Australia’s Healthcare System – Future Directions

19 October 2018

At the Australia-Israel Chamber of Commerce’s Healthcare briefing on 19 October 2018, a panel of experts including Craig Drummond, CEO, Medibank; Dr Stephen Duckett, Director, Health Program, Grattan Institute; Elizabeth Koff, Secretary, NSW Health; and Kate Munnings, Chief Operating Officer, Ramsay Health Care Australia discussed some of the burning questions facing Australia’s healthcare sector today. Cameron Fuller, Customer Executive, Growth Sectors, NAB moderated the discussion.

The event was sponsored by: NAB.

Some of the key insights to come out of the discussion:

Digital health expert visiting from Israel

Dr. Yossi Bahagon, family physician, serial entrepreneur and internationally recognised leader in digital health, spoke of his role in digitising the Israeli healthcare system. He said Israel now has a completely digital health system that is seamless, transparent and personalised. He said people now expect healthcare to respond to their needs in the same way they transact with Amazon or Google. He said Australia looks to him like Israel was 10 years ago, and he was certain Australia’s healthcare system would resemble Israel’s in the future. He spoke of Israeli innovation and Israel’s need to constantly reinvent itself in order to survive. He said Israel has had to find ways to protect itself in a hostile environment, the lack of water forced it to learn how to take water from the sea and make it drinkable. He said that Israel’s renowned expertise in security is applied to a range of different industries. For example, the technology used to detect a car full of explosives is the same technology now used to detect malignant cells on a pathology slide. Yossi spoke of the relevance of Israeli innovation to Australia’s current situation, and his goal of bringing the Israeli experience here. Australia is an enormous country, he said, and technology developed in Israel (such as remote heart beat detection) can help reduce the physical and geographical hurdles to providing high quality healthcare everywhere.

Statistics to set the scene

Moderator Cameron Fuller set the scene by citing some statistics: NSW’s population is set to grow to 11 million in the next 4 years; Sydney’s Western Suburbs has grown 19% in the last 10 years; Australians are among the longest living in the world with life expectancy 85.46 years for women and 81.5 years for men and set to rise; this means there will be more older people and fewer younger people to support and look after them. Healthcare is around 10% of our GDP and set to rise; the average Australian is $1,700 out of pocket in health costs per year.

What key trends are shaping healthcare in Australia today?

Kate Munnings spoke of an ageing population and an ageing workforce, healthcare worker shortages, the blessing and curse of technology, the increasing influence of big data and consumerism.

Craig Drummond said that as a facing-to-consumer organisation, Medibank sees consumers struggling to afford the healthcare on offer. The quality is good but costs are growing 5-6% per annum and wages by only 2%, so there is a huge gap between incomes and healthcare costs.

Unique strengths, capabilities and innovations coming out of Australia

Elizabeth Koff said that Australia has innovation envy – our health system is struggling with innovation. We talk about digital health, but many think of it as the implementation of digital medical records. Governments are cautious about investing in digital solutions as we have had some unsuccessful technology implementations in health. The My Health Record is a challenge playing out right now. She said there’s no doubt it’s a better mechanism to connect professionals across primary healthcare, however it has been caught up in issues of privacy breaches and data governance – foundational elements to get right – and this needs to be overcome. She said we have a stringent R&D model in healthcare which is not agile. There is definitely a place for a high-level research approach, but innovation is about agility and trying at small scale.

Kate said that in the healthcare industry we duplicate, we replicate and we are siloed. Innovation that would drive real value is connectivity.

Dr Stephen Duckett said that we are doing things differently from what we were doing yesterday and this is where the innovation is. Increasing costs are giving us increased benefits in terms of the patient/clinician relationship. However, he said, we are hopeless in management and system technologies innovation, and trying to get a change in this is difficult. This is where the benefit of innovation needs to come from…we still rely on faxes! We have great talent such as neurologist Dr. Thomas Oxley who has developed a way of using thought control to control prosthetic limbs; he’s currently working in Silicon Valley. The question is, how do we keep talent like him in Australia?

How do we keep great talent here?

Craig said we need to create an environment for those people to thrive; we need to get the settings right as well as the tax incentives.

Stephen said we need to be rewarding and nurturing start-ups and entrepreneurs, and fostering a safe environment for them to take their ideas and make them into marketable products.

Elizabeth said that NSW is keen to foster innovation and support it in a comprehensive fashion, but for that to occur, the incentives need to be right and researchers need to be supported as they can’t do it alone. Things haven’t been facilitated in a commercial way in the past. The healthcare industry has been insular and thinks it can manage everything, but the nature of business has changed. She said we need better integration of healthcare providers with other partners, and we need to get savvy about working with other health professionals. She said advanced teaching and research where universities work with hospitals is critical to stimulate innovation. The current focus on data governance is not a good, agile model; access to information and data is critical to develop new innovations.

Kate said it’s hard to commercialise new ideas in Australia as no one wants to fund it. Do we value entrepreneurialism here? We need to get more ambitious to have people like Dr. Thomas Oxley stay in our country. She also said it’s generational, she sees a different attitude with the younger doctors and consumers; it will come with time.

Craig said health is unlike any other industry he’s ever worked in – there is a lack of disclosure and transparency. Medibank has some of the information – out of pocket costs, who charges what, who’s good and who’s not, etc. In other industries this information is feely available, but in healthcare we don’t have these disclosures. He said we are under-reporting to the consumer and this is breeding suspicion and concern in the consumer.

The issue of affordability

Stephen said a ‘complication of care’ adds costs; it’s actually low-class healthcare that is costly, not high-quality health care. The question is, how can we drive a reduction in complications? When they stay overnight, 1 in 4 patients has a diagnosis made that they didn’t have when they arrived in hospital. This adds more than $5 billion in costs a year. We can reduce costs by $1.5 billion a year if we reduce the rate of complications, but the hospitals need the information, they don’t have the data themselves. We need to provide them with the information.

Craig said there are now more day surgeries. They are not appropriate for all situations, but 25-30% of jaw surgeries are now done as a day procedure. Of course, we don’t want to compromise the quality of clinical care, but we are seeing the same, if not better, clinical outcomes at the same or better cost in these facilities. He said we will see a shift into an alternative care setting. Medibank is currently running a chemo in the home program which runs at 75% the cost of in-patient treatment. He said it’s not appropriate for all cases but, where it is, we should use it.

Kate said the ‘system’ is lacking in the healthcare system. We need to look outside of healthcare and build partnerships like the airline industry has done; drive costs out through partnerships.

It seems your postcode may be more important than your genetic code in driving healthcare outcomes. Are we doing enough to address social determinacy such as housing, education, etc?

With regards to avoidable mortality, Stephen said avoidable incidents are 20% higher in regional NSW than in metropolitan Sydney, and it is getting worse. Where you live does affect your mortality rate. In terms of what can be done about it, Stephen said interventions need to be at a community level – we need to change the way these communities work. But this is not a quick and easy process.

Kate said Ramsay Healthcare provides healthcare services to the New Caledonian community in Australia. It thinks beyond doctors, nurses and allied health professionals, and looks to the wider community for preventative healthcare solutions for New Caledonians. For example, how do we use people outside of healthcare to detect signs of cardiovascular disease before it becomes critical?

Why are complication rates for procedures not published/available to the public?

Stephen said there are statistical reasons, we need to make sure we’re being fair and comparing like with like. Also, there is reticence amongst the public to let people know that some hospitals are better than others; the public thinks that once you get to a certain size, all hospitals are the same, but that’s simply not true. He said politicians are anxious about this sort of thing. What’s more, medical records never as fulsome as they need to be; public hospital records have more comprehensive information than private hospitals.

Craig said we should see this information published in the not-too-distant future. He said that as health insurers, will we able to take the lead as we have more freedom than the public sector.

Kate said clinicians get concerned about this sort of information being widely available. If we’re not careful and we get it wrong, we will have classes of patients. If there is a higher likelihood of a patient having hospital-acquired or identified complications, clinicians won’t want to treat them, and this will exacerbate the problem.

Many decisions are outsourced to the GP – what is the role of GP in driving efficiencies and better outcomes in the future?

Stephen said that the GP is often the person best placed to advise the patient, but GPs are flying as blind as the patients – they don’t have the information they need. We need to make it easy for them with regards to referring on to specialists and give them options – one has low out-of-pocket costs, one is only 6km away, etc. We need to help GPs help the patient to make the choice.

Elizabeth said we haven’t been good at sharing data between State and Commonwealth lines. Information sharing is perceived as cost shifting.

What are your thoughts on wastage?

Stephen said it’s not so much about patient-initiated waste but rather clinicians sometimes find it difficult to tell people there’s not much more that we can do for you. We know that the earlier we initiate palliative care, the longer the patient lives. He said there are limits to what healthcare can do, and we need to work with the patients to help them understand that.

Elizabeth said that supplier-induced demand is an issue; she gave the example of a doctor performing knee arthroscopies to help pay off a Porsche loan.