Mr David Kalisch Commissioner, Hospital Studies Productivity Commission Locked Bag 2, Collins Street East Melbourne VIC 8003

Transcription

1 MrDavidKalisch Commissioner,HospitalStudies ProductivityCommission LockedBag2,CollinsStreetEast MelbourneVIC8003 DearMrKalisch The Australian Health Insurance Association (AHIA) thanks the Productivity Commission for the opportunitytomakeasubmissiontothisresearchstudyintopublicandprivatehospitals. Oursubmissionisattached. Inadditiontooursubmission,theAHIAwishestocommentonanumberofgeneralmattersgiven the AHIA s participation in the 30 June 2009 Roundtable and our ongoing dialogue with the Commissionrelatedtothisstudy.Thesemattersareasfollows: Data Recognisingthereisadebateaboutthereliabilityofdatausedtoanalysetheperformanceofthe Australianhealthsystem,theAHIAnotesthatthereisalwaysabodyofdatawhichcanbeclassified as the best available data. This best available data provides a clear body of evidence for the ProductivityCommission sdeliberations. The AHIA s view is that analysis of that best available data by the Commission to compare the relative efficiencies of the public and private hospital systems in this instance is the most appropriateapproachtoensureimprovedhealthoutcomes. DefinitionofProcedure TheAHIAcontendsthattheword procedure bedefinedbythecommissioninthisstudy,inthe way a patient would associate with it if he or she were informed they needed a procedure undertaken.thepatientwouldclearlyunderstandthistomeanthetotalityoftheoperationandthe hospitalcareassociatedwiththatexperience.

2 Riskadjustment TheAHIAisawareofthesuccessof riskadjustment analysisinallowinglegitimateconclusionsto bedrawnfromdisparatehospitalandmedicaldata.indeed,theaustraliancommissiononsafety andqualityinhealthcarerecentlypublishedastudy,measuringandreportingmortalityinhospital Patients (AIHW March 2009) which supports the use of riskadjusted data to analyse the performanceofthehealthsystem. IwouldbemorethanhappytoelaborateontheAHIA ssubmission,orthematterslistedabove,in personattherequestofthecommission. Pleasefeelfreetocontactmeon foranyfurtherinformation. Yourssincerely HONDRMICHAELARMITAGE CHIEFEXECUTIVEOFFICER 27July2009

3 AustralianHealthInsuranceAssociation SubmissiontotheProductivityCommissionresearchstudyintopublicandprivatehospitals Introduction TheAHIAisthepeakbodyfortheAustralianPrivateHealthInsuranceIndustry.TheAHIArepresents 23healthfunds,whichprovidehealthcarebenefitstoover10millionAustralians(reflectingcloseto 94percentofthoseAustralianswithprivatehealthinsurance). PrivatehealthfundsplayanimportantroleinprovidingAustraliansaccesstohospitalcare.Inthe financialyear,2008/09,theahia smemberfundspaidbenefitsworth$7.6billionforpeoplewith privatehealthinsurancetoreceivehospitaltreatment,anincreaseof9percentovertheprevious 12months. Further,theAustralianInstituteofHealthandWelfare(AIHW)reportsthatprivatehealthinsurance funds57.3percentofallsurgeryinhospitals. 1 PreviousreportsontheAustralianhospitalsystemby the AIHW have identified that private funding supports 55 per cent of procedures for malignant breast conditions, 55 per cent of chemotherapy cancer treatments and 70 per cent of same day mentalhealthepisodes. 2 In addition to the direct funding of hospital treatment, private health funds also support the Australian health system through the payment of $3.3 billion worth of benefits for general treatment(financialyear,2008/09)includingaccesstodental,opticalandphysiotherapyservices. TheAHIAnotesthatpreviousattemptstoevaluatetherelativeefficienciesbetweenthepublicand privatesectorshavereliedonmeasuresofinputsratherthanimprovementsinhealthoutcomes.if thepublichospital sresponsetoacardiacarrhythmiaisthroughmedicineandtheprivatehospital s response includes an expensive device, then the only way to evaluate the efficiency of the two treatments is to understand the outcome. To reach a true measure of the relative efficiencies of these two divergent treatment options, the Commission would be required to perform a Cost BenefitAnalysisoftheoutcomes. 1 Australian Institute of Health and Welfare, 2009, Selected Episodes: Hospital Statistics Australian Institute of Health and Welfare, 2008, Selected Episodes: Hospital Statistics

4 1.Partialindicatorsofperformance The AHIA notes the use of the two cost measures (average cost per separation and averagecostpercasemixadjustedseparation)thattheproductivitycommissionproposes toreportinthestudy. TheAHIAdoesnotsupporttheuseofthe20ARDRGsselectedbytheAIHW(Table4of thecommission shospitalperformanceissuespaper). TheCommissionshouldbedissuadedfromusingtheAIHWselected20ARDRGsbasedonaverage lengthofstayastheahiadoesnotconsiderthemreflectiveoftheprivatesector scontributionto treatmentservicesinaustralia shospitalsystem.forexample,theaihwlistcontainsnoneofthe20 leadingproceduresbyaveragecostperseparationperformedintheprivatesectorandcontainsonly threeoftheleading20proceduresperformedbynumberofseparationintheprivatesector(i16z, othershoulderprocedures;o01c,caesareandeliveryand;o60b,vaginaldelivery). TheAHIAbelievesthattheProductivityCommissionshouldseektocomparecostsbetweenpublic andprivatesectorsbasedontheuseoftwoindices.theseindicesshouldbe: Thefirst20procedurescommontoboththepublicandprivatesectorsbyvolume;and Thefirst20procedurescommontoboththepublicandprivatesectorsbycost. Bycomparingproceduresinthisway,differentialsbetweenthetwosectorscanbeconsidered. FortheinformationoftheCommission,inarecentanalysisofthevariationinthecostofinhospital procedures in the Australian health system in 2006/07, the AHIA has calculated that the overall averagecostsforeachepisodeofcarewere: $2,115perseparationperformedintheprivatehospitalsector;and $2,667perseparationperformedinthepublichospitalsector. Thereforetheoverallcostsperseparationare$552lowerintheprivatesector,whencomparedto the public sector performance, representing a 21 per cent differential. In conducting these calculations,theahiaremovedfromtheanalysisthoseproceduresnotperformedinbothsectors, andthencomparedthecostofeachdrggroupbeforeaveragingthosefindings,providingafinal weightedaveragecomparisonofcostsinthetwosectors. Further,theAHIAusedthe20highestutilisedindividualproceduresinthepublicsectorin2006/07 to calculate that the private sector had a lower average cost per separation for 13 of those, representing80percent(2.4millionprocedures)ofthetotalseparationsperformedinthepublic hospitalsector. TheAHIAalsoanalysedthe20mostexpensiveproceduresforeachofthepublicandprivatesectors, andfound11commontoboth.foreachofthose11ardrgs,theprivatesectorenjoyedalower averagecostperseparation.

5 The AHIA notes that in announcing additional funding to address elective surgery waiting lists in January2008,theAustralianGovernmentstatedthatapaymentof$150milliontothestatesand territories would fund 25,000 operations in the public system. This announcement implies that a procedureinthepublicsystemwouldcost,onaverage,$6, This analysis of Australian Government funding for public hospital treatment, when compared againstearlierahiacalculations,providesfurtherevidencethattheprivatesectorperformshospital proceduresatalowercostthanthepublicsectorinmostinstances. 1.3 TheAHIAsupportstheCommission sproposeduseofnhcdcandhcpdatatocompare hospital and medical costs for clinically similar procedures performed by public and privatehospitals. TheAHIAcontendsthattoensurethemostvalidcomparisonofthetwosectors,allrelevantpublic administration costs related to public hospital services must be factored into the Commission s calculations. Forexample,allcosts relatedtoa decisionby acentrallylocatedbureaucratin (for instance)the NSWDepartmentofHealthconcerningpublichospitalpurchasingorhumanrelationspolicies,which isthenrelayedthroughtherelevantareahealthservicebeforebeingenactedbythelocalhospital, should be considered by the Commission as an expense attributable to the delivery of the public hospitalservice,andthereforeincludedinthecommission sassessmentoftheperformanceofthe publicsector. If the Productivity Commission is to ensure a fair and proper comparison of the two sectors, the administration costs, including the administration of taxation receipts which in effect are the equivalentofthe healthinsurancepremium forpublictreatment,associatedwiththepublicsector shouldbeincluded,assimilarexpenditureisusedwhentotallingthefinalcostsofproceduresinthe privatesector. It is also the AHIA s view that the costs which are to be compared by the Commission should be those costs being incurred presently in the public and private sectors and not a comparison of world sbestpractice inanyparticularhospital TheAHIAhasnoobjectiontothedisaggregationofhospitalcostsbyjurisdiction,region andpeergroupasproposedbythecommission. TheAHIAstronglyrecommendsthatthefavourabletaxationtreatmentthepublicsector receivesbeconsideredbythecommissioninitsstudy. FringeBenefitsTax(FBT)andpayrolltaxconsiderationsallowthepublicsectortopayhighersalaries to employees because of the opportunity to classify public hospitals as public benevolent institutions. 3 Minister for Health and Ageing, Media Release, 14 January 2008

6 TheFBTexempttreatmentof publichospitals in particular isamajorsubsidy from theaustralian Government (via total wages costs) and must therefore be included in the Commission s calculations. Otherwise, a form of cost shifting from the states to the Commonwealth will be entrenchedinthecommission sassessment. TheAHIAnotesthatFBTexemptstatusappliestosomespecificentitiesintheprivatesector,mainly religiousandcharitableorganisations. 1.6 TheAHIAencouragestheCommissiontoconsiderthemostappropriateformofinclusion ofthecostofcapitalinitscalculations. Amajorcostfortheprivatesectorintheprovisionofhospitalservicesisthesupplyoffacilities.For validcomparisonstobemade,thecostofallpublicsectorassets,includingland;constructioncosts; the costs of financing any capital investment; depreciation; and Commonwealth grants for the purchase of infrastructure, such as a PET machine for example, need to be included in any evaluationofthepublicsector sefficiency. 1.7 TheAHIAstronglyendorsesacomparisonofthelevelofhospitalacquiredinfectionsinthe publicandprivatesectorsinthecommission sstudy. Havingregardtointernationalexperience,theAHIAbelievesthespecificinfectionsaboutwhichthe Productivity Commission should seek appropriate advice for comparison are Methicillin Resistant StaphylococcusAureus(MRSA)andClostridiumDifficile(C.Difficile). TheAHIAbelievesthattheCommissionshouldconsiderthestudyofdeepseatedorthopaedichip andkneeinfectionsaspartofitscomparisonofhospitalacquiredinfections.othersuggestedareas ofstudyforthecommissionincludethestudyofdeepseatedinfectionsrelatedto(i)heartvalve procedures,(ii)sternalinfectionspostsurgery,(iii)vasculargrafts,and(iv)staphylococcusaureus Bacteraemia. All of these infections can be studied by usage of data which is known and documented.forexample,staphylococcusaureuscanbeisolatedfroman infection,viaawound swab. It is the strongly held view of the AHIA that it is not coincidental that the lowest rate of MRSA infectioninaustraliaisinwesternaustralia,whichistheonlystateorterritorywherenotificationof MRSA infection is mandatory. This notification occurs after cases of infection are confirmed by laboratory results. It would be efficacious for the Productivity Commission to recommend that notificationofallcasesofmrsashouldbemandatedineachjurisdiction. TheAHIAidentifiesthatthereisalargeamountofworkrequiredtocollectdenominatordatainthe AustralianCouncilonHealthcareStandards(ACHS)surveysoninfectionlevels,andthecomplexityof theindicatormakesitlesscomprehensible.theachssurveyswouldbepotentiallymoreeffective,if simple measures such as bed days or patient discharges were used for the denominators, to compareoutcomesforsurgeryordaysduringwhich,forexample,intravenouslinesareinserted.

7 TheAHIAisoftheviewthat,inconsideringotherfactorstocompare,theCommissionshouldfocus ondeaths,mrsainfection,unplannedreadmissiontohospital,unplannedreadmissionstointensive Care, and unplanned readmission to Operating Theatre. In addition, there is an agreed listing of Quality and Safety measures which the Australian Commission on Safety and Quality in Health Carehascompiledwithinputfromvariousstakeholdersinthesectors,andanyoftheseindicators couldalsobeutilised. 1.8 TheAHIAoffersnocommentonthemattersrelatedtoworkforcecharacteristics.

8 2 Multivariateanalysis 2.1 TheAHIAoffersnocommentonthematterscanvassedonmultivariateanalysis.

9 3 Informedfinancialconsent 3.1 TheAHIAconsiderstheIPSOSdatasuitablefortheanalysisofinformedfinancialconsent The AHIA offers no comment on the proposed disaggregation of informed financial consentdatabytypeofproviderandregion. The AHIA offers no comment on the suitability of the outofpocket expenses data collected. 3.4 TheAHIAencouragestheCommissiontorecommendthemandatingofinformedfinancial consent. Medicalorganisationsoftensuggestthatitisdifficulttodiscusspaymentmatterswithallpatients, particularlythosewhoneedurgentoperativecare.the2006ipsosconsumersurveyoninformed Financial Consent found that Anaesthetists continue to affect the great proportion of patients experiencingagap,with29percentofpatientstreatedbythisspecialistgroupexperiencingagap. This equates to an estimated 270,000 patients who received no Informed Financial Consent from thisspecialty. 4 However,theAHIAobservesthattheAustralasianClinicalIndicatorReport publishedby theaustraliancouncilonhealthcarestandardsreportsthatanaesthetistswereabletorecordtheir patients consenttoanaesthesiaandtheirreceiptofinformationontherisksinvolvedat99.6per centand99.5percentrespectively. 5 4 IPSOS, 2007, Consumer Survey Informed Financial Consent, November December Australian Council on Healthcare Standards, Australasian Clinical Indicator Report: , Determining the Potential to Improve, 9 th Edition

10 4 4.1 IndexationofMedicareLevySurchargethresholds The AHIA recommends the linking of the Medicare Levy Surcharge thresholds to the ConsumerPriceIndex. The AHIA notes that the Australian Government has preempted the recommendation of the ProductivityCommissionontheindexationoftheMedicareLevySurchargethresholdsasitsFairer PrivateHealthInsuranceIncentiveslegislation,currentlybeforetheParliament,linkstheproposed tierstotheaverageweeklyordinarytimeearnings(awote)index. The AHIA recommends the Consumer Price Index (CPI) be used to adjust the Medicare Levy Surchargeonanannualbasis.TheuseoftheCPIwouldensureaconsistentpolicyapproachtothe adjustmentofaustraliangovernmenthealthandwelfarethresholdsandpayments,asthecpiisalso usedtoadjust: TheMedicareLevyLowIncomethreshold; TheMedicareSafetyNet; ThePBSSafetyNet; TheBabyBonus;and FamilyTaxBenefitsAandB. The AHIA notes that in the recent Budget, the Australian Government has proposed that the maximumratesoffamilytaxbenefitpartaforchildrenunder16yearsbelinkedtocpi,insteadof Male Total Average Weekly Earnings, to ensure that that payment s indexation is consistent with thatforotherfamilyassistancepayments. 6 6 Department of Families, Housing, Community Services and Indigenous Affairs, 2009/10 Budget statement, Reform of family payments Family Tax Benefit A Removing the link to pension indexation

11 5 Improvingthefeasibilityoffuturecomparisons 5.1 TheAHIArecommendsthepublicreleaseofimportanthealthinformation. TheAHIAbelievesthatcomparativedataonallpublicandprivatehospitalsshouldbereleasedtothe public on an individual provider comparison basis. The information on all matters currentlybeing consideredbythecommissionshouldbereadilyaccessibletomembersofthepublic. The AHIA recommends that all comparisons between public and private should be riskadjusted. Credibleexampleswherethisoccursabound,andsuchriskadjustmentwillpreventclaimsthatany providerdoes only themost difficultcases.thischangewilladdresstheproblemofproviders obfuscatingandthestrengthsarethatitcompareslikewithlike.