Health Care Systems 2.0

Add periodic pandemics to the ageing populations, accelerating rates of chronic disease, innovative technologies and price increases that are already challenging the durability of healthcare systems and the phrase, ‘a perfect storm’ comes to mind.


Prior to this recent challenge*, many countries have managed their health care system budgets by using a variety of prioritisation methods:

  • In the case of newer therapies, health technology assessment (HTA) conducted in an environment of accountability and transparency, uses technical judgements of clinical and cost effectiveness to determine the most appropriate use of taxpayers’ money.
  • For existing services, a value-based approach, i.e. stop using resources on items that contribute little patient outcomes, has become popular. Unfortunately, even if conducted systematically this is not so straight-forward. As noted by Professor Vlado Perkovic during a 2014 panel discussion, a survey carried out by the ANZ Intensive Care Society found only 5% of treatments given to an intensive care patient were supported by reasonable evidence. Similarly, in primary care, Mark Ebell and colleagues (2017) identified that just 18% of clinical recommendations in the literature were based on consistent, high-quality patient-orientated evidence.
  • A similar focus on system and process inefficiencies and waste have been successful. For example, the UK ‘Sustainable Development Unit’ measured an 11% reduction in greenhouse gas emissions attributable to the NHS between 2007 and 2015 (in line with targets) while the level of health care activity rose by 18%. By 2017, the financial savings associated with this environmental sustainability (mainly energy, waste and water) rose to £90 (AU$182) million annually (Pencheon 2018). There are no shortage of ideas on ways to tackle inefficiencies and waste (see Bennett 2013), however in healthcare systems under strain, who has the time?
  • In an effort to tackle ‘the crisis of medical excess’, Cochrane Collaboration launched a new field, Cochrane Sustainable Health last year. The aim is to engage its global network to focus on highlighting the overuse of medical diagnostics and treatments which harm people and also consume scarce resources leading to underdiagnosis and underuse in other areas.

Prioritisation decisions will face legal, political, commercial and ethical challenges

The pressure on budgets will escalate prioritisation decisions and as the impact is felt by more people, there will be public concern. Governments must proactively engage patients and the general public in the process. To date, those directly affected by access decisions become involved. This base of public participation needs to broaden to ensure continuing societal agreement with how decisions on spending finite resources are made. Understanding this, Littlejohn and colleagues (2019) have developed an online decision-making audit tool as a way to interact with stakeholders and help generate acceptance for the need for health prioritisation and the resulting decisions.

Get some patients - Yes, Minister - BBC - YouTube

As parodied in the episode of ‘Yes Minister’, The empty hospital (BBC 2007), a hospital with no patients is extremely efficient to run. However, placing a greater focus on preventative health is a better way to reduce demand on health care systems. This could include initiatives to provide education to improve population health literacy combined with Government services focused on the social and environmental determinants of health and incentives for individuals to make responsible health choices .

Health care is big business. There are many vested interests who will lobby hard to maintain or improve their position. Incentives will also be needed to encourage identifying opportunities to improve efficiency and eliminate waste, a priority for those currently in the system. The poor take-up of Health Care Homes is an example of how a good idea can be derailed.

Crunch time?

At that same breakfast, Professor Andrew Wilson ‘said the crunch point that would finally prompt action on health care reform would come when it was recognised that Australia’s states, which have very limited revenue raising capacity, could no longer afford to run hospitals. He was also concerned he said, about the affordability of healthcare for consumers, with rising out-of-pocket expenses, and a two-tiered health system that saw insured consumers able to access more extensive health care through the private system than those who used the public health system, even though 60+% of private health care costs were funded directly or indirectly by the public purse.’

Notes & References

*A prophetic report published last January by the World Economic Forum and Harvard Global Health Institute calculated that the annualised costs of flu pandemics alone are similar to those predicted to be caused by climate change. It recommends businesses (and Governments) to prepare to mitigate the impact of pandemics with the same urgency as they are for climate change.

Cartoon source

Healthcare Buyer Beware

First screened at the Tribeca Film Festival in April 2018, and still available on Netflix, The Bleeding Edge is a documentary that could have easily been made about any sector of the health care industry.

No medical intervention is without risk, and although informed consent includes a discussion of potential negative outcomes, health consumers are invariably in no position to make an informed decision.

Firstly, they do not have the requisite medical knowledge, and no amount of internet searching can substitute for formal education and clinical experience in a field. Secondly, objectivity must be affected when a health issue is impacting an individual’s quality of life to the extent that he/she is considering something invasive, be it a medicine or procedure.

Consumers are encouraged to ask questions, and seek a second opinion. However, when you may have already waited months for an appointment, and then paid a substantial out of pocket for the consultation, it takes courage, as well as time and money, to seek the opinion of another medical specialist. This is a very real situation for patients, as confirmed by the Australian Government Department of Health’s newly launched Medical Costs Finder website, and as reported in the media last week.

ESSURE Medical Device Reports (MDR) to FDA during post-market surveillance^

For those who have missed seeing the documentary, it explores Bayer’s permanent birth control device Essure, Johnson & Johnson’s transvaginal mesh, the Da Vinci Surgical System, and chrome-cobalt hip-replacements. Patients who have experienced adverse effects are followed as they try to regain their health; search for answers; support others; and make efforts to raise the alarm. Unlike scientific data, the film personalises and, despite the MedTech industry viewpoint, it clearly shows what ill health, irrespective of the cause, can do to a person’s life.

The documentary also highlights how an intervention can be experienced very differently depending on your perspective. This issue is illustrated using PSA levels as the basis for prostate surgery in a 2018 video on value-based healthcare produced by the Metro North Hospital and Health Service in Queensland. Over diagnosis of prostate cancer and over servicing with prostatectomy are well documented. Urinary incontinence and erectile dysfunction are frequent side effects that are debilitating for patients, while from the health sector viewpoint, the treatment has been a success (see screen shots from the video).

This disconnect is behind increasing calls to integrate patient feedback into clinical practice by use of Patient-Reported Outcome Measures (PROMs) and Patient-Reported Experience Measures (PREMs) (see figure).

A concern focused on in the documentary is the lack of evidence required for medical devices to be approved for marketing in the US. The FDA’s 510(k) pathway enables medical devices to be approved if the manufacturer demonstrates equivalence to a device already on the market. This is considered less rigorous than the standards that apply to new medicines.

Patient Reported items (Source)

Parvizi and Woods (Clinical Medicine 2014;14(1):6-12 ) compare and contrast regulations for medicines and devices and explain that differences are a function of the nature of the challenges in defining and monitoring the safety and performance of devices under conditions of use. Namely, the large number of types of medical device in use; short timelines of innovation with a medical device typically changed by incremental steps every 1–2 years; and the main causes of adverse incidents being sporadic manufacturing faults, long-term wear (particularly in the case of implants) and operator factors.

The Therapeutic Goods Administration (TGA) is responsible for medical device approvals in Australia. Compliance with a set of Essential Principles (EP) for the quality, safety and performance of a medical device is required to be demonstrated by manufacturers to achieve marketing approval (ARTG listing). The rigorousness of requirements depends on classification of risk level for different classes of device. For example, for surgical retractors classified as low risk (Class I), a sponsor can self-certify that their product meets the EPs.  Active implantable medical devices (AIMD), such as pacemakers and those include medicines, tissues or cells, are the highest risk and must be assessed in full by the TGA.

EP#14 Clinical evidence states:“Every medical device requires clinical evidence, appropriate for the use and classification of the device, demonstrating that the device complies with the applicable provisions of the Essential Principles.” It is acknowledged that in some circumstances clinical investigation data are not available or are insufficient in quantity or quality (see Box 4 from Parvizi and Woods 2014). In this situation clinical investigation data from a ‘substantially equivalent’ device such as a predicate or similar marketed device may be used to support the safety and performance of the device under assessment.

In response to public concerns, the TGA published an overview of regulation of Medical Devices in late 2018. It includes that “The TGA has only recently started accepting US FDA 510k approvals to support applications for some implantable medical devices, and these applications are being subjected to further scrutiny by us to ensure that devices that use this pathway are meeting Australia’s requirements.”

Risk benefit evaluations are an ongoing conundrum for health consumers. Until the equation can be communicated with clarity, the same warning must apply as with any other purchase, caveat emptor.

Note: A week prior to the film release in 2018, Bayer removed the Essure birth control device from the U.S. market. The Essure contraceptive device was cancelled from the ARTG on 9 February 2018. Since the device began supply in Australia in 1999 until 6 August 2018 the TGA received 59 adverse event reports relating to women implanted with the Essure device. The reports included changes in menstrual bleeding, unintended pregnancy, chronic pain, perforation, migration of the device, and allergy/hypersensitivity or immune-type reactions. Surgery, including hysterectomy, was required in some instances to remove the device.


In defence of Private Health Insurance?

Having been hit by the proverbial bus (#), although in my case, it was a toboggan, my recent encounter with the Australian healthcare system has left me in awe!

From the impromptu consultation with a holidaying ER specialist; the ordered chaos of the Perisher Valley Medical Centre; the administrative whiz at the Sydney rooms who got a specialist to look at my X-rays, found an early morning appointment followed by an emergency MRI slot. This on the way to the hospital to prepare for surgery, by the said surgeon who added me, along with 2 other ‘urgents’, to the list. The hospital nursing and other staff were as competent and professional. A simple thank you seems inadequate.

Once on the list, the private hospital called to inform me that my PHI fund had agreed to pay for my stay. All I would need to pay was the $450 excess (a trade-off applying to each separate admission for some fee relief). The actual admission process was reminiscent of those scenes from American movies where the parent/partner finds out the very expensive care that his/her loved one needs is not covered by insurance.

I was out of pocket every step of the way. I was well informed upfront as to what costs were likely to be involved. Except for the anaesthetist (and assistant surgeon), whom introduced themselves and then promptly injected me with a cocktail of medicines that mean I can’t remember a thing!

What is one to do in this situation? I didn’t explore the possibilities of not being able to pay the gap between what was being charged and the Medicare scheduled fee. To avoid an out of pocket I would have needed to be driven to a medical service in Jindabyne (35 km) or even Cooma Hospital (100 km) emergency department for the initial consultation and an X-ray. Is it a part of Australian folklore that everyone should be bulk billed at a GP level?

The Australia Medical Association Guide for Patients on How the Health Care System Funds Medical Care (2015) notes that:

  • ‘The Medicare Benefits Schedule (the MBS) is a list of the medical services for which the Australian Government will pay a Medicare rebate, to provide patients with financial assistance towards the costs of their medical services.
  • Medicare rebates do not, and were never intended to, cover the full cost of medical services.
  • Medical practitioners are able to set their own fees for their services.
  • The MBS fee and the Medicare rebate do not reflect the value of a medical service or an amount that medical practitioners should or must charge.’

The same applies to specialist medical fees, as consultations and procedures are covered by Medicare, not PHI. Again, where a gap exists, it must be filled by the patient.

Is PHI being unfairly blamed as the cause for all the gaps and out of pockets, when maybe Medicare was never meant to be as universal as we all wish it was?

I will revisit once all the invoices have arrived!

# with reference to Jenna Price SMH 19 July 2019

Private Health Insurance in Australia

The foundations of the modern Australian Healthcare System are three publicly-financed programmes:  Medicare, Pharmaceutical Benefits Scheme & Public Hospitals. However, private health services are an increasingly critical piece of the infrastructure, with approximately 40% of hospital admissions during 2016/17 occurring in the private system. Although not mandatory, such services can be funded through private health insurance (PHI).

The benefits of PHI include choice of doctor, assistance with the cost of treatment in a private hospital, and the cost of ancillary treatments not covered by Medicare such as dental, optical and physiotherapy. The median waiting time for elective surgery for privately insured patients has been reported to be approximately half that of public patients, at 20 and 42 days, respectively.

The PHI policies currently on offer contain a bewildering combination of benefits, co-payments, exclusions and restrictions depending upon the premium paid. Ambulance transport is usually covered, importantly as a trip may be free in some states/territories of Australia but only for ‘medically necessary’ journeys in others, or not at all.

A recent Choice review looked at free online insurance comparison websites purporting to assist consumers to select the most appropriate policy. They found that ‘free’ comparison sites may actually earn fees that make up a sizeable proportion of total premiums. Some sites only compared  part of the market, while others were owned by the insurance companies they were comparing!

Membership woes

In June 1974, around the time of introduction of universal healthcare, a peak of 78.4% of the Australian population held private hospital insurance cover. At the end of June 2018, this figure was 45.1%, with 54.3% holding ancillary/extras or general cover (ambulance at a minimum). The policy trials and tribulations of maintaining private hospital cover levels are clearly shown in the graph.

Source: APRA Quarterly PHI Statistics 

The 2011 National Health Reform Agreement allowed patients with private hospital insurance entering a public hospital to choose whether to be admitted as a public or private patient. This led to an increase in the proportion of public hospital activity funded through private health insurance. Data shows that while 1 in 12 admissions to a public hospital in 2006–07 were under PHI, this figure increased to 1 in 7 during 2015–16 (AIHW 2017) suggesting that public hospitals were encouraging patients to use their private cover. Subsequently, negatively impacting the cost of PHI premiums and public hospital waiting lists.

As policy holders uptake of medical services and the cost of treatments and procedures both rise, premium affordability is becoming an issue. The trend is away from PHI membership as premiums continue to increase year-on-year at twice the rate of  inflation in an environment of low wage growth. Younger members, who are less likely to claim, are dropping cover (refer graph) leading to the question being asked: how can PHI funds be sustainable and afford to pay (ageing) members’ claims into the future?

Further Policy Reform

In October 2017, the Government announced a significant reform package, aimed at addressing some of the issues described. Successful implementation and adoption of these reforms will be essential to maintain the existing levels of service provided by the healthcare system.


For more detail, see the Parliamentary Library’s ‘Private Health Insurance: a quick guide’ by Amanda Biggs, Social Policy Section (Research Paper Series, 2017–18, 4 August 2017)

Meme source: King Julian Madagascar