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Anthony Harris - Centre for Health Economics, Monash University - Unsustainability of health expenditure in Australia – the myths and their solutions?
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Anthony Harris - Centre for Health Economics, Monash University - Unsustainability of health expenditure in Australia – the myths and their solutions?


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Anthony Harris delivered the presentation at the 2014 Future of Medicare Conference. …

Anthony Harris delivered the presentation at the 2014 Future of Medicare Conference.

The Future of Medicare Conference was a timely event as the Abbott government debates a full over haul of the Australian healthcare system. This conference presented a chance for government representatives, regulators, health care providers in the public and private sector, educators and private investors to come together and debate the proposed changes to Medicare as well as discuss the best practice methods of implementing new measures and frameworks.

For more information about the event, please visit:

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  • 1. Centre for Health Economics Myths in the funding of health care and the future of Medicare Anthony Harris
  • 2. Centre for Health Economics Economic or Political Sustainability • It is a myth that the ageing of the population means the future path of total or public health expenditure is not sustainable • The greying baby boomers motivate us to consider how we deliver services to a larger number of wealthier independent elderly living with different expectations at home
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  • 8. Centre for Health Economics Government expenditure on health and tax revenue 0% 5% 10% 15% 20% 25% 30% 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 Expenditure to revenue ratio
  • 9. Centre for Health Economics The real significance of ageing • The real significance of ageing is that it accentuates the fracture lines between the major service sectors used by the elderly – primary and acute care and nursing home accommodation. • Efficient substitution between these is of enormous significance for efficiency, ie for community costs and the quality of life of the elderly
  • 10. Centre for Health Economics Main challenges facing the health and care system 1. The demands created by the ageing population and the increased prevalence of long-term conditions; 2. The relative neglect of prevention and the threat posed by risk factors such as obesity; 3. Continued wide variations in the quality of care across populations 4. Fragmentation between services; and an overreliance on hospitals and care with under- development of primary care and community services; 5. A perception that the principles of a universal health care system have been eroded.
  • 11. Centre for Health Economics Principles of a modern health care system • We want the poor to have the same high- quality care and attention as the rich, paid for in a fair way • Health system should improve health at a cost that is acceptable • Responsive to patients -timely, personalised and seamless care
  • 12. Centre for Health Economics Implications for funding • The poor have the same risks as the rich so purely private insurance markets cannot deliver • Private payments are inefficient in delivering equal care for equal need compared to tax funded • The finance system should encourage or at least not discourage) low cost high quality services
  • 13. Centre for Health Economics How do we improve the health system to meet these challenges Paying by results improves efficiency and quality in health care – myth or truth?
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  • 15. Centre for Health Economics Integration Fee for individual service/case mix funding Capitation payment per enrolee Payment conditional on achieving individual target (waiting time for hip, rate of revision) Payment for pathway compliance (year of bundle of care) Paymentby Results
  • 16. Centre for Health Economics Evidence on pay for performance • Evidence of effectiveness is mixed • Design matters – Bonuses vs fines for target – How large the bonus/fine is in relation to budget – How the payment is targeted – Whether the standard/target is accepted as reasonable/effective – performance standard measurement accuracy
  • 17. Centre for Health Economics Beyond casemix : from bundled pathway payments to risk adjusted capitation • Countries are looking for payment methods that – encourage patient care in the most appropriate, cost-effective settings and to facilitate co- ordination or integration along patient pathways. – place greater emphasis on whole-system efficiency(rather than hospital efficiency), cost containment and care co-ordination for individual
  • 18. Centre for Health Economics Pay for performance summary • Pay for performance has enormous face validity and ideological support even if success to date has been modest and the optimal program configuration is unclear. • Concerns about unintended consequences posited since the adoption of pay for performance have largely failed to be substantiated
  • 19. Centre for Health Economics Integration of health and social care: experiments • Canterbury New Zealand 2007- – est-integrated-health-and-social-care • Those wishing to create a system of truly integrated health and social care must have a clear vision. • In the case of Canterbury, the mantra 'one system, one budget' is firmly held and articulated. • Sustained investment is needed to provide staff and contractors with the skills needed to innovate and to support them when they do. • New forms of contracting may be needed. In Canterbury, this meant the price/volume schedule for hospitals was scrapped and replaced by new contracts
  • 20. Centre for Health Economics Paying for integration not the only answer • The drivers of expenditure growth are still there – technology, income growth and demographics • We do need to make fundamental social decisions on how much we are going to spend on the health system, the balance between prevention and treatment and; • How we are going to raise the money to pay for it; • Efficiency requires a seamless transition between all of the services provided for chronic care; • A necessary (but not sufficient condition) for achieving this is the creation of a single fund holder responsible for all of the services provided to a patient.