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ESTIMATES COMMITTEE E
DEPARTMENT OF HEALTH, HOUSING AND COMMUNITY SERVICES
Program 2--Health Care Access
Subprogram 2.1--Medicare Benefits
- Committee Name
ESTIMATES COMMITTEE E
DEPARTMENT OF HEALTH, HOUSING AND COMMUNITY SERVICES
Program 2--Health Care Access
- Sub program
Subprogram 2.1--Medicare Benefits
- System Id
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Table Of ContentsPrevious Fragment Next Fragment
ESTIMATES COMMITTEE E
(SENATE-Friday, 18 September 1992)
- Start of Business
DEPARTMENT OF HEALTH, HOUSING AND COMMUNITY SERVICES
Program 2--Health Care Access
- Subprogram 2.1--Medicare Benefits
- Subprogram 2.2--Pharmaceutical Benefits
- Subprogram 2.1--Medical Benefits
- Subprogram 2.2--Pharmaceutical Benefits
- Subprogram 2.3--Hospitals, Insurance and Other Health Services
- Subprogram 2.1--Medicare Benefits
- Subprogram 2.2--Pharmaceutical Benefits
- Subprogram 2.1--Medicare Benefits
- Subprogram 2.3--Hospitals, Insurance and Other Health Services
Program 3--Aged Care
- Subprogram 3.1--Assessment
- Subprogram 3.2--Home and Community Care for the Aged
- Subprogram 3.3--Quality of Residential Care
- Subprogram 3.4--Financial support
Program 4--Disability programs
- Subprogram 4.1--Community access and participation
- Subprogram 4.5--Australian Government Health Service
- Subprogram 4.6--Australian Hearing Services
- Program 6--Housing and urban development
- Program 7--Corporate Direction and Support
- Program 6--Housing and Urban Development
- Program 7--Corporate Direction and Support
- Program 2--Health Care Access
Content WindowESTIMATES COMMITTEE E
DEPARTMENT OF HEALTH, HOUSING AND COMMUNITY SERVICES
Program 2--Health Care Access
Subprogram 2.1--Medicare Benefits
Senator PATTERSON --When will the Commonwealth provide written advice to the States regarding the details of the proposed new Medicare agreement? Or have they been written to?
Ms Ariotti --Senator Patterson, a discussion paper will be forwarded to the States today. The paper sets out the direction and much of the content, and identifies area for further negotiation with the States. That paper will go to them today.
Senator PATTERSON --And what years were the original figures for new Medicare agreement based on?
Ms Ariotti --I think you are referring to a table which has been provided to the States as our preliminary basis for discussion. At least it is an illustrative table setting out what the distribution of the new funding might look like. We have used the most recent data available through the Commonwealth Grants Commission. As you know from that table, Senator, there are different elements of the package. For the distribution of the financial assistance grants, the most recent data being used by the Commonwealth Grants Commission is 1985-86. The most recent data being used by the Commonwealth Grants Commission for the cross border flows, the cross boundary flows, is 1989-90 data.
We have been back to the States asking them to confirm the reliability of their most current data available that they can provide to us. We are at the moment going through a process of modelling the distribution of that package and its component parts, using the most recent valid data available to both the Grants Commission and to ourselves and the States.
Senator PATTERSON --Thank you. Do you anticipate a continuing decline in the number of people in private health insurance?
Ms Ariotti --I do not think there is any suggestion, Senator Patterson, that this particular package will have a significant impact on or decrease in private hospital participation rates.
Mr McNeil --Senator, we have given you a answer in writing on that question. We do not believe the Medicare package will have a significant impact in relation to the participation rate with private insurance.
Senator PATTERSON --Yes, I know, but there are other factors that are operating. I am not talking about this having a direct impact. What I am asking is if the decline that we have seen continues--and we have not seen a levelling off of that--will there be increased pressure on the State public hospital system and how will this affect the new Medicare agreement?
Mr McNeil --Senator, there are a number of parts to that. There is likely to be some further decline in private insurance participation rates. I do not think it is valid to go and look at the trend in the last two years and try to extrapolate that forward. It would probably come down by another one or two percentage points. As to whether that creates extra demand on the public hospital system, that is a moot point. There are two schools of thought tossed around. One is that the people who are dropping private insurance are the young and healthy, and that one of the reasons that private health insurance premiums are rising is that the age profile is worsening. The other school of thought is that those young and healthy people who are dropping out of private insurance somehow--
Senator PATTERSON --They have acute accidents, do they not? They end up in acute care hospitals, not as chronic illnesses waiting on waiting lists.
Mr McNeil --Senator, there is no direct correlation between the change in the participation rate for private insurance and public demand.
Senator PATTERSON --Repeat that again, sorry?
Mr McNeil --There is no direct correlation between changes in the private insurance participation rate and public demand.
Senator PATTERSON --You tell that to the Australian private hospitals and the Australian Public Hospitals Association.
Mr McNeil --We have.
Senator PATTERSON --I am sure you have. I am sure it a great debate. Obviously, it is the way we all view the world from different points of view. Could you provide a breakdown of the anticipated expenditure of the $5m allocated to the Medicare negotiations under the Budget? What is that being spent on?
Senator WALTERS --Five million dollars is an enormous amount of money for negotiations, considering your staff are being paid anyway.
Mr McNeil --Senator, as I recall, that $5m relates to things like the development of the patient charter, and information activity and other developmental activity associated with it.
Senator PATTERSON --Right, so it is not for the negotiations; it is for the other aspects of Medicare?
Mr McNeil --Yes.
Senator WALTERS --The Budget Paper specifically says that it is for the negotiations.
Mr Hamilton --It is for the whole pack. It is for all the administrative costs associated with the entire package.
Senator WALTERS --Is that the same $5m that is on page 3.81 of the Budget Paper, the second paragraph, referring to running costs of $5m to facilitate the introduction and understanding of the package?
Mr Hamilton --Yes, that is correct.
Senator PATTERSON --You might not have this figure available, but how many staff of the Department of Health, Housing and Community Services are currently employed in each State? If you do not have that figure, could you take it on notice?
Mr Hamilton --I will just check whether we have the figure but, if not, I will take it on notice.
Senator PATTERSON --And in the Budget Papers it--
Mr Hamilton --It is certainly in the one of the Budget Papers--actually I am not certain that it is in the Budget Papers as thus stated, but we will provide it on notice; it is readily available.
Senator PATTERSON --All right, thank you. The Budget allocates $1.3m, rising to $4.5m in 1994-95, for the establishment of regional units of the Commonwealth Department.
Mr Hamilton --This is program 7.1, Senator; it is not particularly related to the Medicare negotiations.
Senator PATTERSON --Sorry. Under what head of power under section 51 of the Constitution will the Commonwealth introduce legislation to enshrine the principles of Medicare and endorse the Medicare hospital patients charter and seek to establish effective mechanisms by which patients may make complaints?
Mr Hamilton --The section relating to hospital benefits and medical benefits.
Senator PATTERSON --Have you sought legal advice as to whether the Commonwealth Government has the constitutional power to establish patients charters and have the hospitals abide by those?
Mr Hamilton --I should also have mentioned section 96, of course, because these are financial assistance grants. I do not know that we have sought specific constitutional advice.
Senator PATTERSON --There has been some question raised about the constitutionality.
Mr Hamilton --To the extent they relate to payments to the States, they would be conditions of grant under section 96. To the extent they relate to things the Commonwealth is doing directly, they would be under the hospital benefits power.
Senator PATTERSON --Does casemix funding come under this one?
Mr Hamilton --Yes, it does.
Senator WALTERS --I have quite a number for this too, in regard to the waiting lists. According to Budget Related Paper No. 8, $50m will be provided to the hospitals to put in place better procedures for managing waiting lists. Has the Department estimated the extent to which waiting lists are a problem?
Ms Ariotti --Senator Walters, as you know, waiting list data is developed by, maintained by and is indeed the responsibility of the State and Territory governments which manage the hospital system. Now regrettably, Senator, the waiting list and waiting time data both within and between States is inconsistent; different definitions are used; basically it is a shambles--it is a hodgepodge. To the extent that there is waiting list data within States, we have taken a look at that data. States have in fact provided us with information--some of it publicly available and much of it on a confidential basis--so we have been able to have a look at the extent to which there are waiting times that would appear to be inappropriate in certain specialties and in certain geographical areas where there appear to be very large numbers on waiting lists, although the extent to which people are in fact on more than one waiting list at more than one hospital we cannot yet determine.
Waiting times are not universally a problem. It is certainly clear from our discussions with States that it is a problem in some specialties, largely where there may be shortages of specialists, and in some geographical areas. So, to the extent we can, we have done as thorough an analysis as we can of the waiting times and waiting lists.
Senator WALTERS --How do you intend to spend the $50m?
Ms Ariotti --It is a two-pronged approach, Senator Walters. A small proportion of that money, we believe--the Government believes--must be devoted towards, if you like, a longer term structural reform of how waiting lists and booking lists are managed, how they are clerically and clinically validated, to ensure that patients are being admitted on the basis of clinical urgency. To some extent this is already starting, at least in one State, and we believe that this needs to be extended across the country. I think the State health departments likewise are fairly keen to pick up on this initiative. The bulk of the money will be devoted towards targeting those areas where waiting times do appear to be excessive, particularly for the aged in procedural specialities such as orthopaedics and in geographical areas where there appear to be waiting times that are excessive.
Senator WALTERS --How much is being spent on the longer term structural reforms and all that airy-fairy sort of stuff? I ask because in the past the Government has, in the various Budgets, given a lot of money to reduce waiting lists--$300m indeed at one stage--but it did not appear to do a thing to reduce waiting lists. You have not established the problem; you are unable to establish the problem; you have now been given another $50m. If $300m did not work, why you would expect $50m to work I have no idea. It just seems to me to have been a political statement in the Budget rather than any serious attempt. If you do not know what the problem is I do not understand why you would even contemplate putting $50m into it. Could you give me the split-up of that $50m and how it is going to be spent.
Ms Ariotti --Could I firstly correct your misapprehension, Senator Walters, that we do not know that there is a problem. There is indeed a problem. To the extent that we have analysed the material, we understand that there are problems. We are not saying the problems are universal. In terms of the divvying up, if you like, of the $50m in this current financial year, we have to discuss with the States and Territories precisely how that money will be spent. Our best estimates at this point are that around about $3m to $3 1/2m would be spent on putting in place the procedures which are the basis for the longer term structural reform of waiting lists. The residual would be spent on increasing throughput in long-wait areas.
Senator WALTERS --How do you do that?
Ms Ariotti --That is a matter to be negotiated with the States. We have yet to start our discussions with the States on these matters. We intend to start them next week. So we are not in a position to tell you precisely how that is going to occur.
Senator WALTERS --How much of the $300m that was granted in one of the previous Budgets was used to decrease the waiting list?
Ms Ariotti --Certainly the program that the Commonwealth funded in 1987-88 to address the waiting time problem for elective procedures was very effective. It resulted in 100,000 additional public patient procedures and the opening of quite a few additional day surgery facilities and theatre sessions. So to suggest that the previous programs implemented by the Government were unsuccessful is again something of a misapprehension.
Senator WALTERS --Would you acknowledge that we still have a problem?
Ms Ariotti --We would all accept that we have an increase in the ageing population, we have ascending expectations of what technology can deliver and we have an increasing population. There is bound to be an increase in the requirement for particularly acute in-hospital procedures and elective procedures. We estimate that there will be a growth in demand of about 29 per cent, or there has been, between 1986 going up to the year 2001.
Senator WALTERS --I could not agree more with everything you are saying; that is why putting a cap on health expenditure is so difficult. In which specialties and in which States are the waiting lists at their most acute?
Ms Ariotti --The information which we have from the States indicates a not uncommon pattern across the specialties in the procedural areas; those being predominantly orthopaedics, ear, nose and throat elective surgery and in ophthalmology. We actually provided some of this information in a question on notice to Senator Patterson and we indicated that we have, two days ago, written to the State health authorities asking for their permission to provide you with some of the information which was provided to us on a confidential basis. I have yet to have a response from the States on that point.
Senator WALTERS --So how many extra procedures do you expect from that $50m?
Ms Ariotti --From our analysis and in estimating an average cost per case--and bear in mind that there is a very large standard deviation around that mean--our current estimates, to be confirmed following discussions with the States, are that we could probably tackle an extra 26,000 to 30,000-odd procedures through the application of this money in 1992-93.
Senator WALTERS --What is the average cost of, say, a hip replacement?
Ms Ariotti --I would have to take that on notice. It varies very dramatically between the States because the average length of stay for hip replacements varies dramatically. In fact, it is one of the areas of inefficiency that we would be hoping to tackle through this particular Budget package.
Senator WALTERS --Can you give me a rough guess?
Ms Ariotti --It would vary somewhere between six and sometimes five to 20 days. That is a very big cost difference.
Senator WALTERS --No, I am talking about dollars. Can you give me a rough guess?
Ms Ariotti --To the extent that the average cost per day is around about $400 to $450, it would range anywhere between--
CHAIRMAN --Two thousand five hundred up.
Ms Ariotti --Thank you very much, Senator West.
Senator WALTERS --Come on! You are leaving out so many things when you class just accommodation because there is the prosthesis, theatre fees and so much attached to that.
Ms Ariotti --Indeed, and that would be included on average in the average cost per bed day.
Senator WALTERS --So the prosthesis would be included in that?
Ms Ariotti --Yes, on average.
Senator WALTERS --So it could be as low as $3,000 for a hip replacement?
Ms Ariotti --And up, depending on how many days stay in hospital.
Senator WALTERS --Could you check that and give me that figure later?
Ms Ariotti --I will take that on notice.
Senator WALTERS --Could you also take this on notice: what is the cost of cataract operations and hernia repairs? These would be some of the most prevalent waiting lists areas. How many hip replacements and cataract operations does the Department expect to be performed as a result of this $50m?
Ms Ariotti --It is far too early to be so precise and indeed prescriptive about the targeting of that expenditure. I have indicated to you that the data that has been provided by the States is, in a sense, not entirely adequate to allow us to get down to that level of precision. That is precisely what we are intending to discuss with the States when we start talking with them next week.
Senator WALTERS --I should have thought that, before allocating the $50m, you would have said, `We want to get rid of X number of people off the waiting lists' and put the money up for that rather than the other way about. I should have thought that you would have put up $50m and said, `We do not know what that will do'.
Ms Ariotti --To a large extent most of the States do not classify people on their waiting lists by discrete sub-specialties, such as you are talking about. They will classify them against a specialty designated as ophthalmology, orthopaedics, cardiology or cardiac surgery. That, indeed, is one of the deficiencies in the States' waiting list data which will be rectified with the introduction of our Australian DRG grouper which will be starting to be used now.
Senator WALTERS --Those figures are available in the big public hospitals.
Ms Ariotti --It would be very useful, Senator Walters, if you have that data to let us have it, because the States have not been able to give it to us.
Senator WALTERS --I think you will find that they have it because the surgeons know what they have on their lists. They may not want to give it to you, but it is available.
Ms Ariotti --I think that may be the case.
Senator WALTERS --Has the Department estimated the number of people who will need to be employed in order to develop the criteria for assessing the clinical urgency of cases and changes to admissions procedures?
Ms Ariotti --We have not estimated with the sort of precision you are talking about.
Senator WALTERS --You have not done any of that?
Ms Ariotti --In any case, in Victoria, where clinical urgency criteria are applied, the people who actually developed the criteria for the clinical urgency were indeed the colleges and learned societies. It is certainly not an activity that bureaucrats would, in any sense, wish to take over from the clinicians. It is much more appropriately a job for clinicians. In terms of the clerical validation of waiting lists, that is something that can, I suspect, be done usefully by people who are currently employed in hospitals in the admissions areas.
Senator WALTERS --How long will it take for all that to take place? How long will it be before the patients will be able to receive the operations that are required?
Ms Ariotti --It is not intended that the flow of the proportion of the new money devoted to waiting lists, to increasing the throughput in long-wait areas and in geographical areas of some need, would be held up pending the development of some of the longer term structural reforms.
Senator WALTERS --When will it be available?
Ms Ariotti --As I indicated to you, we will be out there discussing these matters with the States next week. Clearly, it is in the interests of patients that this money flow as soon as is practically possible.
Senator WALTERS --Would you say within six months?
Ms Ariotti --My goodness, I would hope so; yes.
Senator WALTERS --Is it a fact that the national health strategy issues paper No. 2, pages 50 and 51, suggests that increasing admissions does not necessarily reduce waiting list numbers?
Ms Ariotti --My recollection is that that was a point made in the national strategy paper, yes.
Senator WALTERS --What do you think of that?
Ms Ariotti --I think it has to do with the complexities of queuing theory, with which I am not entirely familiar. But I think the national health strategy paper also went on to say that some element of waiting lists is necessary for the appropriate functioning of hospitals--quite obviously particularly teaching hospitals. Certainly, it is true that if you reduced waiting lists to nothing you would have more and more marginal cases, so to speak, being put onto the waiting lists.
Senator WALTERS --Nobody is suggesting that.
Ms Ariotti --But waiting lists are clearly an issue. They are clearly a problem. People are concerned about them and it is quite true as well that there are some clinically inappropriate waiting times.
Senator WALTERS --In the Australian a while ago there were a few articles saying that the Catholic private hospitals would be contracted for public patients. Is there any legitimacy to those articles?
Ms Ariotti --I understand that Minister Howe has had discussions with the Catholic hospitals and, indeed, other private hospitals and that in the course of his discussions they indicated to him that they would certainly entertain the notion of contracting for public patients--particularly the age pensioners and people who were deemed to be in need and who were on public waiting lists. In fact, the capacity to contract now--
Senator WALTERS --Could you check up on that?
Mr Hamilton --There is no need. What Ms Ariotti said is correct.
Senator WALTERS --I have a letter from the Catholic hospitals which says that that has all been exaggerated.
Mr Hamilton --Ms Ariotti was not confirming the details in the Australian. The Australian story was exaggerated, but Ms Ariotti accurately described what has been happening.
Ms Ariotti --I would like to add to what I have just said. It is possible to contract for the care of public patients in private hospitals now under the current Medicare agreements and has been so since 1988. In fact, there is public contracting in private hospitals now.
Senator WALTERS --Yes, of course there is. I am well aware of that. But it is usually in special areas where the public hospital facility is not available; not just to fix up waiting lists. It is a totally different concept. But in this article in the Australian newspaper it was just for getting rid of waiting lists.
Mr Hamilton --The Budget statement indicates that the Government will--
Senator WALTERS --Let me finish. According to the letter I have, that discussion was not finalised in any way at all with Minister Howe, there had been no decision at all on the part of the Catholic hospitals to do that, and the whole thing was well out of order.
Mr Hamilton --We are not accountable for what the reporters on the Australian say. Ms Ariotti described accurately what had been happening. There was a reference in the Budget announcement to the fact that we will be exploring, through the States, the possibility in some circumstances--indeed, the sort of circumstances that you mentioned--that there may be additional contracting.
Senator WALTERS --But you also said that Minister Howe had been talking to the Catholic hospitals who had agreed.
Ms Ariotti --I did not say that, Senator. I think I said that they were not averse to considering the contracting of public patients in their private hospitals.
Senator WALTERS --We will see what the Hansard says. Has the number of privately insured beds in public hospitals increased or declined over the last three years?
Mr McNeil --Are you talking about the number of beds used by private patients in public hospitals? They have declined.
Senator WALTERS --Has the number of privately insured bed days in public hospitals increased or declined over the last three years?
Ms Ariotti --According to our figures here, they have increased slightly.
Senator WALTERS --They have what?
Ms Ariotti --They have increased slightly. Of the occupied bed days--
Senator WALTERS --I think you might find they have declined.
Mr McNeil --Yes, they have declined.
Senator WALTERS --That is better. The Government claims that people with health insurance are receiving preferential treatment and has said in the Budget statement that it will do away with that. Has the number of, first, bed days and, secondly, admissions of Medicare patients in public hospitals increased or declined over the last three years?
Mr McNeil --The number of bed days for public patients in public hospitals has increased marginally from about 11.6 million in 1988-89 to 12 million in 1991.
Senator WALTERS --What about admissions?
Ms Ariotti --Admissions have increased by 8.8 per cent since 1989-90.
Senator WALTERS --Thank you. Is it not a fact that there has been a decline in the number of privately insured bed days and an increase in the number of Medicare days because the use of private insurance in allowing people to go to private hospitals has actually freed up the public hospital system for the treatment of Medicare patients?
Ms Ariotti --I think that is the patients' choice.
Senator WALTERS --Yes, of course it is. The Government has been saying that privately insured patients have been given preferential treatment in the public hospitals and that it intended to do away with that. I am just pointing out that they have indeed declined. Has the Federal Government increased its payments to States for public hospital treatment for Medicare patients?
Mr McNeil --The Medicare hospital funding grant is indexed for cost increases and population growth and has been since 1988.
Senator WALTERS --By what per cent per year since Medicare was introduced? You might have to take that on notice.
Mr McNeil --I would have to go back to get you the detailed figures. I will take that on notice.
Senator WALTERS --How can it be claimed that people with health insurance receive preferential treatment in public hospitals when the total number of insured bed days in the public sector has declined?
Ms Ariotti --It is not clear in my mind that there is necessarily an association between those two statements.
Senator WALTERS --It was said in the Budget statement.
Ms Ariotti --It is true that the Budget package is designed to improve access and to reduce any discrimination that favours people who are privately insured. The national health strategy issues paper No. 2 certainly made mention of the fact that there was evidence that people with private insurance were effectively being queue jumped ahead of public patients--Medicare patients--in public hospitals.
Senator WALTERS --Because public hospitals needed the money.
Ms Ariotti --There are certainly incentives which lead public hospitals to seek revenue through private patients, yes.
Senator WALTERS --How have you been able to stop that?
Ms Ariotti --One of the major elements in the new Medicare arrangements, to apply from next year, is the application of a bonus pool which is specifically targeted to assist public hospitals, to encourage them, to give access to public patients and to improve the share of public patients. It is more targeted and better targeted for public patients.
Senator WALTERS --That is a very good initiative, I should think, because public hospitals have taken in privately insured patients, sometimes to the detriment of pensioners. It is about time something occurred in that regard. Will the Department provide a breakdown of the public and private bed days in both public and private hospitals by State for the period 1983 to 1984 and 1991 to 1992?
Ms Ariotti --To the extent we have that data we can make that available to you.
Senator WALTERS --Thank you.
Senator PATTERSON --I have a question about the health communications network. What is the status of the Joint Federal States Steering Committee for Health Information, Management and Technology: A Compelling Case?
Ms Ariotti --That is a publicly available document. It is a research analysis provided by the group of technical contractors in February 1992, provided to the joint Commonwealth-State steering committee to assist the health Ministers' very early thinking on the health communication network. It went to the steering committee. The joint Commonwealth-State working group is in fact a steering committee. They did consider further elements of that research analysis which were taken forward in a paper, which I am happy to make available to you, also in the public domain--the paper that went to the 14 April 1992 health Ministers conference.
Senator PATTERSON --When I read this I almost agreed with Prince Phillip when he spoke at a Monash graduation some time ago and he said, `Technical barbarians are to be feared more than the primitive kind'. I do not know whether you have read the language in this document but it is most interesting language--nouns used as verbs, psycho-babble and sociological babble. Besides I was fascinated in the introduction where it says, `We have let a thousand flowers bloom. Now you must also plant and nurture an acorn'.
Ms Ariotti --Technical people can have a little bit of romance too.
Senator PATTERSON --That is about the only romance that was in this. That actually gave me some hope that they were not totally technical barbarians. That document is in the public domain. Are there any other documents that we could have that would help us to understand more fully the national health information network?
Ms Ariotti --Yes. All of the documents that have been prepared for the joint Commonwealth-State working group for the health communication network are in the public domain. Contrary to the press reporting this week, to the Department's knowledge there are no confidential papers. I am happy to make available to you the report of the national health information systems and technology strategy workshop. You asked me a question about this in April. The report of that workshop is in the public domain. The paper that was presented to the Australian health Ministers conference is in the public domain and I think that this small seven- or eight-pager that went to health Ministers is probably the most descriptive of the concept of the health communication network.
Senator PATTERSON --If you could provide the Committee with all that information that would assist us greatly. Will that give us examples of how the health communication network operates?
Ms Ariotti --It gives examples of the sorts of problems that the health communication network is attempting to solve and, yes, it does cover some aspects of how it would work.
Senator PATTERSON --Could you give the Committee a breakdown on how it will work? From my reading, it would appear that you would have banks of information in hospitals, doctors surgeries, pathology laboratories, et cetera, which could be accessed by a practitioner who required information about a patient.
Senator WALTERS --It is everything but a card.
Ms Ariotti --It is certainly not a card.
Senator WALTERS --The patient will not be carrying a card, but all the information will be there in the doctor's computer. It can be accessed by the Health Insurance Commission.
Ms Ariotti --No. Can I just explain it to you, Senator. The genesis for this whole idea came from health Ministers because they were concerned about three main things: firstly, that there is information in the health system now. It sits in paper files. It sits at the ends of patients' beds. It sits in the doctor's surgery and it is not really private. Secondly, that doctors--
Senator WALTERS --What do you mean, `It is not really private.'?
Ms Ariotti --I mean that the hospitals are already facing privacy concerns about the fact that they have paper based files--
Senator WALTERS --The doctor's surgery is not.
Ms Ariotti --Doctors' surgeries have their patient records sitting in open filing cabinets, quite often, behind the receptionist. That certainly happens in my doctor's surgery'; it happens in many doctors' surgeries.
Senator WALTERS --It certainly does not happen in mine.
Ms Ariotti --Fine. Secondly, many doctors are already buying themselves computers into which they are putting their own case--
Senator WALTERS --Just a moment. I cannot accept that they are in, you say, open files. That is an emotive term. If a patient's history is sitting in a filing cabinet behind the receptionist's desk or the sister's desk, why is that not private? What do you mean by open files?
Ms Ariotti --Medical practitioners themselves have expressed concerns about the fact that many patient records sitting on paper based files are in fact not as secure as they might be, could be or, very likely, should be.
Senator WALTERS --What do you mean by, `They are not private because they are sitting in open files.'?
Ms Ariotti --They sit in filing cabinets or open filing racks or in the basement of hospitals in big open filing racks. People can come and get access to them. There are not infrequently stories in the newspaper about personal patient confidential information being found in rubbish tips. That information is not confidential, secure and private now to the extent it should be and ought to be and this is causing concern to privacy commissioners at the Federal and State level, to hospitals and to individual doctors--at least those that have been talking to us and, I think, to the college of GPs.
Senator WALTERS --Just let me find out. Mr Hamilton, you might be able to help me. Which program does the ICAC come under?
Ms Ariotti --ICAC is New South Wales.
Senator WALTERS --Yes, but it was to do with Medicare confidential information being made available.
Mr Hamilton --That was a matter in relation to the Health Insurance Commission. If you wish to ask a question about that, you could ask it now.
Senator WALTERS --I just wanted to make sure that we are not missing out on that.
Mr Hamilton --In case you are making a link with the previous remark of yours, in the health communications network there is no proposal that Government departments, or the Health Insurance Commission, would have any access to it. This is a matter of access by permission.
Senator PATTERSON --I want to know whether hospitals, labs, pharmacy specialists, researchers in primary care and, I suppose, genetic registers of disease would be included in this network.
Ms Ariotti --There are already, to use your words, banks of information in the system. They are in doctors' surgeries, they are in pharmacies, they are in pathology laboratories. According to practitioners, it is not a lack of information that is causing some of the problems in our health care system that actually can affect, badly, patient care; it is getting that information in the right place at the right time. As a result of the workshop held in Sydney, the clinicians predominantly, amongst others, indicated to us that they thought there was merit in considering a potential solution that looked at getting that information to the right place at the right time. For example, if you had been to your general practitioner a week ago and had some tests ordered and X-rays ordered, they would be available when you came back to get the results. That quite frequently does not happen now and it causes concern.
So the idea is that the health communication network would be able--with the patient's consent, and with the right privacy, security and confidentiality arrangements in place--to shift information between doctors, for example, or between the doctor and the pathologist, or a GP and a hospital about a patient's test results. The health communication network is not a data base. It does not hold data. It merely is a communication vehicle. It is like Australia Post that has a little truck that picks up a letter from one letterbox and drives it to another letterbox.
Senator PATTERSON --No. You have used that example.
Ms Ariotti --I have used that example, Senator.
Senator PATTERSON --I am sorry, but in Australia Post it goes in an envelope and there are all sorts of rules about what happens--
Ms Ariotti --Correct. That is precisely the same analogy that would apply to the health communication network.
Senator PATTERSON --I am sorry. I do not think you can use the Australia Post analogy. You have got to use an analogy where information is being transmitted along a dedicated line, but that is not like a letter. You might use an analogy of a fax company or something else, but I challenge you on the Australia Post analogy because it is a very different system. You are using two different modes of transmitting information; one is in an envelope which is sealed, and the other is, I presume, down a dedicated line.
Ms Ariotti --I am sorry, Senator, I was attempting to spell out the concept of shifting information which is not clear when people confuse the idea of shifting information with that of something like a card. That was the concept and the distinction I was trying to make. If you want to go to the technical details about how such information would be shifted, I would be happy to talk about that.
Senator PATTERSON --If my medical practitioner decides to go into a hospital where I have had an operation, does he have to have my permission before he can take the information off my medical record from that hospital?
Ms Ariotti --Indeed he would, as indeed he does now.
Senator PATTERSON --So do I give him an overall blanket thing or will it be a case where I can say to him, `On this occasion, yes, I do not mind if you get the information from that hospital.'?
Ms Ariotti --Those are issues that we are exploring now. That is precisely the situation that arises now sometimes. There has been an increasing degree of discussion about precisely how it is now that patients give their consent. It is very unclear. The NHMRC has been looking at the issue of informed patient consent in this area. The same principles that will be developed to apply to patient consent across the board will, of course, have to apply in the instance of this aspect of information exchange as well.
Senator WALTERS --If I had been to a general practitioner, and then went to another one, could I just say, `You can only have part of my history, not all of it; you can only have the tests.'?
Ms Ariotti --As a patient, you do not have to declare to the doctor you are going to that you have even seen another doctor.
Senator WALTERS --Of course I do not. Once I have given permission for him to have some access, does he have access to the lot?
Ms Ariotti --Not necessarily, no.
Senator WALTERS --What do you mean `not necessarily'?
Ms Ariotti --If I could just explain it to you. It is not compulsory for every person in the health care system to use this network. For example, you may have been to a doctor who does not have a computer and is not interested in using this network.
Senator WALTERS --And it will never become compulsory?
Ms Ariotti --No, not as far as I am concerned, and not as far as the joint Commonwealth-State working party is concerned--just as you are not compelled to use a telephone.
Senator WALTERS --So what you are saying is that some doctors may care to take it up but other doctors may not.
Ms Ariotti --Precisely.
Senator WALTERS --And there will never be any compulsion for the medical profession, as a whole--
Ms Ariotti --That is certainly not within the thinking of the joint Commonwealth-State working party, no.
Senator Tate --That is reassuring.
Ms Ariotti --Contrary to the media reporting this week.
Senator WALTERS --There will be no capital gains tax, Minister.
Senator PATTERSON --Is there any possibility of it being extended? The Health Insurance Commission--as we have discovered over the years--holds enormous amounts of data on us in terms of what pharmaceuticals we have had prescribed for us and what we have dispensed, what specialists we have been to and what medical tests we have had and had Medicare benefits for. That information, it may be argued by the medical practitioner at some stage, would be very useful to know. Is there any concept that that data could be available with the patient's permission?
Ms Ariotti --The joint Commonwealth-State working party has not considered that sort of application in detail. There are, of course, proposals that the AMA has an involvement in that it would be looking at claims data being provided direct from doctors to the Health Insurance Commission. That is a very similar concept but it is not part of the health communication network.
Senator WALTERS --What consultation has gone on to this moment with the AMA?
Ms Ariotti --The group of consultants working on this enterprise has had one previous discussion with the AMA. They are briefing the Federal Council of the AMA again this Friday. I have certainly had one discussion on the telephone with the gentleman who I understand is contracted to Dr Bruce Shepherd, who is the President of the AMA, about the issues that he has been writing about this week. There have been many discussions with other groups of clinicians and doctors.
Senator WALTERS --Good. With regard to the AMA, are you having very comprehensive discussions before it all starts? When is it going to start?
Ms Ariotti --It may not even start. We are in a very early developmental stage. Health Ministers have asked us, in a sense, to look at the feasibility of the concept, to look at the issues and problems that surround the concept. If there are not workable solutions to those problems, then I doubt very much whether health Ministers would want to go any further at all. There is no notion about it coming into play next year, the year after or the year after that. It is very much a decision for all of the Australian health Ministers to make. Because we are at such an early developmental stage, we have not been proposing to undertake our very formal consultations with all the interested parties, such as the AMA, for about another three weeks. However, we have been having a lot of informal discussions with people really seeking their ideas about whether or not it is a feasible concept at all.
Senator WALTERS --You will be having considerable consultation with the AMA in the next three weeks?
Ms Ariotti --I would certainly be hoping to have considerable consultation. In view of the extraordinary stories which certainly the Australian Doctors Fund has been involved in peddling through the press, scaring aged people and chronically ill people about things that are nowhere on the agenda, I would certainly hope that our consultants would be having extremely extensive and detailed conversations with the AMA in an attempt to disabuse them of their ideas.
Senator PATTERSON --Did you investigate a Medicare smartcard, as opposed to using a health communications network, as an alternative method of the patients maintaining their own records and only permitting access through the use of a fingerprint, a PIN, or whatever, in lieu of this so that the information was maintained by the individuals--putting the question the other way now?
Ms Ariotti --The Department has never explored that idea, no.
Senator PATTERSON --So it has never investigated the Medicare smart card?
Mr Hamilton --No.
Senator PATTERSON --On the draft Australian standard put out for comment, a document dated 15 July 1992, there are draft Australian standards 92123, 92124, 92125--`Status in Health Informatics', `Patient Held Medical Record Cards' and `Security of Patient Clinical Data and Electronic Clinical Information Systems'. It seems to me that there was a discussion there about a standard for patient held medical record cards. I presume that the committee responsible for looking at the draft Australian standards included the Health Insurance Commission. Is that right?
Mr Hamilton --I do not know whether it included the Health Insurance Commission.
Senator WALTERS --Could we ask them?
Mr Hamilton --Yes. The suggestion that came from one consultant that the smart card would be a way of doing this was rejected by the joint steering committee, and I assume that what you are referring to is part of the reference to the standards.
Senator WALTERS --It was a two-day workshop and the Privacy Commissioner spoke there.
Senator PATTERSON --I have a copy of a document, with a date of issue of 15 July and a closing date for comments of 30 September, which includes `Patient Held Medical Record Cards'. The Health Insurance Commission is part of this committee, and I would like to know about this card.
Mr Hazell --Is that the standards association?
Senator WALTERS --Standards Australia, I think it is.
Mr Hazell --Yes, I think I have seen that document.
Senator WALTERS --As I say, the Privacy Commissioner attended and spoke to the seminar.
Mr Hamilton --If Standards Australia wish to develop a standard for something that the health Ministers have said will not happen, that is their business.
Senator WALTERS --Was the Health Insurance Commission associated with it in any way?
Mr Hazell --The standards association took a decision 18 months to two years ago to set up a standard or a series of standards on health informatics, as they called it, and it invited a number of people to participate in that. It has looked at a range of matters. I notice that in that particular document it is talking about smart cards. That hardly seems surprising since the chairman of that standards committee is in fact extremely interested in smart cards. His interest is related to the areas of the provision of health service, not the claiming of benefits.
Senator PATTERSON --Could you just clarify this for me. If a private company were to say to people that, instead of getting involved in this national network, they can carry their own cards around--a patient held medical record card rather than that which Standards Australia would require or would have looked at--and these doctors who use this system would prefer to use this than to use the other system, it would go along and look at a patient medical record card without the Government being involved in one. Is that right? I am trying to clarify this to try to get some of the spooks out of the system. In some ways, I have a preference for walking around with a bit of cardboard with my medical record on it.
Mr Hazell --Smart cards are a feature in other countries in terms of the management of patient care. They were introduced or began in France a number of years ago, and it is quite confident for groups of practitioners to set themselves up in the particular way that you have mentioned. There have been suggestions by groups of practitioners for that to happen. I know Dr Neame, I think his name is, in Newcastle is very keen on that. Knowing that that is a trend, if you like, that has been adopted elsewhere and could come to Australia, the standards association felt that it was about time Australia had some standards with respect to these sorts of matters. They are not government initiatives at all.
Senator PATTERSON --I cannot find it in this document because this copy belongs to one of my staff members, and I have marked my copy, but it lists--and I have forgotten what the word is--hurdles or problems you are going to face and groups of people you have to deal with in discussing this. Do you know one group you left off? Members of parliament were left off, or left off by the particular organisation which presented this.
It would seem to me that, if you are earnest about wanting to defuse this situation and to say, `Look, we want it all to be out in the open. We want it to be clear.', an appropriate thing would be to have a briefing here in Parliament House for members of parliament. That probably would have been a very good thing early on, but the person who did this little profile to tell you where you were going to have hitches very stupidly left us off the list. I think you ought to put them on the list and we ought to have a seminar here, rather than wasting the time of Estimates going through details, and briefing people who take particular interest.
Mr Hamilton --That is an excellent idea. We will do that.
Senator PATTERSON --I can see some of the benefits of it, but I can see some problems with it.
CHAIRMAN --You have convinced them, Senator.
Senator PATTERSON --All right, but I still have some more questions to ask besides that. Could you tell me the individuals who are involved in the Federal-State steering committee for health information and technology?
Ms Ariotti --That committee is chaired by Mr Alan Bansemer, the Deputy Secretary to the Department. The members are nominated by the Australian Health Ministers Advisory Committee, and are: Mr Ross Wraight, Deputy Secretary of the New South Wales Department of Health, and Mr Ray Blight from the South Australian Health Commission.
Senator WALTERS --Could you tell me where all the banks of information are going to be kept?
Ms Ariotti --To the extent that there are banks of information, exactly where they are now.
Senator WALTERS --No. They are in doctors' surgeries.
Ms Ariotti --And that is exactly where they will stay.
Senator WALTERS --The doctors will have computers.
Ms Ariotti --Only if they want to.
Senator WALTERS --Yes, and the hospitals will have computers?
Ms Ariotti --They already have those.
Senator WALTERS --Yes, and the histories will be in both those places. They will not be accessible at all by any government department, the Health Insurance Commission, or anyone else?
Mr Hazell --Absolutely not.
Senator PATTERSON --Has this system been used anywhere else in the world? Is there another model and have you got any papers or articles on that?
Ms Ariotti --We could certainly make available to you the work that has been done internationally. There is not a national communication network specifically for health such as the one we are proposing. Australia has a particularly unique telecommunications environment through the past activities of Telecom and now Optus, such that, for example, some of the State jurisdictions have State-based networks using fibre optic cabling, quite similar to the sort of national approach that we are discussing now.
Senator PATTERSON --I am just trying to think of some implications of it. If I go to a doctor who chooses to be in this network system, but I do not want as a patient to be in it, have you got to the point where you are thinking about a person being able to opt to say, `I don't want my record on a computer. I want you to keep it on a card, and I have an obsession about my stuff being on a computer'. Would the practitioners then be in breach of the law if they put my stuff on a computer?
One of the concerns I have is that if it is on a computer there is a possibility that that information can be hacked into. If people know that a very senior politician, or a very senior public person, goes to that practitioner--because a receptionist or somebody else knows, or they see them going there--they could hack into the system and get information out much more easily than they can hack into the Health Insurance Commission.
You could say to me, `Well, now, they could get into the doctor's surgery and steal it if they need it all that badly'. I am saying it is much easier to hack into a system when the people using it are not computer literate, such as doctors and doctors' receptionists. It is not their bread and butter; it is a sideline. You would have to change your doctors because they have decided to go into a network.
Ms Ariotti --I think that is a very real concern. Patients at the moment may not know that their doctor is actually putting their personal and private medical information on to a computer.
Senator PATTERSON --Yes, but the computer is not linked up to anything at the moment.
Ms Ariotti --But the computer does not have to be linked up to the health communication network either.
Senator PATTERSON --How does the doctor get the information dumped down the computer?
Ms Ariotti --Only if he wants to be connected.
Senator PATTERSON --The doctor is connected up. The patient can say, `Doctor, I want you to keep your notes about my case on a paper file. I do not want it in your system'. If he does, what will happen?
Ms Ariotti --Under the sorts of regulatory environments and statutory responsibilities under the various privacy legislation that would have to govern an enterprise like this, the doctor would be in breach of such legislation, yes.
Senator WALTERS --Are you going to insist that the doctor inform the patient?
Ms Ariotti --Absolutely. There would be no question that that is the informed patient consent end of the enterprise.
Senator Tate --There is no legislation at the moment, is there?
Senator PATTERSON --No. We are speculating.
Senator Tate --I understand what you are saying.
Senator PATTERSON --The concept people have is that it was a network, and if you are vocationally registered, then maybe you have to be hooked up to it to get your VR, because it is going to make it easier and we are going to reduce costs. I can see the value if a patient goes into hospital and the hospital can get from the doctor, with the patient's consent, details of whether the patient is allergic to Omnipon or whatever else might be a problem that patient has. I can see the value of all that.
However, with all these banks of information that somebody can actually extract information from--and with all the best intentions in most cases--people need to know how extensive that is going to be and whether they can opt out of it. If there is a system where you can opt out of it, then maybe people will not get as spooked about it. That is why we are asking so many questions about it.
Mr Hamilton --We certainly do not see this development of the proposal as merely a technological exercise. There are major issues which we need to address. We want to be able to satisfy ourselves that, as a result of such a network going ahead, patient privacy would be enhanced. I believe that we could only go ahead if it was not only not reduced but also enhanced. Looking at the privacy, ethical or other issues is an equal part of the process down the coming months as the technological issues.
Senator PATTERSON --Obviously, you have more faith in computers than I have. I have a preference for my personal information to be on paper. I think people are less likely to break into people's offices than hackers are to get into systems, especially teenage hackers who find it a thrill to get some information. They do it for no other purpose than the thrill of finding it out. That is beside the point. I think you have clarified some of my concerns. I would ask for a briefing and may well have some questions after that.
Senator Tate --Have you had a bad behaviourist experience with computers?
Senator PATTERSON --No, I have not. My attitude is that we give away our freedoms bit by bit. I do not know who quoted that. Technologically we are giving them away bit by bit. When we know the amount of information contained about all of us in various departments and places and now recorded on computer, Australians ought to be concerned about it and at least it ought to be in the public arena for debate.
Senator WALTERS --Particularly when we hear of the ICAC report where there has been a breach.
Mr Hamilton --That has nothing to do with technology, I might say. That was a very human breach.
Senator WALTERS --Yes.
CHAIRMAN --Are there any further questions? We will get as much information as we can.
Senator WALTERS --I think one of the causes is that the Minister, Brian Howe, in Brisbane said that smart card was off the agenda.
Mr Hamilton --Yes.
Senator WALTERS --I think that probably led to people believing it was on the agenda. You have assured us that it was never on the agenda.
Mr Hamilton --That is correct.
Senator WALTERS --That was probably bad phrasing by the Minister.
Mr Hamilton --Others were putting it on the agenda. The joint steering committee took it off.
Senator WALTERS --He says it is off the Government's agenda.
Senator Tate --It is certainly not on the agenda.
Senator WALTERS --It certainly made people feel it was on the agenda.
Senator Tate --It never was.
CHAIRMAN --Are there further questions?
Senator WALTERS --What action has been taken as regards the report of the ICAC?
Dr Nearhos --I will refer to that report which was issued by ICAC. ICAC was chaired by Assistant Commissioner Roden and when it tabled its report quite a number of significant comments were made, and I will refer to some of those comments.
The report referred to the cooperation that the Health Insurance Commission gave in the ICAC investigation. It said that the Health Insurance Commission regards itself as bound by section 130 of its Act and it does not condone any breach of that section. It went on to refer to documents which had been signed by the two particular officers of the Health Insurance Commission. The officers signed acknowledgments and undertakings that they would not release such information. It said:
I am aware that subsection 130 of the Act provides that a person shall not make a record of or divulge or communicate to any person any information acquired by him in the performance of his duties or in the exercise of his powers or functions under the Act.
The officers who were questioned in ICAC admitted to signing those statements. When it became known to the Commission that these statements were made, the two officers were suspended immediately and the matter was referred to the Australian Federal Police for investigation. It is still being dealt with by the Australian Federal Police and the Director of Public Prosecutions. Our general manager has written very recently to try to expedite their investigations.
Senator WALTERS --So at the moment it is all under investigation and we can inquire of the result at the next Estimates?
Dr Nearhos --Yes.
Senator WALTERS --Have the people whose confidential Medicare information has been given been told that it was their information?
Dr Nearhos --I do not think their names were divulged. I have certainly no knowledge of who those people were.
Senator WALTERS --When it is known do you intend to let them know?
Dr Nearhos --It may never become known who the people were.
Senator WALTERS --Surely the court case will establish that certain individuals were the victims of that?
Dr Nearhos --Certainly, if they become known.
Senator WALTERS --Do you intend to inform those individuals if it becomes known?
Dr Nearhos --Yes.
Senator WALTERS --What action would they be able to take?
Dr Nearhos --I do not know.
Senator WALTERS --Will you compensate them?
Dr Nearhos --One would have to know the circumstances and what the information was used for.
Senator WALTERS --Just that fact that their private information has been divulged.
Dr Nearhos --I do not know what damages there would have been. We would have to wait until the matters have been dealt with.
Senator WALTERS --Unless some sort of compensation is offered, I would imagine that the individual's credibility with the Department and Medicare generally would be very much lower than if Medicare considered it was detrimental enough to come to the party.
CHAIRMAN --Any further questions on that Senator Walters?
Senator WALTERS --No, that is all on that. I will bring that up at the next Estimates.
CHAIRMAN --Are there any further questions on 2.3?
Senator WALTERS --Yes. I have a number on casemix. How much has been spent on casemix development to date?
Ms Ariotti --I will need to get the precise figures for you. In the course of this current Medicare agreement, since 1988 there has been an allocation of some $30m--$5m a year indexed. We are now in the final year of that five-year development life cycle.
Senator WALTERS --You will get that for me?
Ms Ariotti --I will get the precise figures for you.
Senator WALTERS --Which consultants have been employed on casemix related tasks?
Ms Ariotti --Over the five years of the casemix development program there would have been quite a few. I will have to take that on notice and give it to you. I think in previous questions on notice to this Committee we have provided the names of consultants, but I will bring that up to date for you.
Senator WALTERS --Thank you very much. Which projects have been funded and which have been rejected? Could you get that for me?
Ms Ariotti --There would be hundreds and hundreds where applications have been made for grant funding. Only a small proportion of those have been funded. It will take me two or three weeks to get that information for you because I will have to go back through about one hundred files.
Senator WALTERS --Do not do it if it takes an extraordinarily long time.
Mr Hamilton --We will certainly give you the successful grants.
Senator WALTERS --Can the Department estimate how much has been spent by the State governments and the industry?
Ms Ariotti --I could not estimate that. It would be quite significant--in the hundreds of millions, certainly if we include the sorts of developments for their computer systems and for their patient information systems.
Senator WALTERS --So you could not even give me an estimate of that?
Ms Ariotti --If I had to include the staff resources allocated in the hospitals, the doctor time allocated in the hospitals, the time given free by clinicians to committees, it would be very difficult to estimate.
Senator WALTERS --But it would be significant?
Ms Ariotti --It would be very significant, yes.
Senator WALTERS --Having said that, has the Department, or to its knowledge any other body or authority, attempted to measure the cost-benefits of casemix?
Ms Ariotti --There has not been a formal analysis in Australia of the cost-benefit. There is information obviously from overseas and in particular America where they have had a long established use of casemix adjusted measures used for many purposes.
Senator WALTERS --They have hundreds of levels, do they not, in their casemix--a tremendous number?
Ms Ariotti --They have about 600-odd classes in their casemix, which is what we have in Australia, yes.
Senator WALTERS --I thought that we would not have been attempting anything like that number. It was the indication the Department gave me quite a while ago. They would not be going down that very--
Ms Ariotti --I think I may have misunderstood your question.
Senator WALTERS --I thought our casemix was only going to relate to about five or six different casemixes.
Ms Ariotti --If I understand your question correctly, there is a classification system which groups acute in-patients into different classes. There are about 512-odd classes in the Australian customised classification system. There are several classification systems used in America. I think one of them has at most 1,100 classes and it goes down to about 500-odd in the different classification systems.
Senator WALTERS --I thought the 1,100 was more accurate. I did not know they went down much below that. Has the Department attempted to measure the cost of administration in relation to the introduction of casemix funding to, first, the Commonwealth, second, the States, third, private hospitals and fourth, health funds?
Ms Ariotti --No. We have not attempted to directly measure that. I was asked this precise question at the Australian Private Hospitals Association congress when I was in Hobart and the answer I gave then--two weeks ago--was that, firstly, there is a huge opportunity cost to not having better information, and to the extent that there may be an additional administrative cost it may well be offset by the cost efficiencies that are derived by using this system. There is no question of that. I am not sure that anyone has actually made a determination that says the current level of administrative costs in our health care system is appropriate, too high or too low.
Senator WALTERS --Surely you might have some influence?
Ms Ariotti --Once the infrastructure is in place it is unlikely that there will be huge administrative overheads--unlike America, may I say, where they use it certainly as a prospective payment system and in conjunction with a billing system. Since they have so many private insurers who have to pay hospitals on individual private billings there is a very high administrative cost, not associated with DRGs or the use of DRGs but just with the fact that they pay individual billing, which is why the administrative cost for the insurers in America sits at around 30-odd per cent.
Senator WALTERS --Has the Department signed a contract for the development of an Australian national DRG grouper?
Ms Ariotti --Yes, Senator, we have provided full details on this particular consultancy in at least the last two Senate Estimates Committees. A contract was signed early last year for--
Senator WALTERS --Was that a computer program?
Ms Ariotti --It is a piece of software. That software is now in a lot of hospitals. It is being ported to a lot of hospital information systems environments. We are now in the process of working with Australian clinicians to develop the second version of that grouper.
Senator WALTERS --With whom was the contract signed?
Ms Ariotti --The contract was signed with 3M Australia.
Senator WALTERS --Has the Commonwealth agreed to subsidise the cost?
Ms Ariotti --The Commonwealth is subsidising the cost of the licences that have to be purchased by individual hospitals, yes.
Senator WALTERS --How much?
Ms Ariotti --I would have to take that on notice. It is a very complicated contract, a very technical contract. But I would be happy to take that question on notice and other questions to do with that contract, and give you written advice on it.
Senator WALTERS --I would like as much as you can, if you would.
Ms Ariotti --If you could just be specific though about the sorts of details you want.
Senator WALTERS --As much as you can give me about the contract and how much the Government has agreed to subsidise it, et cetera. What are the estimates of sales of the grouper and how many have been sold?
Ms Ariotti --Again, that is part of the contract. It is a three-year contract with an estimated number of licences. The complexity about the licences is that they can either be mainframe licences or PC licences on networks. So because of that I would need to come back to you with a rather more complicated answer than I could give you here. It is part of the detail of this contract which I can provide to you.
Senator PATTERSON --Is there any date on which it will be implemented? A lot of money has been spent. What date are you anticipating implementation?
Ms Ariotti --We have been working towards a date of 1 July 1993 for having in place the infrastructure to implement a case-mix payments system for hospitals, at least for acute in-patients. Quite obviously, it is not going to be possible on 1 July 1993 to shift from one sort of payments system that has been applying on 30 June 1993 and the next day say, `This is what is happening'.
So, in the course of our negotiations on the new arrangements under the Medicare agreement, we will be talking with the States, starting next week, on the logistics of rolling it out, starting from 1 July 1993. It is likely that we would have a roll out that would be across States. But for teaching hospitals or for the types of hospitals that have the costing systems in place, we would roll it out gradually over the three years commencing 1 July 1993.
Senator PATTERSON --Thank you.