The Government’s announcements on hospital reform are bold and deserve widespread support. They are in the right direction. I am agreeably surprised, given the history of previous health-reform attempts.

I hope the states and the Coalition are not churlish and miss a great opportunity for themselves and the Australian people.

In the months ahead there will be hard negotiations and I assume further policy announcements to flesh out yesterday’s announcement.

The announcement has a clear hospital focus, a continuation of an obsession we all have with iconic hospitals. The best health systems in the world are grounded in primary care. In Australia we are over-hospitalised. A policy objective should be to keep people out of hospital with alternative arrangements in the community. Hospitals are like the family refrigerator; regardless of size it will always be full.

So I will be looking for future policy statements about how hospital care is integrated with primary care. This issue is only a footnote in the statement yesterday.

A key part of integration of all health care will be governance at national and local level.

The government is challenging, quite correctly, the special interests of state governments and their health bureaucracies. Stronger special interests are among providers — the AMA, the Australian Pharmacy Guild, pharmacy companies and the private health insurance funds. They have legions of lobbyists who dominate the public debate at the expense of a community that is effectively excluded and disenfranchised.

That is why I have suggested that at the national level the Commonwealth Government should establish a permanent, independent, professional and community-based statutory authority, an Australian health commission, similar to the Reserve Bank in the monetary field. The Reserve Bank’s governance structure has made it almost impervious to lobbying and generally, it has been independent.

Such an independent health commission with strong economic capabilities is necessary to facilitate informed public discussion, counter the power of special interests and determine programs and distribute Commonwealth health funds across the country. Last year, the Business Council of Australia called for a single “independent body that can lead and be accountable by the Australian community” for health services. The traditional ministerial/departmental model is proving just too susceptible to special interests in health.

The Commonwealth Government should not opt out of policy responsibility, but issue principles, as it does to the Reserve Bank, to provide policy and implementation guidelines for the health commission. The principles could include:

  • universality,
  • equity,
  • efficiency (technical and allocative),
  • single-payer (to best manage costs),
  • choice of provider (with government funding for private hospitals),
  • subsidiarity (delivering healthcare at the most feasible local level),
  • accountability (With all providers obliged to meet key benchmarks. What about a “my hospital” website? With fee for service, providers are compensated for the number and length of transactions rather than health outcomes.),
  • social solidarity and risk-sharing, and
  • personal responsibility (For personal health outcomes and use of health services).

In addition to the need for integration of all health care and independent and professional governance, there is a range of other health reforms that are essential.

First, the Health Insurance Commission (Medicare) should be what its name implies, a proactive public insurer anticipating risks and controlling costs. With a default option policy for everyone, it should also provide a range of policies for members, e.g. higher excess for GP visits in return for increased hospital benefits.

Secondly, we need a major reform of the restrictive work practices and demarcations that bedevil our health workforce structure. In the name of safety, these archaic work practices are designed principally to protect the turf of doctors. This is at the expense of hundreds of thousands of other health professionals and the community.

Thirdly, quality and safety must be urgently addressed. There was a media frenzy over four Australians who died installing insulation batts. There was a Royal Commission in Victoria over 172 bushfire deaths. Yet 200 Australians die each week in our health sector as a result of avoidable mistakes. The silence is deafening.

Fourthly, we need to include dental care within Medicare. The $4 billion p.a. subsidy to the wealthy with private health insurance should be transferred to a universal dental scheme. (I assume that the government has buried the outlandish proposals by NHHRC on Denticare and Medicare Select.)

There is a lot to be done, but the first step by the government is to be applauded and encouraged.

*John Menadue, AO, is a Centre for Policy Development Board Director. He headed the Department of Prime Minister and Cabinet from 1974 to 1976, and was Secretary of the Department of Immigration 1980-83.  He was CEO of Qantas between 1986 and 1989, and continues to advise several national companies. He recently chaired major Health reviews in NSW and SA.