Federal Health Minister Tanya Plibersek

State Health Minister Michelle O’Byrne with Premier Lara Giddings. Michelle O’Byrne Pic: Rob Walls,

The federal and state governments are about to spend more than $40 million on the fourth administrative redesign of the Tasmanian hospital system in eight years.

The spending is part of the four-year $325 million ‘health bailout’ negotiated by the Denison independent, Andrew Wilkie, with the federal government. It contrasts with the $30.5 million to be spent over the period on elective surgery which, unlike the administrative spending, has received wide public attention.

Newly leaked figures show $40.9 million will be spent on a ‘clinical redesign’ process. Of this, $30.6 million has been allocated to ‘clinical leads and support staff, and implementing clinical redesign solutions’.

Another $4.3 million will be spent on consultants to ‘undertake clinical design analysis and train, mentor and assist clinical leads and other support staff’.

The $40.9 million will also fund a Commission on Delivery of Health Services in Tasmania, to be headed by a former deputy secretary of the federal Health Department, Alan Bansemer. What the Commission itself will cost remains confidential between the two governments.

The press release from the federal Health Minister, Tanya Plibersek, announcing the $325 million disguised the level of the new administrative spending. It said $42 million over four years would be spent to ‘support innovation in clinical services’. It gave, as its sole example, the creation of a Virtual Health Sciences Precinct, comprising hospitals and research organisations, and costing $1 million.

No other examples were given, and the term ‘clinical redesign’ was not used.

As a result, this element of the package has received little public attention or journalistic scrutiny.

In more recent announcements by Ms Plibersek and the state minister, Michelle O’Byrne, priority was given to the spending on elective surgery which, the ministers said, would fund 2,600 operations.

An analysis of the Commonwealth’s figures shows these extra operations would cost $11,700 each. On this basis, the amount to be spent on the new clinical redesign would pay for almost 3,500 operations. Or the same amount could be used to pay the salaries of another 125 nurses or another 67 staff doctors for four years.

The state health minister, Michelle O’Byrne, has given the scheme her unqualified public support. The new commission would ‘provide valuable input into ongoing efforts to create a more sustainable health system’, she said in a press release.

Greater efficiency in the public hospital system, and its capacity to deal with demand, have been the goals of three previous reform processes, starting with a 2004 report of an expert panel led by Monash University health economist Professor Jeff Richardson. This was followed by the Tasmanian Health Plan, a more elaborate review led by consultant Dr Heather Wellington, which covered much of the same territory as its predecessor. Dr Wellington has again been retained, for an undisclosed fee, to take part in the new review. The Rudd and Gillard versions of the National Health Reform process – and the range of reviews which the federal government commissioned – also addressed largely the same questions. All three led to the changes, now in place, which have devolved power and responsibility from the Department of Health and Human Services in Hobart to regional hospital administrations.

But cost-efficiency in Tasmanian public hospitals still lags national averages: it costs us about 20 per cent more to provide a given service than similar hospitals around the country. Some of that difference may be unavoidable, though most health policy experts believe this level of inefficiency is unacceptable.  But in normal circumstances, it would be the task of ordinary governance processes – administrators and the state health minister – to ensure efficiency and to do so within existing budgets.

Sophisticated tools already exist to determine which services, in which hospitals, are being delivered inefficiently and by how much they differ from national norms. The most important of these tools is the Casemix system, which provides a detailed method of calculating the cost of all services, and how that cost compares with a given standard. The figures for one state, or one hospital, can be compared with data collected by the Australian Institute of Health and Welfare from every public hospital in the nation.

The Casemix system is run by the state health department and funded out of the department’s normal budget.

The central unanswered question is: if normal governance procedures and three expensive reform processes have failed to produce efficiency, why should anyone believe a fourth will be successful?

What needs to be done to achieve greater efficiency in hospitals – that is, better health outcomes for the available number of dollars – is well known and has been discussed many times.

First, the overmanning of the state health department must be wound back and that money put into services. That process is already well under way.

Second, inefficiencies within so many hospital units must finally be addressed. Administrators already know where those inefficiencies occur and, generally, why.

Third, we – and all other states – need more and better alternatives for patients who don’t really need expensive accommodation in acute hospital wards but who have to be looked after and can’t get in anywhere else. To its credit, this is being addressed in the new federal package, with many millions of dollars going to hospital alternatives. But even here there are problems.

Most of the money – all but about $90 million of the $325 million – will bypass the state government altogether. The lion’s share of this will go to non-government organisations, particularly the brand-new Tasmanian Medicare Local, a network of GPs and others with laudable goals but a remarkably vague charter.

This new and untried organisation will receive between $50 million and $60 million in this package, in addition to their existing budgets provided by state and federal governments. Within the Tasmanian system, that is an extraordinary amount of money to entrust to an organisation with an unproven record in efficiency and accountability.

Another of the long list of questions neither government has answered is: what will happen to the new systems and services set up by the Medicare Local and other bodies when the funding runs out at the end of four years?

As the saying goes, the devil is in the detail. But almost no detail has emerged from a highly controlled and stage-managed process. The people who run our health organisations – unless they have won this particular funding lottery – have little to go on other than press releases from the two ministers.

The technique has worked. There has been little negative public comment and almost no discussion of the policy priorities revealed by this package.

This funding has real potential to bring a better deal – if only for four years – to vulnerable patients in this state, but only if the money is spent in the best possible way. Keeping everyone in the dark is good for the politicians and bureaucrats. But it’s not good for the public or the parliament. And it’s extraordinarily bad for sick people in desperate need of better care.

Martyn Goddard is an independent health policy analyst based in Hobart. He is a former journalist with the ABC in Melbourne and Sydney. His analyses of national and state health systems are here