Health funding priorities upside down, data shows

4 minute read

The Productivity Commission report reveals the continued obsession with hospitals and neglect of primary care.

The headline data from yesterday’s Productivity Commission report on government health services suggest that, despite much hype from government about managing the chronic disease burden, it continues to pour more and more money into hospitals and less and less into primary care.

While hospital funding increased by nearly 8% from $83.4 billion to nearly $90 billion from 2021 to 2022, funding for GPs between 2021 and 2023 went the opposite way and dropped by over 7.5%.

With a funding paradigm already heavily weighted to the hospital sector (nearly 8:1) and facing a tsunami of chronic care management issues that only a highly efficient primary and allied care sector is likely to fix, such a funding trend defies most current government guidelines and rhetoric on healthcare policy, in particular a renewed focus and energy around fixing general practice.

The hospital funding data reveals that the spend on infrastructure, which mostly goes to building or upgrading brick-and-mortar hospitals, grew by 10% in the period, while hospital wage bills grew by 6% (and that isn’t all pay rises because net staff increased – see below).

In the meantime, the spend per patient per GP also dropped by 10% in the 2021-23 period from $465 per patient to $420.

Covid does not explain the drop in overall primary care funding in the above period. Net funding for primary care in 2023 is now lower than in 2019, the year prior to covid: $11.2 billion in 2019-20 to 2023’s $11bn.

In the time it took governments to cut primary care funding by 10%, expenditure on the PBS has increased nearly 20% from $9.7bn to $11.6bn.

The PC report also reveals that because the number of GPs servicing the community is increasing while net funding is going backwards, it is likely that the average GP income is decreasing even faster than the 10% drop in overall funding being reported in the 2021-23 period.

Except for one year mid-covid, the life expectancy of Australians dropped in 2023 to the lowest it has been in 10 years – 81.2 years. You have to go back to 2013-14 to get a lower life expectancy figure.

That suggests the system is treading water, and probably that the funding priorities between managing care better in the community versus funding acute care facilities is not working, or at least, not changing fast enough.

The PC report shows trends that point to an increasingly stressed system where the key stress points don’t seem to be aligned any longer with funding priorities.

Here are few more interesting statistics:

  • From 2014-15 to 2017-18 the percentage of obese or overweight people in the population went from 62.8% to 66.5%;
  • Total public hospitals and beds went from 692 and 63,048 in 2018-19 to 697 and 63,444 in 2021-22 (at over $1bn for a 300-bed hospital build, and at least six new ones being built now across Australia, it tends to add up)
  • Available hospital beds per 1000 people dropped from 2.6 in 2018-19 to 2.5 in 2021-22. The only state to buck the downward trend was Tasmania, which went from 2.7 to 2.9;
  • Average fulltime equivalent staff per 1000 hospital patients went from 15.5 in 2017-18 to 16.9 in 2021-22, a jump of 9%, which does not compare favourably with the above figure of overall increase in wage costs in the period of only 6.6% (the only way that seems to add up is if the average wage per employee is coming down);
  • The number of total hospital service events (procedures, consultations, allied interventions) went up 40% from 37.7 million to 53 million from 2018-19 to 2021-22. Procedures, astoundingly, nearly quadrupled from 3.3 million to 12.7 million.

These data point variations are inexplicable in the context of net staff and wages only going up by less than 10%.

It looks a lot like the work per full-time staff member has gone up while their pay has gone down.

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