From universal care to a two-speed system

13 minute read

One of the founding principles of Medicare is being sacrificed before our eyes.

The recent Strengthening Medicare Taskforce Report promises “significant changes to how primary care is funded and delivered to enable high quality, integrated and person-centred care for all Australians”.

Celebrating the 40th anniversary of Medicare, Health Minster Mark Butler has been promoting the government’s primary health care reforms, which include enhanced bulk billing incentives for some groups and enrolment fees for patients with chronic illnesses (MyMedicare). He also proposes reviving 1970-style “community health program” grants.

But has the government compromised universality, a foundational principle of Medicare? Are increased MBS rebates for bulk-billed GP services provided to defined populations tacit acceptance by government of a “two tier” system? This seems an inevitable conclusion if the remaining Australians are left to the mercy of the GP marketplace.

Rapid and brutal

The Minister faces a challenging situation, with chronic health workforce shortages and falling use of Medicare across rural and regional Australia.

GP angst is not limited to regional areas. Associate Professor Louise Stone, a GP attached to the ANU “social foundations of medicine group”, wrote last May that “the collapse of Australian general practice has been rapid and brutal”. She lamented “chronic underfunding” and questions whether general practice can survive.

The Cleanbill “Blue Report” on National General Practitioner Listings (January 2024) collated the billing arrangements of over 6000 GP clinics and states: “The trend … is catastrophic. Fewer than 1 in 4 Australian GP clinics offer bulk billing to nonconcession adult patients for standard consultations in 2024, and this number has fallen by over 11 percentage points on a clinic-by-clinic basis in just the last year. 514 clinics which bulk billed these patients at the start of the year had stopped by November 2023.”

Diverging paths

Medibank was adopted as ALP policy for the 1969 and 1972 elections at the insistence of party leader Gough Whitlam. The scheme of universal medical insurance was contrary to the “official party platform set by ALP conferences throughout this era” which “consistently called for general practitioners to be paid either on a salaried basis or per capita (as in the British NHS)”. However, “for pragmatic political reasons “Whitlam constantly underlined the distance between Medibank and socialised medicine”.

In 2024 the Australian medical profession is a long way from its early 1970s structure of predominantly small doctor-owned practices with VMO specialists (and many GPs) providing services in public hospitals.

In 1968 75% of NSW metropolitan GPs and 90% of rural GPs undertook procedures such as “reduction of closed fracture, tonsillectomy, uterine curettage, appendectomy and hernia repairs” while 25% of NSW urban GPs and 69% of rural GPs managed 25 or more confinements per annum.

General practice now has limited involvement in modern hospital practice. Maternity services in many regions have been consolidated into larger specialist run centres. General practice has evolved away from solo practices towards large multi-doctor practices. A recent development is the emergence and continuing growth of large practice networks, some established and owned by doctors and others by businessmen.

The “gatekeeper” role arising from the Medicare requirement for a GP referral before services provided by a specialist can attract Medicare rebates is a central organisational component of general practice. Otherwise, general practice has only patchy formal operational links with the broader health system. In rural areas GPs retain roles in public hospitals typically as VMOs. Arrangements vary from state to state. In Queensland some rural hospitals are now staffed by well-remunerated salaried “rural generalists”.

Urban general practice is now typically an office-based consulting profession with some involvement in nursing home care. Continuing advances in medical science, the heightened expectations of Google-informed patients and a regulatory, ethical and legal environment of ever-growing complexity make general practice a challenging, often stressful profession.

Since the 1970s general practice has not benefited financially in ways non-GP speciality practice has. The MBS has incorporated remarkable technical advances in many areas including cardiology, gastroenterology, orthopaedics and ophthalmology. Specialists have established lucrative practices in these fields. Market forces mean many are also able to charge substantial out-of-pocket “gaps”. Since the later 1990s private health insurers have been able to offer substantial “top-ups” to Medicare insurance rebates for private in-hospital specialist services.

The last independent review of “medical fees for medical benefit purposes”, limited to recommending changes to reflect cost increases, was in 1985. The ambitious late 1990s Relative Value Study sought to determine fee relativities between GP and specialist attendances and between cognitive and procedural work. But after two years of work the RVS disappeared, like an abandoned dingy floating out to sea. Government became concerned the RVS might lead to substantial increases in aggregate MBS outlays. Early recommendations from the RVS precipitated political tensions within the profession, for example, over proposals for time-tiered MBS specialist attendance Items.

Annual adjustments to MBS fee levels are made by government on political and fiscal grounds. Canberra folklore is that when Tony Abbott was appointed Health Minister in 2003 the Prime Minister provided an extra $2 billion for the MBS with the new Minister instructed “to shut the doctors up” before the next election. Significant increases to GP incomes followed.

Acronym stew

In 1991 one of the architects of Medicare, economist John Deeble, prepared a background paper for the then National Health Strategy reviewing trends in Medicare utilisation since its establishment in 1984. He compared Australia with Canada where doctors cannot charge more than schedule fees, Germany where funds negotiate global aggregate payments and doctors may not be paid if aggregates are exceeded and Britain where “all management is on the supply side … with capitation payment of general practitioners”. 

Deeble pointed out that “the Australian system is rare in being open ended in major aspects … more must be done by persuasion and incentive … making management of the Australian system more difficult”. Since Medicare was established both ALP and Coalition governments have implemented a goulash of initiatives seeking to influence the organisation, activities and distribution of Australia’s general practitioners. Despite the many billions spent these initiatives had little lasting impact.

Reports included The Future of General Practice (1992, 179 pages) prepared for the “National Health Strategy’, General Practice In Australia (1996, 347 pages) prepared for Health Minister, General Practice: Changing the Future Through Partnerships (1998, 362 pages) and General Practice In Australia (2005, 651 pages). These studies and their recommendations were developed by conscientious public servants working with GPs from the RACGP, AMA and other GP organisations.

From the early 1990s these reports lead to a myriad of expensive, now largely forgotten, government GP programs. The alphabet stew of acronyms included GPPAC, GPCG, MBCC, EPC, ADGP, AGPAL, FMP, RACGPTP, GPET, RTPs (re-birthed as RTOs), the PIP (originally BPP), RCS, RAMUS, PDSA, NPS and BEACH. Who remembers the AHPMC trials, the CDDS or the BMMS? Was there really something called ARRWAG?

In the absence of any broad accountability framework the hazy policy aims behind many of these initiatives were overwhelmed by market dynamics with no restraint on where practices can locate and the wide variability and availability in the scope of services offered by GPs.

The Commonwealth also dreamt of major structural and organisational change to general practice. It dabbled in “community health centres” in the 1970s, “coordinated care trials” in the 1990s, “GP Super Clinics” in the 2000s and “Health Care Homes” in the 2010s. None of these initiatives had any lasting impact on the organisation of the broad general practice sector. For example, the GP Super Clinic “program objectives” included “providing patients with well-integrated multidisciplinary patient centred care, particularly those with or at risk of chronic disease” that was “accessible, culturally appropriate and affordable” in clinics “responsive to local community needs”. Have the GP Super Clinics, recipients of multi-million-dollar grants, ever been evaluated against these objectives?

In 1992 an expensive national network of around 100 GP Divisions was established and funded by government. The hope was that the divisions would coordinate services such as after-hours care in their region and become a formal local interface for general practice with specialists, state services and hospitals; the dream was that the divisions would evolve into homes for professionally controlled, serious GP peer review activities. The divisions were originally controlled by boards of local GPs but morphed, first into “Medicare Locals” and more recently into Primary Health Networks, with much reduced GP influence over their governance. The RACGP has recently described “a culture of mistrust between GPs and PHNs who struggle to reconcile the role of PHNs in supporting GPs while continually finding their tenders rejected in favour of non-GP services.” There is a PhD thesis waiting to be researched and written by a political science scholar on why the general practice profession was unable to grasp and consolidate the opportunities offered by the Divisions.

There have been some ongoing positive GP initiatives since Medicare including the introduction between 1989 and 1995 of mandatory postgraduate GP training and compulsory continuing education. Practice accreditation, which assesses the organisation of the practice rather than the individual GP, was introduced in the early 1990s.

Step back in time

Given the concerns about Australian general practice, it is wonderful to learn that salvation is at hand.

The Strengthening Medicare Taskforce Report further developed the proposals in the 2016 General Practice and Primary Care Clinical Committee of the MBS Review. These initiatives, now labelled MyMedicare, build on the 2016 recommendations which included a “new model for primary care funding” including a patient enrolment fee “weighed by relevant patient characteristics” with “GPs and practices remunerated through multiple channels”. (Use of the word capitation is verboten.)

A committee of around 20, representing many health interests (including a few GPs) developed the 2022 Strengthening Medicare report over many months. The committee was chaired by the Health Minister. Key points in the report include:

“The provision of primary medical care services must be intergraded more closely with other components of the health system and other community services … The organisation of general practice in Australia today is influenced by the fact that it is financed in large part on a fee-for-service basis. To some extent the more comprehensive the service the greater is the risk of reduced income … Remarkable developments in medical science have meant that the general practitioner’s job as the doctor of first contact and the doctor responsible for the continuing care of people can no longer be done without frequent assistance from other experts … A much better organisation of community services is required if the challenge of modern health problems is to be met … General Practitioners can and should give nurses greater responsibility and variation in their work … Development is limited by financial issues: difficulties about the payment of nurses employed by practices and the sources of finance for the payment of other associated health personnel … A Melbourne study found only 25% of Melbourne University and 29% of Monash University graduates at the end of their intern year preferred general practice as their future professional activity.”

OMG!! I’ve quoted from the wrong document. The above observations are from a 54-page monograph published in 1970, 53 years ago, titled General Practice and its Future in Australia (AMPCo).

The 2023 Strengthening Medicare Taskforce report has a 1970s flavour. Some jargon has changed but themes and concepts discussed in 1970 dominate the 2022 report:

“We need to break down barriers to interprofessional collaboration and teamwork … build trust between professions and accelerate cultural change to allow all providers to work to their full strength in a coordinated approach that maintains the patient at the centre … Primary care needs better continuity of care, more integrated person-centred care … to facilitate integration of specialist and hospital services with primary care and integrate primary care with mental health, aged care, community and disability services … Support general practice in management of complex chronic disease through blending funding models integrated with fee-for-service … and better promote quality bundles of care for people who need it most.”

Speaking at the Whitlam Institute in November, Butler praised the Whitlam-era Community Health Program, a series of initiatives funded outside the Medibank fee-for-service scheme. He noted the 2022 Strengthening Medicare Taskforce report and the 1973 CHP “share much in common, particularly in the problems they identify and the opportunities they see for reform”. The CHP was underpinned by “a comprehensive model of health that looked beyond the narrow medical reasons for episodes of illness”.

Will the Commonwealth continue the tinkering with general practice that has characterised the 40 years of Medicare? The recent report would provide a rationale for a new burst of short-term programs with impressive acronyms.

The medical supermarket

The 2022 report with its Kumbaya flavour largely ignores fundamental uncertainties simmering in the GP political and policy mix.

The Economist in a January 2022 article suggested “Clunky, costly, highly regulated health systems are being shaken up by firms that target patients directly, meet them where they are – which is increasingly online – and give them more control over how to access care. Scientific advance in fields such as gene sequencing and AI make new modes of care possible. E-pharmacies fulfil prescriptions, wearable devices monitor wearers’ health in real time, telemedicine platforms connect patients with physicians, and home tests enable self-diagnosis.”

It is interesting to speculate whether Australia will follow trends in the US where “retail clinics, urgent care centres, telehealth platforms and private equity firms” as well as large companies, including Amazon and CVS, have entered the medical market.

Last month The Australian Financial Review ran a feature article on a private company, Eucalyptus, which provides online obesity treatments including access to new medications. Participants “pay monthly fees that start at $375 for a supply of the injectable solutions, online coaching and diet plans”. The company’s “paid clinical governance adviser” Dr Nick Coatsworth suggested the RACGP president, in expressing concerns about maintaining “high-quality and safe medicine”, is “acting in bad faith to protect members’ interests”.

Modest proposals

Could the decline in bulk billing with increasing out-of-pocket costs for GP services, difficulties accessing GP care and pressures on public emergency departments lead a bold government to propose serious radical change to the general practice “industry”?

Economist and former Commonwealth health secretary Professor Stephen Duckett recently proposed imposition of Canadian-type arrangements with fees capped at MBS levels and extra billing banned. In pursuit of its aim of “affordable access to primary care for all Australians” might a government seek to regulate the distribution of general practitioners?

Or would any government decide that such initiatives are not feasible given constitutional uncertainties and the challenging politics, complex administration and high costs?

One thing is certain: in the medium-term future Medicare GP rebates are not going to be suddenly increased, independently of major policy changes, to levels that reflect the costs of running a high-quality general practice.

Practices will have limited options under current policy settings other than charging significant out-of-pocket gaps or, for bulk-billed services, hoping the recently increased incentives provide some respite. It seems unlikely that recent initiatives will lead to “high quality, integrated and person-centred care for all Australians”.

Dr Bill Coote, a former rural generalist and practice owner, was secretary-general of the AMA from 1992 to 1998 and director of the Professional Services Review from 2011 to 2016.

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