in Australia.

Knowing best performance outcomes means medical providers can learn from one another to develop best practice, and funding can be designed to reward best practice, thereby further reducing wastage.

Medibank is taking action in a number of other ways in an effort to keep healthcare affordable and ensure a sustainable healthcare system into the future.

We are doing this by paying hospitals a fair rate for looking after our members. This means negotiating the best outcome at all 450 hospitals available to our members.

We do this by holding healthcare providers accountable for the quality of the care they provide.

Keeping healthcare affordable goes hand in hand with having a quality healthcare system. As insurers we have a significant role to play in encouraging and working with healthcare providers

We all have a role to play in working towards ways to reduce the burden of chronic disease, and through cross-sectorial collaboration, we can overcome regulatory barriers to achieve better coordinated and integrated care, to ensure that we really are working towards the better health of all Australians.

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