Healthcare Performance of Australia compared to OECD countries

Running Head: HEALTH SERVICES FINANCING
HEALTH SERVICES FINANCING
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Healthcare Performance of Australia compared to OECD countries.....................................2
Challenges Faced by Healthcare System in Proving Equitable Access.................................4
PBS Cost Effectiveness in Australia......................................................................................5
Comparing PBS to Cost Effectiveness of Pharmaceuticals Schemes used in Other
Countries................................................................................................................................6
Recommendations to Improve Australian Healthcare System...............................................7
Conclusion..................................................................................................................................8
Reference....................................................................................................................................9

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Introduction
Healthcare financing is core components of the health care systems. It deals with. the
generation, allocation as well as uses of financial resources in health care system. The
healthcare financing ensures that sufficient resources are generated for sustaining services
and meeting health needs of overall population. Most of the reforms of health sector
measures attempt for addressing issues of health financing such as funds mobilization,
services allocation and utilization and provider of payment incentives. Each country requires
government funding of the healthcare for the country’s population. The financing of
healthcare not only involves funds allocation, but also involves allocation of those funds. The
national health expenditure is derived from the government and the non-government sources
(Duckett & Willcox, 2015).
Hence, this report aims to discuss comparison and contrast of performance of
Australian healthcare system in comparison with other two OECD member countries from
financial perspective. Further, performance measures will be identified in which healthcare
system of Australia is performing. Moreover, cost effectiveness of PBS in Australia will be
evaluated. In addition, comparison of PBS will be done with the cost effectiveness of
pharmaceutical used in the other countries. Lastly, based on findings, recommendations will
be given for reducing cost and lowering pharmaceuticals consumptions in Australia.
Discussion
Healthcare Performance of Australia compared to OECD countries
According to OECD, the Australian healthcare system is considered to be best.
However, with the changes in the needs of healthcare, for instance complex health conditions,
increase in demand, increase in healthcare cost and other issues, Australian healthcare system
has come under intense pressure. Although, care within the healthcare system of Australia is

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best in world, but there is need for changing current paradigm used for measuring results as
well as allocating the resources. It is dealing with the two major issues, which are allocation
of resources and outcomes improvements of performance and patients. The healthcare system
of Australia not only faces the workforce shortages and inefficacies, but there are
expectations of the greater public reporting of the availability of required services, clinical
indicators and patient reported outcomes for ensuring informed making of decision by the
patients (Westbrook et al. 2015). Australia is having public system that is complemented by
the private health insurance. The public accesses care of Australia within public health
system is for free or at the low cost through Medicare that is funded by tax. The private
system includes providers of health service, which are privately owned and managed
pharmacies, private hospital and specialist medical and allied health (health.gov.au. 2020).
In comparison to Australia, OECD member country UK is having government-
sponsored universal system of healthcare that is known to be National Health Services. It is
consisting of series of the publicly funded system of healthcare in UK. Under this system,
citizens are entitled to the healthcare, but they are having option for buying private health
insurance also. The UK system of health care is most efficient in world. The report of
Commonwealth Fund looked at five performance areas, which are efficiency, quality, healthy
lives, equity and access to care. The healthcare of UK is entirely part of government budget
and is actually government part. The portion of taxes of the country, finances NHS entirely
(npr.org. 2020).
In Canada, provinces and territories are having primary responsibility to organize and
deliver health services and supervising the providers. As Australia and UK, most sum of
money that flows through the healthcare system of Canada come from the federal taxes.
Further, charitable contribution also plays major role to fund new programs of hospitals. In
terms of coverage, Canadian healthcare coverage is better than Australia because it is

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designed for ensuring that every citizen of Canada has access to the hospital physician and
medically necessary services, as there are hundred percent coverage. The healthcare system
of Canada is not perfect because of various issues that ranges from longer wait time to gender
gap (Canada, 2020).
In comparison to other two OECD countries, Australia is not performing good in
terms of its healthcare system and performance measures such as physician services quality,
hospital quality services, health plans quality, care experience of patients, healthcare services
cost and in terms of coverage of services (Keall, Barton & Crozier, 2014).
Challenges Faced by Healthcare System in Proving Equitable Access
The healthcare system is hardly called system, rather it is the dizzying array of the
sector that is highly decentralized. Although physician groups size is mounting, but still
certain percentage of practicing physician are in two person or solo practices. The sector of
health plan is revolving away from the structures, which can facilitate coordination and
integration with fall in share of market of the health maintenance organization and the
preferred provider organization getting prevalent. Currently, health care systems are operated
as cottage industry, which includes big cottages with the state of art technologies for caring
patients, but the infrastructure is quite inadequate (Demarzo, Cebolla & Garcia-Campayo,
2015).
In financial perspective, it can be said that quite less investment is done in healthcare
facilities. Absence of the systems, the poorly designed systems as well as resulting lack of the
integration are common across the sectors and within organization of individual health care.
Moreover, these systems can be harmful for the patients or it fails for delivering what is
required by patients. One previous report by IOM states that inability for applying knowledge
regarding human factors in the system designs as well as failure for incorporating the well-

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acknowledged principles of safety into the health care, for instance simplifying and
standardizing equipment, processes and supplies are the key contributors to unpardonably
occurrence of higher medical errors (Cohen et al. 2014).
PBS Cost Effectiveness in Australia
“Pharmaceuticals Benefits Scheme” is program of the Australian government that
helps in providing subsidized prescription drugs to the residents of Australia and certain
foreign visitors that are covered by the Reciprocal health care agreement. In absence of PBS,
medicine access could be difficult for various Australians such as because of large investment
requirement for R&D, there are some of the medicines that may costs thousands of dollars for
treating single patient (Harris, Nagy & Vardaxis, 2014). However, after listing on PBS, same
treatment is then subsidized and it is available through the modest patient co-payment.
Further, there are number of factors considered, when considering to price medicines and
reviewing prices of existing PBS medicines. This includes advice from PBAC on clinical as
well as cost effectiveness, medicines in same ‘therapeutic group’, alternate brand prices and
so on (pbs.gov.au. 2020).
The pricing section uses various methods for setting prices for the PBS medicines in
accordance with product type such as cost-plus method, weighting pricing, reference pricing
and others. If medicine is non-inferior or equivalent in the health outcomes, pricing section
applies the approach of cost minimization. It involves setting new medicine’s price that is
equal to least expensive option of medicine in comparison group offering most similar level
of the effectiveness to new medicine. If medicine is inferior or superior to the existing
therapies in comparator group, then the prices will be set relative to effectiveness of existing
therapies (Edney et al. 2018).

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Figure 1: Factors Influencing PBS medicines pricing and Pricing Methods
Comparing PBS to Cost Effectiveness of Pharmaceuticals Schemes used in Other
Countries
Australian pharmacy can be compared with the UK and Canada pharmacy. The
funding proportion devoted by Australia is lower compared to UK and Canada. The major
difference in pharmacy of Australia and UK is the way in which the medicines are paid for.
The universal health insurance scheme in Australia is known as Medicare. Under PBS of
Medicare, prescription medication cost is subsidized for the citizens of Australia and the
eligible foreign visitors. Hence, patients will be only paying part of prescribed medication
costs. Further, PBS Closing Gap Scheme is co payment measures that is unprecedented to
those who work in pharmacies of UK. It is the scheme that recognizes medication cost as
barrier for the indigenous population, for instance Aboriginals and Torres Strait Islanders for
accessing healthcare. Payment for the PBS medications in these groups of patients is removed
or reduced significantly, which makes the medication much more accessible (pbs.gov.au.
2020).

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The practice of pharmacy in Australia is operating in the similar way to the practice of
pharmacy in UK. However, way of paying for the medication by patients seems to have more
American influence in the terms of using health insurance provider for covering cost of
medication. The strength of the national fourth-hurdle systems such as Australia is having
their processes standardized and centralized. The program of “fourth hurdle” processes after
the drug is measured for the quality, efficacy and safety. This stands in the unambiguous
contrast with the situation of other OCED countries, where comparing economic and clinical
value of the proposed new drug to those of the existing one rarely plays the role in process of
determination of the coverage (Ademi et al. 2014).
In comparison to Australia, Canada offers hybrid model”. The review of its Common
Drug states that national process to review drugs and the assessments of the effectiveness of
cost, combines benefits of the single and centralized review mechanism with the opportunity
for the individual provinces for acting separately in the coverage design, price negotiations
and formulating development. In addition, Canada directly regulates formulary prices, while
PBS clearly influences them. In contrast to this, Australia does not directly regulate the
formulary prices (Canada, 2020).
Recommendations to Improve Australian Healthcare System
Currently, PBS is fastest growing area of the health expenditure. The PBS mission is
to make it reasonable to all the Australians, but at responsible community cost. However, in
current situation, it is placing burden on its future capacity for making it available to the
Australians, the latest developed expensive medicines. Moreover, there are some existing
measures to control cost, which includes brand premium policy, patient co-payments,
Therapeutic Group Premium policy and others. However, the other recommended means to
improve Australian Healthcare system includes by capping PBS budget. Different levels of
reduction of cost will be having different impact on program of PBS. Further, subsidy access

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should be reduced to the non-essential drug, burden of subsidy should be shared with the
private health insurers, minimizing the inappropriate prescribing, flat monetary levy on all the
Australians for financing new drug, system to review periodically for cost-effectiveness of
the generic drug and encouraging generic drugs prescriptions.
Conclusion
Therefore, this report concludes that healthcare care system of Australia and other
OECD nations such as UK and Canada provide best services, but still there are some of the
differences between healthcare system of Australia and other nations in terms of financing,
coverage and PBS. Further, this report found that healthcare system is facing great challenges
in terms of financing the infrastructure for the patients care. Moreover, it has been found that
sustainability of the PBS is therefore the issue of significance. The reason behind increasing
PBS cost is rising prescription of the expensive latest developed medicines that is bolstered
by the expectation and awareness of community. Hence, it is recommended to take the
measures that can help in reducing the high cost of PBS expenditure.

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