Collaborative commissioning among Primary Health Networks was one of the key asks from the PC ahead of productivity roundtables.
Governments need to invest now to save later and stop treating care as a cost to contain, says the Productivity Commission in its fifth and final interim report ahead of the government’s economic reform roundtable next week.
With Australia ranked 27th out of 36 OECD countries in prevention spending, it’s often the forgotten part of the health funding model, and it needs to change.
“Too often in discussions about productivity, the care economy only gets mentioned as the problem child putting a drag on growth,” Commissioner Angela Jackson wrote in The Conversation.
With its interim report, Delivering quality care more efficiently, the Commission hopes to change that narrative.
The three key areas of reform recommended by the report are:
- Creating a national framework to support investment in prevention
- Providing more integrated and tailored care through collaboration
- Increasing cohesion in quality and safety regulation across care services
Prevention framework
One of the Commission’s key suggestions is establishing a National Prevention Investment Framework.
The report highlighted that Australian, state and territory governments recognise the need for greater prevention efforts, but silos, short-term budgets and election cycles mean little is achieved.
Australia allocated 2% of health spending to prevention in 2019, whereas countries such as the UK, Canada and Finland proportionally spent around double that.
According to Adjunct Professor Terry Slevin, Public Health Association of Australia’s CEO, “The saying goes that prevention is better than cure, but when it comes to investing in prevention, Australia’s federal budget system is broken.
“Current Federal Budget rules don’t allow for forecasting or consideration of financial and productivity benefits beyond the four-year estimates period.
“That means the long-term benefits that come from preventive health measures are excluded from influencing government decision making. This is nuts.
“As an example, a recent Cancer Council study found that cancer control measures have prevented 230,000 deaths in Australia since the mid-1980s. Consideration of this type of huge, longer-term benefit would be excluded from the current budget planning processes,” he said.
There is a target of increasing spending to 5% by 2030.
“While this target is somewhat arbitrary, it recognises the potential value from increasing spending on preventive interventions and reflects that the scale of funding needs to be large enough to make a meaningful difference,” the PC’s report said.
Related
A prevention framework would recognise the benefits of prevention across sectors and levels of government, and over extended timeframes. It would have a robust assessment and evaluation process and could be legislated to support its long-term sustainability.
“Our reform proposal is about encouraging governments to invest now to save later. It will help ensure governments work together to support the most effective prevention programs,” said Commissioner Alison Roberts.
“And the thinking needs to go beyond health. Improving housing, social wage, justice and more also improves lives and prevents disease.
“Investing in prevention is an opportunity to save money in health care costs and increase productivity.”
Professor Slevin said:
“A ‘better than side benefit’ results in Australians having a greater opportunity for a longer and more fulfilling life, which we reckon is not a bad aspiration.”
Professor Jennifer Martin, president of the Royal Australasian College of Physicians, said the College has been advocating for prevention for some time.
“It’s often seen as costing a lot of money to do prevention, but no one’s really looking at the improved productivity or the actual reduced acute care spend that you get from that.
“It’s the first time that people are starting to think about prevention as having a relationship with productivity,” she said.
She said the impact of climate change and obesity are two areas that can see significant benefits from prevention policy.
“Preventive health efforts really have to be focused on that and mitigating the health impacts of climate change.
“(For) obesity and obesity related diseases, metabolic disease and the ill health from that, there’s a huge spend on health care. The effects of that can be prevented with good social policy, a tax on sugar and looking at how we how we enable food and beverage industry to influence our food,” she said.
Collaboration in commissioning
The interim report called for increased collaboration between Local Hospital Networks, Primary Health Networks and Aboriginal Community Controlled Health Organisations.
Known as collaborative commissioning, it can improve the quality and experience of care, strengthen place-based approaches that promote local autonomy, and reduce potentially preventable hospitalisations and other gaps in service provision.
“We have seen instances of successful collaborative commissioning initiatives around the country. It’s time to start embedding it through governance and funding reforms so it becomes usual practice,” said Commissioner Roberts.
It’s something Western Queensland PHN CEO Sandy Gillies knows all too well.
As part of its Queensland-Commonwealth Partnership, the PHN does joint regional needs assessments with other healthcare organisations to find solutions for its region.
“Everyone can see whose money’s on the table. And we commission what we need in order to respond to the needs that have been identified, rather than fragmented policy and siloed funding,” she told The Medical Republic.
This agreement was highlighted in the PC’s interim report as something that could be extended to other states and territories, “noting that some flexibility will be required since the boundaries of LHNs and PHNs align differently across jurisdictions”, the Commissioners wrote.
“Even modest gains could be transformative. Our report estimates a 10% reduction in preventable hospitalisations could save $600 million annually. But the real value lies in better care: fewer gaps, smoother transitions, and services tailored to communities,” Commissioner Roberts said.
However, key to strengthening these agreements is having longer funding agreements and more flexibility in the way they are funded.
The PC report highlighted that short-term funding isn’t conducive to developing robust delivery frameworks that provide the most effective assistance.
One anonymous PHN noted in the report:
“… when there’s less than six months left [on the contract] … staff start to leave. The longer you leave it, the more they start leaving, the bigger the dip [in service delivery] is … as you re-fund them, it takes probably an equal time plus about 50% to get back up to where you were before.”
Reforming quality and safety regulation
Different segments of the care economy are regulated under different regimes, including in the aged care, NDIS, childcare/early childhood education and veterans’ care sectors. There are different clearances for each sector and different audits, standards and registration systems.
“Fragmented regulation across the care sector reduces productivity, heightens the risk of harms, limits access to care and creates unnecessary burdens for care providers. Previous reform efforts have faced roadblocks and lost momentum – we need a fresh, concerted approach,” said Productivity Commissioner Martin Stokie.
Although the sectors have differences, “substantial similarities between them justify a more consistent approach to quality and safety regulation”, the report said.
This could include a way to allow workers to move more easily across care sectors, a national screening clearance for workers in all care sectors and a common process to assess the suitability of providers.
There should also be reduced duplication across the aged care, NDIS and veterans’ care sectors with a single provider portal, with less duplication in provider registration, accreditation and audits.
“The commission found more than 42% of aged care providers are also registered NDIS providers, and 82% of veterans’ care providers operate in aged care and/or the NDIS. These are often large providers, delivering a significant share of services. Yet they must comply with separate systems, diverting resources away from frontline care.
“All of this is not just about efficiency – it’s also about safety, trust, and quality,” Commissioner Roberts said.
The Commission also suggested having a consistent regulatory approach to artificial intelligence rather than sector-specific approaches.
Will the recommendations deliver better care?
Dr Katharine Bassett from Catholic Health Australia said she hopes the recommendations will drive genuine reform.
“This is not a job for one department or one budget cycle,” she said.
“It demands coordinated national leadership — the kind we used to see when Australia took on big reforms, from Medicare to superannuation.
“Productivity is not about squeezing more out of people. It’s about stewardship. It’s about designing systems that allow people to give their best, and to be valued for it. It’s about change that improves outcomes for future generations.”
Yesterday, the federal health minister Mark Butler held the Health, Disability and Ageing Economic Reform Roundtable in Sydney for a group of 40 invited attendees.
Discussions at the roundtable and its report will feed into the government’s Economic Reform Roundtable next week, led by Treasurer Jim Chalmers.
According to Mr Butler:
“There is so much opportunity in the care economy to grow productivity.
“Finding ways to drive productivity gains will support our economy to deliver quality care and outcomes which will in turn, benefit the health and wellbeing of all Australians now and for future generations.”
The Productivity Commission is accepting submissions to inform its final report, due to be delivered later this year.
“Our proposed reforms seek to break through government’s siloed approach to decision-making and lift national productivity by improving the quality and efficiency of care services,” Commissioner Jackson concluded.
