Wednesday, March 3, 2010

Healthcare Reform

The announcement today that the Federal Government will "takeover" the majority of hospital funding was fully expected. In the lead up to the last federal election the then opposition leader said that if the States couldn't get the hospitals right then he would have to do the job. If I remember correctly his words were - The buck stops here, it stops with me. Quite clearly his actions today say that he didn't think the States had been able to fix the problem.

What makes the new system interesting is that the Federal Government will only be the supplier of funds, about 60% of the funding required for the activities carried out by the hospitals. The rest will come from the States. That may be how the plan is supposed to work however in reality the funding arrangement will not change. This is because the bulk of the Federal money will come from taking money from the States (GST revenue). It is easy to be generous with other peoples money.

The management of the hospitals will also change - they will be run by regional boards. Fine in theory but he who holds the purse strings calls the shots. The Feds will only pay the hospital money for activity based on standard costs for procedures. If those procedures cost more in some hospitals they will have to make efficiency gains to save money or they will have to cease the procedure because they can't afford to do it based on the rebate they will receive. What you will find over time is that services will be reduced at some hospitals because they can't reduce costs. This is most likely to affect country hospitals, who by the way often have reduced services to start with.

Will all of this end the long waiting lists for elective surgery? I don't think so. Will it bring down the cost of healthcare? I don't think so. Will it end the blame game that is Public Healthcare? I don't think so. Will it increase the bureaucracy? Of course.......

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