Hooray, the freeze is over! What now?

7 minute read

It's high time the government got off its backside and started investing in the future of healthcare


At The Medical Republic we have a poor record of calling things before they happen – we called the US presidential election briefly for Hillary clinton – but if the Medicare rebate freeze isn’t largely dropped as a part of May’s budget, we will eat a copy of Australian Doctor on YouTube.

The amount of leaking in Canberra about this particular budget measure is inordinately large. It’s going to be way too hard for government to not follow through, or do something that looks like they’ve done it. So, the freeze is over. What now?

Unfortunately, the way the thawing came to be leaves very little room for optimism around the future for the funding of general practice and the health sector overall.

The government was dragged, kicking and screaming to the idea of dropping the freeze, by a cynical scare campaign on Medicare at the last election. Remember, this is the same government that attempted to add co-payments to an already seriously infected GP-income wound.

The other factor probably weighing on the government’s mind is the likelihood that, although bulk billing rates have defied gravity against the freeze so far, experts are predicting a cliff fall in the near future.

According to the Grattan Institute’s Professor Stephen Duckett, if the freeze lasts much longer, there will be a substantial drop in bulk billing and patients would start feeling the pain far more significantly.

Added to Mediscare, such a situation would have put the government so far down a dark alley in the minds of voters and healthcare that it risked no return.

So the government is being pragmatic and reacting to polling and populist scare tactics (we aren’t too sure how much lobbying by the AMA and the RACGP affected the decision, but we are prepared to suggest little to none). What’s new here?

Not a lot, unfortunately.

Which begs the question, what really happens now the freeze is lifted and the income of GPs returns closer to having some sort of relationship to the actual cost of care?

Some indication might come in what the government does as its first step. This is the devil in the detail that we are all hanging out to see.

Will it announce immediate increases to Medicare items, and, if so, how much of an increase?  We guess, the least they can do is to index a rise to the last year at least, and do it pretty quickly. Like July 1. That’s not much really – about 2% given current run rates on CPI.

If that happens, by my estimates your average GP can expect a “pay rise” from July 1 of about $50 per week, after tax, or in other words, GPs aren’t going to get a lot more in their pocket come July 1.

Compare that with estimates of the loss of income since the freeze was introduced in July 2014. Those estimates were starting to look scary with the extension to the freeze to 2020 – around $109,000 per average GP lost in income.

At least we aren’t heading that way now the freeze is gone. But there are lot of reasons to believe we aren’t heading anywhere meaningful, either.

It has been estimated that a full retreat on the freeze would cost the budget $3 billion by 2020. So naturally, commentators are already canvassing the options for a compromise that would offset that big budget hole.

The AMA and RACGP will likely trade some things to get the anti-freeze measure up.

It doesn’t really matter what the compromise ends up being, the issue remains that the government has showed no real interest in the concept of investing in general practice as a means of managing our healthcare system better. It’s just been expedient.

It is not going to be pretty if the budget re-establishes indexation for the relevant Medicare items but slashes the $3 billion elsewhere. It is likely, though, as Treasurer Scott Morrison has stated, there won’t be any “give” in the budget without a corresponding “take” to balance that.

This all smacks of Titanic deckchair economics.

Sometimes you just can’t get out of a dilemma such as Australia seems to be in without some net investment. No one is saying spend like a drunken sailor on healthcare. But compared with most OECD countries, our health spend as a percentage of GDP is relatively low.

Letting it drift up a bit, with the intention of investing smartly into the future, has the potential today to not only allow us to drift it downwards in the future, but significantly improve the system as we go.

Invest in what?

Put simply: primary-care delivery, our funding regime and connectivity in the system.

Our primary care set up is among the best in the world, and so far has been the key element keeping our health system manageable. But everyone can see the economics is starting to run away from us.

Unless we reinvest in technologies, infrastructure and changes to how we fund the system, the rising costs of treating an ageing generation is going to see us with either a much larger tax burden, a significantly dilapidated healthcare system, or both.

GPs are keeping more of their patients out of hospitals, our major health system expense, and are also the front line of prevention. They are the fulcrum of cost containment in the system, but people are looking at this in the wrong way.  If you support and invest in GPs you increase your savings potential. If you cut in this area, you go the other way, fast.

Connectivity is about digital efficiency in our healthcare delivery, which we have failed at miserably at so far.

If you look at the scoreboard on digital efficiency in other complex markets, such as travel and financial services, you can see the massive potential for health. But healthcare has another level of complexity, so it’s been much harder to achieve those efficiencies.

Connectivity needs more investment and more government help, because the private sector doesn’t join in until it gets easy enough.

The upside of such investment is that when we do crack healthcare connectivity, the efficiency gains are much bigger relatively than any of these other markets.

But there’s no one out there to make this play. Our new health minister could do it. It would be bold, and might make him prime minister material. But it feels like he’s content to be like those before him and not stand up to cabinet.

Today we are in the dark ages as far as health connectivity is concerned. GP desktop software is outdated and doesn’t talk well to anything. Faxes are still commonplace. And GPs can’t talk to their patients like banks and airlines talk seamlessly to their customers. Neither can they talk efficiently to their payment systems, the government My Health Record, to pathology, to allied health, to hospitals and so on.

Part of the problem is that the Australian government has been largely woeful at digital transformation all up. If you look at the UK and even the US, there are vast advances being made by all levels of government in digital servicing. But not here.

Witness the recent scandals surrounding Centrelink payments and our government’s staunch defence of something that has been very poorly executed. Partly as a result of this, we lost our first head of the Digital Transformation Office, a person who had a lot of experience and success in the UK.  This talented manager was mauled by the Canberra bureaucracy politics. That is how we treat digital talent here.

Instead of trying to do the numbers on what else they can cut to make up for giving GPs back a little, wouldn’t it be nice to see some leadership and vision in our healthcare planning? And a little more attention paid to connectivity, as well as the hub of that connectivity: general practice.

Sometimes you just have to spend to get to the future. And sometimes you have to get off your backside and do the bleeding obvious.

In the case of health, focus on general practice, connectivity and funding.

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