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COMMUNITY AFFAIRS REFERENCES COMMITTEE - 23/03/2000 - Public hospital funding

CHAIR —Welcome. The committee prefers all evidence to be given in public, but should you wish to give any of your evidence in camera you may ask to do so and the committee will give consideration to your request. The committee has before it your submission, No. 62. Do you wish to make any alterations to that submission?

Mrs Smith —No, we do not.

CHAIR —I invite you to make a brief opening statement and then field questions. I also place on record our appreciation for your adjusting to our time needs. Thank you.

Mrs Smith —Thank you for the opportunity to make this submission to the inquiry and to give evidence today. I would like to give a bit of background on the college and then give an overview of our submission. The college was established in 1945 and aims to develop and foster excellence in health service management through education and ongoing professional development. We are a national body and we have about 3,000 members. We provide a network for all health service managers from the various professions, so we represent general managers, doctors, nurses, allied health professionals et cetera. The college also has strong links with academic institutions and we have a major role in accrediting health service management courses. We also have well-established international links.

The key purpose of the college is to be the professional membership body for all health professionals involved in management. We strongly believe that well-skilled and professional health service managers are vital to the ongoing success of the Australian health care system. You will note that the college submission is also supported from submissions from the Queensland and New South Wales branches. We think these two submissions generally support the key issues that we have raised in our major submission.

As members of this inquiry well know, there are growing pressures in our health care system. There is a great deal of debate about how we can develop a more effective system in the context of growing demand and constrained resources. We are all aware that these are global issues. We are all desperately trying to control health expenditure as a percentage of GDP. We are dealing with issues of increased technology, increasing demand and increasing consumer expectations and we are also trying to `up-end the pyramid' so that we are focusing more on health promotion and prevention rather than just cure.

Our current planning, policy, funding and service systems need to be reformed to develop pathways for a different approach to the provision of health services in Australia. In particular, we believe that communities and key stakeholders need to have some discussion and debate about the resources that are available and what our expectations, needs and key priorities should be. I am aware that a lot of other people have said that, and we understand that it is a very difficult process, but we do believe that it is an important pathway to pursue. We also believe that there is a need to provide education to communities and consumers about health care and, in particular, about health choices and health outcomes and to facilitate the understanding of what opportunities they have in terms of their own health care. We noted recently that the New South Wales Health Council has put out a major report. I want to highlight the following statement in the report:

We highlighted honesty as an important value and principle, particularly about the resources available and what is reasonable to expect from the highly professional staff within the system. We need to be open and honest with each other about what we are prepared to pay for our health services and how we want the money to be spent: on community and preventive care or acute care in hospitals.

We strongly believe that we need to move to this sort of honesty level so that we can reduce blame shifting and help to address the real issues and resolve some of the critical problems we have, such as the work force issues that we are currently trying to deal with. The college supports the principles of Medicare but would argue that Medicare, in its current form, is not sustainable.

With respect to the key points in our submission, there is a need to: address the split responsibilities for health between the Commonwealth, states and territories; have one funding source to achieve risk sharing across providers for episodes of care; in this regard, collocation of health service providers may well be a useful initiative; focus on health services, not just on hospitals; and pursue the change in emphasis to prevention and health promotion. A very important pressure on us is to increase investment in information technology development, particularly unique patient identifiers, sharing of information, providing better information and choices for consumers, the development of clinical pathways, care plans and evidence based clinical support systems. There is a need to develop a national health planning and health policy framework; to set national health priorities and outcomes and develop consistent national standards for measuring outputs and outcomes; and to recognise that the increase in private health insurance levels does not necessarily reduce the demand pressures on the public hospital system.

We have also emphasised in our submission that the role of public hospitals is unique in terms of teaching, research and complex care and that private hospitals do not generally pursue these roles to the same extent, or in that package of services, and they also must provide returns to their shareholders. We do support the need for a greater emphasis on the development of quality systems and we support the development of national accreditation standards and more flexible, less costly arrangements for achieving accreditation status. Jim Swinden is going to make a brief opening statement.

Mr Swinden —As Mavis said, our fundamental interest is in ensuring that there are competent and skilled managers in the system. This is a voluntary association with a couple of employees at our national office. As a person who has been in the industry for 20 years and who has been actively involved in the college, I feel that there has been a significant amount of change over that time. Managers in many respects now feel, to an extent, that they are players in a meat in the sandwich situation. They are really the brokers between the clinicians and the health department. There are funding pressures from the health departments and there are pressures from clinicians in terms of advocating for their patients. Equally, the department is there between the federal and state governments. There are a whole lot of pressures in the system that our members feel, and a lot of those do relate to funding.

As an association, we found it more difficult in recent years to provide continuing education, particularly because our members are generally under a greater pressure than they have been in the past. So we have had to change the way we deliver continuing education using videoconferencing, shorter, sharper education sessions and so on. I think they are just indicators of the pressures that are in the system.

Our belief is that health services management requires particular skills. It is not about business management. It is about business management in part, but it is also about dealing with the human aspects. It is unique from the point of view that we are dealing with health professionals who are highly intelligent, highly skilled people, and that requires managers with a great deal of skill in dealing in a very complex system. That is our introduction.

CHAIR —Thank you very much.

Senator KNOWLES —Mrs Smith, I noticed you said that a major part of the responsibility was developing a quality assessment system. What has been done by your managers in terms of setting standards to get qualitative and quantitative measurements for value for money?

Mrs Smith —Most of the managers involved in the various health agencies would be looking at their own business practices, looking at standards that are available through the various accreditation processes, responding to those, assessing what is required where the gaps are, and feeding back through various mechanisms to agencies like the Australian Council on Health Care Standards.

Senator KNOWLES —Is there a standard computer program or whatever that every manager in the health system is now using to be able to put a qualitative and quantitative outcome measurement by which—

Mrs Smith —No.

Senator KNOWLES —What has your organisation done to try and achieve such an outcome?

Mrs Smith —The Australian College of Health Service Executives is largely involved in education and professional development. We do have a formal input to the Australian Council on Health Care Standards. We are certainly talking to them about what we perceive as shortfalls in the system, for example, the need to develop standards and approaches that actually facilitate internal development and responses to accreditation standards.

Senator KNOWLES —How would you do that?

Mrs Smith —There has to be a better engagement of the industry in changing practices and looking at health outcomes. There needs to be, from a government perspective, a framework and again a broader engagement and probably some investment. We have moved from a system of funding inputs to funding outputs, and I think we have all supported that. We are now talking about achieving better health outcomes, and there is a lot of work to be done there. There has not been a lot of work in that regard. The fairly low investment in information technology makes the process even more difficult. So we need a vision and a plan about how we are going to develop this.

Senator KNOWLES —Concerning the recommendation you are saying you put to government, have you got that so that you could provide it to the committee?

Mrs Smith —We have certainly through other mechanisms put forward the concept of developing national standards. The college, apart from its role with the Australian Council on Health Care Standards, has not formally, apart from what we have said here, put forward a proposal. But we would be happy to do so.

Senator KNOWLES —I just want to come to page 3 of your submission in terms of cost shifting. Forgive me for saying it, but I do not understand a syllable of what is in that paragraph. You say:

Cost shifting is unproductive in terms of administrative and consumer effort. It reflects the imperfect but apparently intractable structure of joint Federal/State funding responsibilities. Private/Public sector cost shifting is also a dynamic. Where consumers' welfare is at risk governments must act to minimise such a potential.

I do not understand any of that. I am just at a loss to know what you are really meaning.

Mr Swinden —Cost shifting has occurred, I think, from the managers' point of view because they are under financial pressure to run their hospitals. I do not think they are interested in shifting costs. They are interested in maximising the revenue that they get to their hospital to provide the most care and maximise the services they can. What we are saying is that shifting between public and private sector costs is a dynamic thing. It is happening all the time. Every time there is a change in one set of rules, people will change practice to get the best benefit out of that and, as a manager, I have changed the way that we have operated the hospital to ensure that we get the maximum revenue. I do not think the hospitals themselves are concerned about whether the money comes from state or federal government.

Senator KNOWLES —As a manager, what sorts of instructions have you issued along those lines?

Mr Swinden —In relation to what changes have been made, do you mean, or to not shift costs?

Senator KNOWLES —To not shift costs or, in fact, to shift costs.

Mr Swinden —I can say that, as a manager in the past when casemix funding was introduced in Victoria, we changed the way we admitted patients to make sure that we got the maximum revenue that we could get.

Senator KNOWLES —I understand that, but that means what?

Mr Swinden —In terms of what we did? Patients that were previously not admitted as outpatients were admitted to the hospital to attract casemix funding. So that shifted costs, effectively, from the Commonwealth to the state.

Senator KNOWLES —Have you any other examples?

Mr Swinden —I suppose I have more recently been involved in looking at emergency services in New South Wales and certainly there are issues there to do with the provision of GP services relative to emergency departments. There are certainly issues about the cross-over and the overlap in roles between emergency departments and the provision of services by GPs. It is certainly a grey area and one which causes dilemmas in terms of the extent to which you expand or contract emergency department services and the extent to which that impacts on provision of services by GPs.

Senator CHRIS EVANS —Thank you. I appreciate the submission because it has picked up a lot of points that have actually been raised with us during the inquiry on which we had not read a lot of submissions. One of the key ones is this question of capturing data in hospitals and the failure, it seems, to be able to capture data that tells us anything about outputs, about which hospitals do things well and which do not and whether we are getting value for money in the health system. You seem to recognise that and talk about what data hospitals are good at collecting. Why is it that we are not good at collecting the data that is so useful for governments in terms of determining priorities and where to put the health dollar? Are those structural barriers and how do we overcome them?

Mrs Smith —I think there are a couple of issues. I think that there have been quite piecemeal approaches to developing information systems. There is definitely a lack of money to develop what is required. There is the issue of trying to invest in systems that meet everybody's needs, so there is a question of specification, getting the players to talk together and having some vision about what it is we want as a system. So that is one part. I think the other part starts at the other end. We mention in our submission that we strongly believe that there is a need for a national health plan—a national health policy framework—so that if you cascade that down the states have a framework in which they are working and the health care providers also have a local and a broader framework within which they are working. If we had that framework and we had the sorts of outcomes we want clearly identified, then I think we could start designing our systems and data collection to focus on where we are trying to get to.

I think that at the moment there is a lack of direction about exactly what the priorities are and what we want out of information systems. Quite legitimately there are different focuses. The clinicians would say, certainly in Victoria, that there has not been a lot of development. We are really pleased we have an IT strategy but it has all been about business systems. Unfortunately that end of the game is driven by what needs to be reported for funding for those sorts of issues. If we had a plan about where we were going I think some of those matters would fall into place and there would also be an opportunity for far more strategic investment rather than sometimes, as we see at the moment, little buckets of money for all sorts of little projects. That is really not benefiting the system as a whole.

Mr Swinden —Certainly the information varies depending on the sort of information you are talking about. For example, inpatient information is, I think, quite good generally, however information on outpatients is just hopeless, to be honest. It is pathetic because it is so difficult to define episodes and there has not been a lot of effort put into it because it is not a major component of the system. The other thing is that timeliness of information is critically important. There is not much point in collecting information if it is not timely. From my perspective, having worked in both public and private sectors, I find that private sector organisations collect information that is far less sophisticated but far more timely, so there is a difference in the quality of the information—

Senator CHRIS EVANS —You are not going to say you have a lot of information on dead patients, are you?

Mr Swinden —No. What I am saying is that, for example, private hospitals look at bed days and staff ratios per bed day and things like that, whereas the public hospitals legitimately say a bed day is not a bed day. It is a complex issue and therefore we look at DRGs, but by the time you get DRG information it is a month or two after the event. The private hospitals, I suppose, are focused on the efficiency side of it and the ratio of costs to revenues.

Senator CHRIS EVANS —From our point of view we are interested in knowing whether or not St Vincents does hips well compared with somebody else and whether we ought to be funding them to do hips, or whether we ought to say that St Vinnies does not do hips anymore because they cost twice as much. It seems we do not have any chance of getting that sort of information at all. Those sorts of decisions are not made in the system at all. We just have an argument whether we add five or 10 per cent to the budget and hope that somehow it helps. Is that fair or is that not fair?

Mr Swinden —I think there is more than an element of truth to that. One of the issues comes down to the development, I suppose, of evidence based medicine and the extent to which we do have the evidence, collect the evidence, and actually use it on what is clinically effective and what is cost effective. Certainly, there is not a lot of information in the system there at the moment.

Senator CHRIS EVANS —You picked up this point earlier, Mrs Smith, when you talked about bringing all the players together. The clinicians who have appeared before the committee have tended to the view that they do not have enough ownership about a range of these systems and it is too management driven. Your submission puts a different complexion on that discussion. The nurses were here earlier saying that nurses had no ownership of the management systems and the entering of the information and they think it is a waste of their time because it just gets filed somewhere. It is of no use to them so they do not feel any participation. Is there a problem in the sense of clinical and nursing staff versus management that they do not have an integrated approach to these things?

Mrs Smith —I think the situation is mixed. I think that if you have an organisation, a hospital or health service, focusing on a particular project, and there are some examples of quite innovative work going on in this regard, then it tends, as a particular focus, to bring the players together. If there are attempts to develop these sorts of things on a much broader basis where there is not a focus then I think the priorities are not set and therefore, maybe, the engagement of the whole range of players does not occur. I do agree that there is a need to involve clinicians much more in these processes. It is just a question of whether you try to do it as a system thing or whether you actually focus on some key priorities, and that comes back perhaps to setting national and state priorities and then having at least a volume of activity occurring so that when you do collect the data it does make some sense and you can do something with it.

Senator CHRIS EVANS —Thanks for that.

Mr Swinden —I do not think it is just an issue between management and clinicians either; I think a lot of this data is also collected for health departments for compliance purposes as well. So even the managers would say, `We are collecting a lot of this data and shooting it off and we never see what happens to it either.'

Senator CHRIS EVANS —It is misused by state and by federal politicians to blame the other ones for the lack of funding.

Mr Swinden —I will not comment on that. It is a multilayered thing, and unless you take a comprehensive view of providing the information that is required across the system at all levels you will not solve it comprehensively.

Mrs Smith —If I could add, though, that there is a lot of information that is collected, but it is not shared. It is a pity that it seems many departments collect a lot of information but it is not put back and made available as information to the people who are supplying it, so there is something to be dealt with there too.

Mr Swinden —That is true, because the infrastructure is not there to share it.

Senator CHRIS EVANS —I will just turn to the New South Wales submission. There are some quite radical proposals there, and it is good food for thought for the committee so I am very pleased to receive them. Part of the focus is making health care much more community orientated. One of the things that has been bugging me during this inquiry is this seeming wall that exists between the hospital and what GPs or community health organisations do. There is the failure to share information, the fact that we test people when they come into the hospital with tests they might have had the day before under the GP and that we might not have admitted them if we had known what the GP had done the day before. Your proposals obviously go to overcoming some of those things. I see you talk about compulsory registration of individuals with a preferred GP provider. Could you explain to me what that means?

Mrs Smith —This is something that the New South Wales branch feels strongly about and does have a position on. The important principle is that GPs must become much more part of the care process and I guess that is one way to make that occur. I think others would say that there ought to be a bringing into the whole health care episode of the GPs, perhaps at the centre of that care, to provide incentives for GPs to provide, in a sense, better services where there is availability and access. The concept of family GP practices is deserving of further consideration and some incentives to try to get better services at that primary health care level.

Mr Swinden —We have also talked about a unique identifier for patients and the need to link GPs, pharmacies and hospitals together from a data point of view. There is certainly the capacity to do that now. We would say that there is a major opportunity to take a lot of costs out of the system overall if other parts of the system can see what other parts are doing, so that we can monitor prescription use and we can monitor tests and know what tests have been done at different parts of the system. It requires a whole lot of issues to be addressed in relation to confidentiality and making elements of the data visible to the right people at the right time, but it requires a big investment in infrastructure and in software to make all of this hang together. And this does not just relate to patient issues, it relates to the business side of the health system as well, in terms of e-commerce business to business.

Senator LEES —I would like to pick up on that last issue where you are looking at a constant doctor, I guess partly to prevent doctor shopping as well as to keep track of treatment. When you talk about a patient identifier, could you expand on that a little for us? Privacy implications have been the reason that there has been very little progress in this area. We keep being told that the total level of medication someone is on or their interaction with other doctors is hidden for privacy reasons, so how can we get round some of that?

Mrs Smith —The unique identifier is purely having a number that lets everyone know who that patient is in a central database. The privacy issues, I acknowledge, are enormous. It appears that work in that area has been quite slow. I know there is a lot of work going on, but I have not seen any particular outcomes or proposals come out of that process at the moment; certainly in some of the states.

One of the keys to the unique identifier is to make sure that patients, clients and individuals have some control and some mechanism to say whether they want to be part of that system. I think the majority of people would say, `That's great. If my records can go on some sort of central database and also I can give approval to a provider to access that data, and if I can also have information deleted if for some reason I am not comfortable with it or have it reviewed, then I think that is probably the key to my moving forward.' Trying to develop the legal frameworks around it is probably a lengthy process. I do not know whether we are ever going to achieve that. Obviously, if you have health care providers who are one legal entity, then to be able to access data within that legal framework is relatively easily done. But I think there is a view that you must give individuals some control over what occurs with their data.

Senator LEES —So they could effectively delete items that they did not want to go on to the central database—perhaps a particular episode of care.

Mrs Smith —Yes, and there are obviously very clear areas where there would be sensitivity.

Senator CHRIS EVANS —It is an obvious point that Centrelink and people like that keep information. Now we have the Job Network where we have hundreds of individual providers who are accessing the records of people who are registered for unemployment. This obviously can be done. I do not want to diminish the privacy aspect.

Mrs Smith —The other issue is to educate the community about what it is and what is trying to be achieved. When you mention identifier numbers, privacy issues, then people immediately feel negative about it. There is a huge education process involved there as well. I think the majority of individuals would say that that could be a good thing.

Senator LEES —If we are looking at improving our health system and improving the outcomes, shouldn't the first thing we do be to set national goals and targets? If you have got individuals in this system with their identifier where alarm bells start ringing, saying, `This is the set standard on this procedure' or `This is what is supposed to be achieved' and obviously something is going wrong, I guess I am trying to go back to square one and look at where we start the process.

Mrs Smith —I agree with you: we need to set some national priorities and have a commitment to achieving that. Having done that, I think it is far more possible to identify what best practice is, and put in clinical support decision making systems that help that. Also, underpinning that means that there is a pathway for the strategic investment that I am talking about. To have the unique identifier and to be able to collect ongoing relevant information about episodes of care obviously contributes to that process, but it also means that there ought to be improved care, more integrated and coordinated care, through having those records available to all the relevant providers.

Mr Swinden —At the end of the day, we have to get down to managing the system based on the people rather than on the episodes of care, because at the moment that is really what we are managing to—information on that. So we do not know what people are doing, moving through the system.

Senator LEES —At the moment we are just tracking DRGs.

Mr Swinden —It might be one person 10 times or 10 people once.

Senator LEES —My last question is with respect to looking at the whole casemix system. We have had some witnesses suggest it is really beyond its use-by date. Other witnesses suggested that it only works in some parts of the system. Can we have your views on casemix, its effectiveness and whether or not we should keep putting so much emphasis on it.

Mrs Smith —I guess it depends on what you think casemix is. Most people involved in the health care field would say that the development of casemix has been a good thing because it does focus on outputs. It does provide a mechanism for accountability, about funds going in and what you produce at the other end.

I should say that casemix has been used very differently in the various states. In Victoria casemix has been used to purely allocate the amount of dollars available on some equitable basis across providers. That is really what it does. It does nothing in terms of putting money where money is really needed. That is another process, and we have talked about setting priorities and having a strategic framework in which to work.

CHAIR —Mrs Smith, you just said Victoria has used casemix to allocate dollars. Have you got an example from another state that does it differently?

Mrs Smith —You can correct me if I am wrong, but New South Wales uses casemix to essentially allocate the dollars from the central pool to the area health boards—the population based funding approach—and then there is another mechanism for the area health boards to allocate that money within the hospitals. The recommendations from the New South Wales Health Council in the recent report is to now extend that casemix approach into specific units of activity, as we do in Victoria. It depends at what level you wish to use that casemix approach to allocate dollars.

CHAIR —I just wanted to get that comparison.

Mrs Smith —I do not think casemix is by its use-by date. It is important to have costing systems that tell us what it costs for units of activity, and casemix does that. Where the difference is is then allocating on a proportional basis of the total funds available where there is a gap between the price paid for a unit of activity and the cost of delivering that unit of activity. I think that is why a lot of people are saying that therefore casemix does not work. The other argument is that if you actually looked at the costs and met those costs and put the money in, then you would have a very different scenario.

Senator LEES —The suggestion was, particularly for the larger teaching hospitals, that there are other components in the education side that are not built into their casemix funding whereas it might be working for a medium sized hospital that does not teach.

Mrs Smith —Yes.

Mr Swinden —They are arguments around the edge rather than about casemix itself. Personally, I think casemix has been extremely effective in doing what casemix does, and that the budget cuts that occurred in Victoria in 1992 could not have been done in any other way. They targeted the hospitals that had the most capacity to meet those cuts and left those alone that did not. As I said, it could not have been done any other way. At the same time, you also have to recognise the inherent dangers in casemix and adjust for those, take them into account and recognise them.

Senator TCHEN —My questions are designed to remedy my own ignorance so if it sounds inappropriate it is not a criticism on you. Firstly, I am intrigued with your written statement where you say that your members:

in all sectors have become increasingly frustrated with the balancing act they have had to perform between demand pressure and resource management.

Isn't this balancing act what you are supposed to do?

Mr Swinden —Certainly, that is true.

Senator TCHEN —That is your job, isn't it?

Mr Swinden —That is true. It is a question, at the end of the day, of how far it goes. I mentioned in the introduction that managers, to an extent, feel that they are identified as the culprits, if you like, and the reason why the system does not work as well according to, say, clinicians or whoever. Certainly that is their job. It is a question of whether they are provided with the appropriate tools to do their job most effectively. I certainly would argue that there are some problems in our expectations. For example, in Victoria we have a 1.5 per cent productivity improvement requirement each year.

You can continue to apply that on and on, but you must get to the point where unless you provide the appropriate funding to actually resource the sorts of productivity improvements that are required, you will just be cutting at the edge. For example, I think approaches like a business process improvement—some call it patient process re-engineering—is something that would be well worth doing. The IT infrastructure that we have certainly is not integrated and it is not adequate to continue to produce the efficiencies that are required so, I think, unlike a business we do not have the resources or the capital to be able to borrow against future savings and, at some point, we have to invest in the future. At the moment, I do not believe that that is occurring.

Mrs Smith —I also add that I think there is no question that we have much better information on financial activity, patient activity, benchmarks-a whole range of information-and it is quite clear that there is not a lot left in the system to meet productivity improvements and increasing demand. So it comes back to my opening comments about it then becoming, `Whose fault is this?' And it can be the managers and it can be the clinicians; it can be a whole range of people, but at some point we have to stop and say that if there is not sufficient money in the system—and we have the objective measures to suggest that this is the case—then you have to start looking at the volume of services. It comes back again to the comments about engaging the community, about their expectations and about the sorts of rationing issues that we have to address. Some of those happen by default now in terms of waiting lists and access to accident and emergency departments and some community based services. That is the point being made.

Senator TCHEN —In that case, can I take it further to this question of quality of care which Senator Lees, Senator Evans and Senator Knowles have all touched on in questions to you. We have received evidence from various people about this quite interesting topic, but one particular set of evidence we received argues that, apart from quality of care—the improvement in quality of care apart from the direct benefit to patients—there is also a benefit of considerable savings to the system and an estimate is that that saving could be of the order of $2 billion a year. That does not seem to have been taken into account by the hospital administration manager profession because, for example, in page 4 of your submission under (h) you said:

The tension between initiatives to drive down administrative costs and creating funding initiatives to improve data/information management of clinical processes is ongoing.

Nevertheless, you are looking at it from the point of view of being a cost of improving data and administrative costs. You are not looking at the improved data or the issue of achieving savings. Is that a shortcoming in your vision?

Mr Swinden —I suppose it gets back to what I was talking about before. To my mind, you have to have the capacity to get funds up-front to produce future savings and quality improvements and I think the improvements that are still in the system are not easy to obtain. They require an investment in systems, in education, in people and in process re-engineering, and I do not believe the money is there in the system to obtain those. I guess that comes back to the issue of frustration. There is a recognition that there are things that can be done. They are extremely difficult, they go beyond individual institutions, they are state issues, they are national issues that require an integrated approach across agencies and they require money. And while we are in an environment where that money is short and we do not have the capacity to actually invest in the future at an agency level, then those things will not occur. So I do not necessarily see them as inconsistent.

Mrs Smith —I think it is true that if we could reduce the number of adverse outcomes, then there would be money to be saved, but it really is the investment time frame and the fact that agencies work from one 12-month budget to the next rather than having a time frame to invest and then achieve a return.

Mr Swinden —We had a presentation by the Leicester Royal Infirmary on patient process redesign late last year, and that was effectively their finding. They had put some millions of pounds into patient process redesign and found that, at the end of the day, they improved the process for the patients and saved money, but it required an up-front investment.

Senator TCHEN —In that case can I ask the question that more or less begs to be asked: do you know if anyone is taking the initiative of putting this item on the agenda?

Mr Swinden —I think in a limited way some hospitals are starting to. But, again, if it is going to be done comprehensively, it requires more than an agency level approach. That is my view.

Senator TCHEN —I am talking about the profession, because you represent the college.

Mr Swinden —Sure. I guess the question is: what can the profession do in the absence of resources? I think you asked why they are frustrated. I think it is like saying, yes, they want to run the 100 metres, but it is difficult if you are hobbled. So it is not that there is a lack of commitment. There is certainly a desire to do these things.

Senator TCHEN —Do you know of anyone who is taking the initiative to put the issue on the agenda?

Mr Swinden —To put it on the agenda?

Senator TCHEN —The national agenda, if you like.

Mrs Smith —The college has supported the findings of the Porter inquiry; we are strongly supporting those recommendations. We have indicated that we want to work with that new committee and to have some input. It is often very difficult to know exactly where to put these matters on the agenda when you are trying to deal at an agency level but also at a state government and a Commonwealth level. I think it does come back ultimately to national planning strategies and priorities. If there was a process in place to develop that framework, that would be the ideal way to bring these matters forward as part of an integrated approach.

Senator TCHEN —In your written submission, under Medicare, there is a single line which says `Federal Council supports the principles of Medicare.' In your verbal submission, you also added the comment that you think that, in its current form, it is not sustainable. Can you clarify that?

Mrs Smith —I think there is a perception by the community that Medicare is fully funded through taxes and it is basically an open-ended system. Quite clearly, the system is struggling at the moment. It could well be that either the benefits that are currently provided to all through Medicare need to be tailored to something that is affordable or perhaps the answer is to put more tax money into the Medicare system.

Senator TCHEN —What do you mean by `portable'?

Mrs Smith —`More affordable', because the system is stretched—

Senator TCHEN —I understand.

Mrs Smith —so it is either a question of more money or reducing services.

Senator TCHEN —Affordable, I can understand. Thank you.

CHAIR —What is the background of most of your members? I do not want to know if you have done jail terms. Are any of you doctors or nurses?

Mrs Smith —Yes. We have a diverse membership. The college attracts a whole range of health professionals who are involved in management in some way. So we have general managers, doctors, nurses, allied health professionals, from both the public and the private sector. So we are very diverse.

CHAIR —If somebody gets a new job and they are appointed to run hospital X, do you ring them up and say, `Hey, how about joining us?' or do they find out about you and think `That's a good thing; I'd better do it'?

Mr Swinden —It is a bit of both.

Mrs Smith —A bit of both. At a local level, usually someone will ring and welcome that person and extend the—

Mr Swinden —It does depend, however, because the membership criteria involve your qualifications as well. So, traditionally, certainly the expectation has been that you would have a qualification in health services management. Increasingly, in recent years some appointments to management positions in health have not been. Therefore, the college has been looking at the issue of how to deal with its membership criteria so that it can embrace those people in management in health.

Senator CHRIS EVANS —Is that because they are appointing outside managers, people with management experience in other industries?

Mr Swinden —Correct.

Senator CHRIS EVANS —Sorry for interrupting, Chair.

CHAIR —No, that is exactly what I want to find out. What qualifications have you, up until now, expected people to tick off on?

Mr Swinden —As Mavis mentioned before, we accredit various courses in health services management across Australia. Some of those are MBA courses with health streams in them. Traditionally, there has been a health services bachelor's degree at the University of New South Wales and a range of others, postgraduate diploma courses, et cetera.

CHAIR —The stories I hear from New Zealand are that they have put managers into hospitals. I had the pleasure of meeting one who was very proud that he had absolutely no knowledge of medicine or nursing. My understanding is that since then there has been a very significant change to hospital management in New Zealand and that that period, that experiment or effort, was not successful. Is that your understanding? Do you follow things across the Tasman?

Mrs Smith —I think your comment is fair. Again, it would be mixed, and the New Zealand health system has been through some fairly difficult times. Obviously, the college view would be that you would want people to have experience and qualifications in health to be able to do the job properly.

CHAIR —Have you had any similar kind of problem amongst your own membership?

Mr Swinden —Certainly there has been a fundamental change in our membership.

CHAIR —From what to what?

Mr Swinden —I always used to say 20 years ago the membership of the college was predominantly white male public hospital CEOs, whereas now we have gone to a far broader membership. There are far more people in health who are looking to get or have obtained management qualifications, so we see our role as management in health rather than health managers.

CHAIR —Twenty years ago: white male public hospital—and doctors?

Mr Swinden —CEOs, generally not; generally probably an accounting background.

CHAIR —I cannot conclude that now they are coloured women from private hospitals?

Mr Swinden —Not necessarily. It is a far more diverse group, but, as I said, our issue is that a number of people currently in management in the system have come from outside. Certainly my personal view is that we need to ensure that we impart knowledge and involve them in our professional development.

CHAIR —Why is your college involved in education? I would just like to know what you are teaching them that they are not picking up in their MBAs with health streams or whatever else.

Mr Swinden —Our education program is predominantly about current issues, so we try and deal with the things of the moment rather than skills based material. And it is about networking, about enabling people to know who they can contact for advice or support and know who to talk to to get information.

CHAIR —Do you get any of your education done by the local tertiary institution?

Mr Swinden —In terms of subcontracting?

Mrs Smith —A lot of the courses are provided through the various tertiary institutions. There are probably two things there. One is that when we are accrediting courses we are obviously looking for relevant health subjects. That does not mean it has to be a total health course; there will be finance, law and those sorts of things and there will be specific health subjects. So we are looking for a balance in those courses. The other thing that the college has involved itself in, in a variety of courses around the states, is to try and attract young graduates into the health field where they already have a qualification but have an interest in health. Then we provide two things: some ongoing education through, say, an MBA program and also a health experience, so it is a sandwich course—it's an old term, isn't it?—and the college can bring people in and provide very targeted education to meet the needs of health agencies.

CHAIR —I like it, actually. Thank you. As Senator Knowles said, it is a bit hard to remember exactly who said what and where when you have been on the road like we have for the last few days, but I think it might have been in New South Wales that we were told of a lively tension between clinical independence and management. In short, no-one is going to tell the doctors what to do, which is a bit of a challenge.

Senator CHRIS EVANS —The Chair is speaking as Dr Crowley, so you are aware of the position she is coming from!

CHAIR —On behalf of my non-conflict of interest position, that is right. Thank you, Senator Evans, that was a fantastic way to stop a person under full steam. The information we were talking about at the time was really very much about efficiencies and best practice, the combination that we have been talking about with you for the last hour. The New South Wales witnesses were saying that this must be management led, that you simply cannot have significant changes of quality and efficiency, outcome data and all those sorts of things if management is not in there up to its elbows.

We have heard that you cannot push doctors around. We have not heard that you cannot push nurses around; in fact, some people would say that they have been trained for 150 years to be pushed around. We have heard that the clinicians have to own things, they have to be responsible for initiating the changes, or at least have a large handprint across it. I just wanted to know your view about how you manage this? It would seem to me that there are two pretty powerful forces butting one against the other here, and I would have thought there is truth in both of those claims. In your experience, how have you managed to try to weave the two together?

Mr Swinden —From my personal experience, when casemix came in here I was running what was, in relative terms, the most inefficient hospital in Victoria and so it had the most to do in catch up. Yes, the managers had to lead the process but nothing would happen without the medical staff being involved and agreeing and believing that change had to be made. You cannot do it without the doctors. It is a difficult balancing act and, as I said before, it requires skill, credibility and leadership. In the case I was in, we reduced length of stay virtually overnight by probably 25 per cent when casemix came in by doctors recognising that there were probably changes that they could make to clinical practice and that it was in the interests of the organisation to do so. That is probably easier in a rural situation, which this was, than it is in a large teaching hospital where change is a lot more difficult. I do not think you can do one or the other—it requires both.

CHAIR —That is very useful. Thank you very much. We have, unfortunately, to stop at this point. If there were further questions, could we please contact you to get answers on the record? I would like to thank you for your submission and your contribution. This inquiry is actually drawing input from outside the usual suspects, so we are assisted when there is that kind of broadening of the debate and some new push for ideas. Thank you.

[1.41 p.m.]