Australia’s Health Care Reforms

This report discusses the guiding principles of value-based healthcare that guide the healthcare delivery reform in Australia. It also discusses the sustainability of the reform with regards to ageing population, increased chronic diseases, ever-increasing costs of technology and the demand on the entire healthcare. Based on this discussions, certain recommendations are provided to improve the healthcare delivery system of Australia.

Australia’s Health Care Reforms

Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Guiding Principles of value-based healthcare reform.....................................................................5
Market concentration...................................................................................................................5
Population demographics.............................................................................................................5
Risk Transfer................................................................................................................................6
Elasticity of the supply chain.......................................................................................................6
Elasticity of demand.....................................................................................................................6
Regulatory authority....................................................................................................................7
Executing the health reform framework......................................................................................7
Discussion of findings.....................................................................................................................7
Recommendations..........................................................................................................................10
References......................................................................................................................................11

Executive Summary
Despite having a strong healthcare system in Australia, the country experiences various
challenges due to its fragmented concept (Hall, 2015) and has been reformed several times in the
past. In recent times, various reforms that have been introduced in Australia focused on the shift
towards value-based healthcare in response to rising costs, increasing demand for services,
inequality in accessibility (Cant & Foster, 2011) and variations in the safety and quality of
services. The health system of Australia is viewed as mixed system as private financing and
services work along with the public system (Biggs & Cook, 2018). All the aspects of the public
and private healthcare services are attempted to be standardized in a way that enables the shift of
healthcare system of Australia towards value-based services. The aged healthcare care system is
experiencing rising demands due to the introduction of novel treatments, increasing ageing
elderly population, increased prices of chronic disorders, and rising health costs. National Health
Reform Agreement (NHRA) is a reform which ensures that the states and territories are funded
appropriately to meet the rising charges of health service delivery. To reinforce the sustainability
of the health system of Australia particularly the public sector, the Commonwealth and all the
states and territories signed the NHRA for financing and administrative arrangements of public
hospitals in 2011. NHRA improved the healthcare services as it gave emphasis focus on even
allocation of responsibility for the funding of the growth in costs of public hospital services in
future. As opposed to previous reforms, NHRA provided clearer and simplified funding for
public hospital services, based on the effective price of offering those services. It aims at
providing increased accessibility to services (Wiese, Jolley, Baum, Freeman, & Kidd, 2011),
drives improved efficiency and increased the local accountability and transparency, improved
responsiveness to local communities and a more strong funding process for the health care

service in the future. Further, it increased public information so that the service users can make
comparison of health service delivery and get more options.
Introduction
Australia has witnessed the implementation of a range of significant initiatives in the last decade
to improve the quality of Australian health system. Federal government seeks to work on the
National Health and Hospital Reform Commission so that the structural reforms to manage the
barriers faced by the health system of Australia (Donato & Segal, 2010). One of them was the
NHRA which introduced activity-based funding and National Partnership Agreements. It was
motivated by the suggestions stated in the National Health and Hospitals Reform Commission
(Shannon, Holden, & Dam, 2012). Further, with its implementation the states and territories
reduced their centralized health administrations and decentralized financing, planning and
provision duties to local level. (NSW, 2012) NHRA is a reform that outlined the steps to improve
the transparency, authority and funding of the health care system of Australia. The Agreement
lays down that every signed party is in charge for providing ABF or block funding to the public
hospitals in partnership (CFFR). ABF is dependent upon the number and costs of the services
given to the clients. Block funding is provided for academic and research based tasks ( NHFB,
2016). NHRA forms a collaboration between Commonwealth, and the states and territories. In
addition, it lays down that the responsibility of the monitoring of public hospitals is of the states
and territories. NHRA further makes sure that efficient prices and enhancement in patient
accessibility is achieved to gain sustainability and transparency of the funding of the public
hospitals, along with their accountability and refined approach to needs of the local communities.
NHRA makes efforts to improve the performance of Australian public hospitals to achieve
improved healthcare outcomes. This report will discuss the guiding principles of value-based

healthcare that guide the healthcare delivery reform in Australia. Next, a discussion of the
sustainability of the reform with regards to ageing population, increased chronic diseases, ever-
increasing costs of technology and the demand on the entire healthcare. Based on this
discussions, certain recommendations are provided to improve the healthcare delivery system of
Australia.
Guiding Principles of value-based healthcare reform
Market concentration
As per the NHRA, the extent of services delivered through public hospital are either funded on
an ABF or block grant manner and are entitled for a Commonwealth NHR funding which
involves the admitted and non-admitted services, every emergency department services offered
by an acknowledged emergency department and other services that could rationally be regraded
as a public hospital service. The continuation of funding from other sources to public hospitals
will occur. Other sources will include the Commonwealth, states and territories, and third parties
to works towards other services which do not come under the scope of the Agreement such as
home and community care, pharmaceuticals, etc. (Gov.au, n.d.).
Population demographics
As per the NHRA, the performance will be evaluated by a joint approach including the service
provision outcomes and population health outcomes. The population health consequences for a
community for which the Medicare Local is accountable will primarily be calculated for context
placing and scheming ideas instead of accountability.

Risk Transfer
The management framework which is based on performance sustains the risk of distortion of
performance by the workers. State and territory governments are accountable for LHNs and are
consequently cause to undergo audit by the suitable Auditor General and the appropriate internal
audit operations of several health departments.
Elasticity of the supply chain
The healthcare system of Australia is accepting supply chain reform to make considerable
advancement towards an interoperable system that offers significant quality and effective
benefits for care givers and service users. There is a need for Supply Chain reform due to
absence of standardized product identification and location identification. Further, as several
product data catalogues are kept per hospital, per hospital network and per state, the supply chain
reform will assist in managing with these issues.
Elasticity of demand
The signatories of the reform work towards providing coordinated care reforms especially for
clients with chronic and complex conditions as this is the key to a robust and sustainable health
system. It will decrease preventable demand for health services and improve patient health
outcomes. This approach is guided by the principles of patient-centered approach, evidence-
based practice and a consistency with whole-of-system efforts to offer improved patient health
outcomes. Apart from that flexibility and sustainability are also the guiding factor (Lost about
health-care reform? Here’s where we got to in 2011, 2011).

Regulatory authority
The regulatory authority is responsible for giving advice annually to the Commonwealth
Minister for Health and Ageing, Health Ministers of the state and territory and governing parties
of private hospitals. Apart from recognizing the high performing facilities, the Authority will
also contribute in identifying the low quality performance as a significant safety mechanism
(AIHW)
Executing the health reform framework
The framework will need timely supervision by the Council on Health. The framework will also
need t be modified as the health system will progress over the period of time to maintain its
relevancy as per the requirements of the community. The governing bodies are authorized to
suggest changes in the framework when and if required which will be considered by the Council
on Health. Then the Council on Health will measure the Framework and suggest any planned
modifications to COAG for sanction.

Discussion of findings
In view of the increasing aging population (McPake & Mahal, 2017) and rising cost of
healthcare, the health reforms were proposed that will influence the people of Australia in future.
It was reported that people of Australia over the age of 45 suffer from a chronic health disorder
and 1 in 5 have more than one chronic disorders. These issues require to be fundamentally
handled by health care reforms. The provision of services to aged population is unequal in
Australia. Therefore a collaborated national plan for health care services should be regarded
(Giles, Halbert, Gray, Cameron, & Crotty, 2009).
NHRA was made and implemented after an independent inquiry of 18 months into the health
system, a Prime Ministerial listening tour of the hospitals across the nation, various fraught
Council of Australian Governments (COAG) meetings and an unsuccessful effort (Doorslaer,
Clarke, Savage, & Hall, 2008). The federal Labor Government was ultimately able to develop a
health reform to handle every state and territory in the form of NHRA.
Various experts have commented that the reforms stated in the NHRA are less comprehensive
than those drawn in the National Health and Hospitals Network Agreement (NNHNA) (2010)
(Gov.au, 2011). Western Australia rejected to agree with the NHHNA due to the critical plan to
hold back GST from the states to finance reforms so it was eliminated from the NHRA. Certain
health policy experts also believed that NHRA had restricted scope. As they regarded the reform
bundle in funding terms rather than a system terms which was considered as a limitation of the
reform. It was specifically critiqued for this as a huge section of the NHRA were committed to
public hospital funding and particularly in explaining the approach through which the
Commonwealth will switch from block funding to an activity-based funding.

Moreover, the participation in ABF was also not novel as COAG first dedicated to ABF in 2008.
But the specifications about how ABF will work in practice was new in agreement (Boxall,
2011).
NHRA also had certain strong points. Without the NHRA, the budget of state and territory
governments would have been used completely as the health expense responsibilities on them
increased and their ability to offer provide services would have been considerably restricted. In
addition, the NHRA also gives significant details about the way in which funding will take place
between the Commonwealth, state and territory governments and Local Hospital Networks
(LHNs). The key objective of the agreement is to make the funding process at both levels of
governments more clear in order to avoid or decrease the blame game in the Australian
healthcare system (Australian Government, 2011).
The agreement also offers certain stipulations on the new governance and performance
measurement delivery. Like, in the agreement it was stated that the National Health Performance
Authority (NHPA) will manage the MyHopsitals online site which was then maintained by the
AIHW, and will evaluate the performance data for LHNs and Medicare Locals to find out the
quality practices. The agreement also outline the principles for data exchanging between
different organizations and Governments was also set out in the NHRA as it was a weakness in
the system. NHRA lays down the principles for exchange of data between different levels of
government and agencies. In addition, the agreement committed the governments to build a more
formal system of data exchange through a National Health Information Agreement.
NHRA also outlined changes in local governance of public hospitals. One of the important
change was that LHNs have individual bank accounts and get Commonwealth funding from the
National Health Funding Pool. It ensured that they had greater funding assurance and more

leniency in budgeting than they had before NHRA. However, since the state government is the
majority funder, so it can shift its funds between LHNs as per the requirements (Dixit &
Sambasivan, 2018).
After establishing the national governance organizations and a performance and accountability
outline, Commonwealth suggested that it desired to be more active in making sure that the care
givers provide high quality services. But, the role of Commonwealth is still restricted to
supervising, motivating and persuading the health care givers which include the states, Medicare
Locals and private hospitals to achieve performance standards as the Commonwealth itself does
not offer hospital services. After establishment of a formal procedure the two levels of
government were enabled to work on the critical aspects of health care system. Since Australia is
a federation in which healthcare services is a shared responsibility among the Commonwealth
and the states, an understanding between governments is necessary. Since, NHRA is a reform
that enables the cooperation and understanding, it is likely to give long-term benefits. Further,
through the NHRA, the States may use top-up funding for any health system that will support the
boost in growth in demand for hospital services, including chronic disease management
programs as jointly agreed by the Commonwealth and the relevant State.
Recommendations
It is found that the healthcare system of Australia is mainly dealing with issues like resource
allocation, and performance improvement and improvement of patient health outcomes. After
understanding the NHRA including Aged Care Reform, various recommendations are provided
to strengthen this reform and eventually the agreement. NHRA should associate the health care
adherence processes with quality systems more closely so that service improvement can be
achieved. Further, there should be an obligation regarding routine collection of data on

operations and quality of health care services. Then the data that is gathered should be analysed,
and made available to the public to help the service users so that they can make informed choices
with respect to the services they get. The accessibility of the data to public will also assist to
induce competition in service and improvement in quality. The Quality indicators should be put
on the official website which must include suitable information to assist informed decision-
making regarding various aspects of healthcare availability. In addition satisfaction of the service
users should be evaluated through surveys and other techniques. Compliance and complaints
procedures must be reinforced to make sure that the service users and their carers can report the
problems without fear of retribution and a belief that they will be heard. The health care quality
standards must contain collaborations with the service users so that they are assisted to be
included in quality enhancement. A consistent, organized and collaborated national approach to
aged care education and training is required which must include minimum standards for
education and training for those involved in working with elderly people (Bartlett, Butler, &
Haines, 2016). This approach must emphasize on leadership and cultural modifications at
organizational level, to enhance opportunities to reflect learning into better practice. The plan
must be sustained by the government and by the health care sector, and stress on making the
sustainable changes in practice which may result in improved outcomes for population. It is also
suggested that a bundled payment process may be used to lower the costs and enhance the
quality and health outcomes. Bundled expenses can also be used to lower the unplanned
readmissions. A need for more deregulated insurance market to enforce competition in the sector
to empower the clients with more options for their health insurance, and offer improved quality
of care. This approach can be expanded to Medicare services and public hospitals, which would

still be available to private service user without charging, but state that individuals and families
who enjoy a higher income should contribute more to their healthcare costs.
References
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