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Tuesday, 1 November 2011
Page: 12377


Mr LYONS (Bass) (20:30): The member for Bowman obviously knows a fair bit about health, but he has a short memory. I was there when the former Prime Minister took over Mersey. It was great theatre and very bad for health. There have been lots of others that I can talk about as well. If the opposition were so good at it, why didn't they get it right in their time?

I would like to add my comments to the debate on the National Health Reform Amendment (Independent Hospital Pricing Authority) Bill 2011. Australia has a good health system but we do need to prepare for the challenges of the future. Having looked at hospitals in other countries, I can say that we do have a good hospital system. There are increased demands on our health and aged-care system due to new treatments becoming available, an ageing population, increased rates of chronic and preventable disease and rising healthcare costs. And, as I have said in this place many times before, the only certainty in health is change. The Gillard Labor government is reforming health in Australia. We are creating more beds, reducing waste and aiming for transparency. This bill is an important part of our health agenda.

The Independent Hospital Pricing Authority, IHPA, is an important element of the National Health Reform Agreement, which provides for Commonwealth payments to the states for public hospital services to be based on a national efficient price calculated by the pricing authority. And the authority will take into account the cost of training and the cost of different goods across state borders.

The bill specifies that the functions of the pricing authority are, among other things, to determine the national efficient price for healthcare services provided by public hospitals, develop and maintain costing and classification specifications, determine data standards and requirements for public hospital data to be provided by states and territories, and provide assessments or recommendations in relation to cost-shifting and cross-border disputes. The pricing authority will also be required to publish information for the purpose of informing decision makers in relation to the funding of public hospitals, subject to certain restrictions.

In reaching agreement with all Australian states and territories on 2 August this year, the Australian government showed its commitment to meet the healthcare needs of Australians and to work with the states and territories to deliver a better deal for patients. A key part of the agreement is the introduction of activity based funding. The new independent umpire, the IHPA, will set the efficient price and advise governments on the implementation of this measure across Australian hospitals. The introduction of activity based funding was a key recommendation of the National Health and Hospitals Reform Commission's report.

Activity based funding will be introduced from 1 July 2012. From 1 July 2014 the Commonwealth will pay 45 per cent of the efficient cost of growth in hospital costs, and from 1 July 2017 this will increase to 50 per cent. In total the Commonwealth is investing an additional $19.8 billion in hospital services over this decade. This is a big reform and is a fairer system that will end cost shifting and the blame game. As a previous hospital administrator, I can tell you this is a move in the right direction. The IHPA will take submissions and engage in detailed technical work with clinicians in the setting of the efficient price for services funding by both activity based funding and block funding. Factors will include reasonable access, clinical safety, fiscal issues and efficiency. I am confident this will be a thorough process.

The main purpose of the pricing authority is to promote improved efficiency in, and access to, public hospital services by providing independent advice to governments in relation to the efficient costs of such services, as well as developing and implementing robust systems to support activity based funding for such services. Activity based funding will help to increase the efficiency and transparency of public hospital funding. This is a big departure from the current arrangements where the Commonwealth provides public hospitals with block grants through states and territories, which are not tied to the provision of services. These changes are good news for Australians using the public hospital system.

As I mentioned earlier, change is the only constant in health. These reforms will help to ensure that hospital financing can dynamically adjust to shifting populations, local demographic characteristics, changing costs of delivering medical services from technological and clinical innovation, and the complexity and location of delivering hospital services. As I have said several times in this House, diseases and cures can overcome our planning, but at least paying for services on a case basis is a sensible way of funding.

I wish to note that small regional and rural hospitals are protected under the new financing arrangements through the use of block funding where activity based funding would not be appropriate and to ensure that small rural and regional hospitals are funded to deliver on community service obligations.

As stated in the memorandum, the authority will have nine members, including the chair and deputy chair, with the chair being appointed by the Commonwealth, and the deputy chair appointed with the agreement of the states and territories. The remaining seven authority members are to be appointed with the agreement of the Commonwealth, states and territories. The National Rural Health Alliance in their submission to the Senate committee welcomed the requirement that the board include at least one person with substantial experience or knowledge and significant standing in regional or rural health care, as we know full well that providing some services in rural and remote areas costs more. A clinical advisory committee and jurisdictional advisory committee will also be established to the support the pricing authority in undertaking its operations. Dr Tony Sherbon has been appointed as the Acting Chief Executive Officer of the Interim Independent Hospital Pricing Authority. Dr Sherbon has skills as a senior administrator and doctor and has experience in implementing structural change, the establishment of clinical structures and the design of new public health plans and strategies as a past chairman of the Australian Health Ministers Advisory Council. I am sure he will be an asset in this role.

The new national health and hospitals network agreement combines reforms to the financing of the Australian health and hospital system with major changes to the governance arrangements between the Commonwealth and the states and territories to deliver better health and hospital services. The changes to the funding arrangements will provide a secure funding base for health and hospital services in the future. The new governance arrangements will improve the responsiveness of the system to meet local needs, enhance the quality of services and allow greater transparency. This is a major microeconomic reform that will help to increase the efficiency of services because the introduction of price signals will mean there is an incentive for hospitals to maximise the services they deliver at or below the efficient price. This is good reform and will ensure that more services can be delivered locally. It will also be important for growing areas of Australia where often under the old system public hospital funding did not catch up with the demands that they have.

These reforms are also vital as it is important for taxpayers that their funding is transparently reported, with funding according to services provided paid directly to local hospital networks through the national funding pool. This means Australians will know what is being bought through our massive investment in hospitals—what services are delivered, by which local hospital network they are delivered and at what cost. Australians should have this information so they are confident that the money is being spent where it is needed most. Importantly, this reform will also help to identify underperforming hospitals so that those cases can be remedied and the lessons of highly performing hospitals can be shared.

The Gillard Labor government has a strong agenda for health. Everyone, no matter where they live, deserves access to first-class health care close to home. That is why we have ended the blame game through the national agreement to boost hospital funding, increase local control and expand primary and aged-care services Australia wide. I was in Tasmania when the Liberals sacked the local hospital boards. I was also there when the Liberals sacked the regional boards. I note now that in Tasmania they have a policy to bring back the regional boards after having sacked them.

This means more money, more beds and less waste in public hospitals with less bureaucracy. Hospitals will become more accountable and the doctors and the community will get more say. Plus there will be extra support for GPs and aged-care providers nationwide. Because this is a national deal, every Australian will benefit no matter where they live. Labor do have a proud record on health. In the last four years public hospital funding has gone up 50 per cent. We have tripled mental health funding, delivered 5,500 more GPs and 680 more specialists, and enacted the world's toughest anti-smoking laws.

The Liberals' 10-year record is dim. Out-of-pocket health expenses went up 50 per cent, $1 billion was ripped out of hospitals, and doctor shortages affected six in 10 Australians. I remember when the money was slashed from nurse and doctor training by the minister. Of course, I remember the great feature of the former Prime Minister taking over the Mersey hospital, which did not allow for sensible administration of health in Tasmania.

We had a mess to clean up, but I am proud to say that our national health reform is already delivering for patients. The after-hours GP advice line handled 10,000 calls in its first month of service. New telehealth services are available through Medicare for the first time. We have seen the establishment of the first 19 Medicare Locals to better coordinate frontline healthcare services and education in local communities. Projects to provide more beds have commenced in a range of public hospitals, including the great Launceston General Hospital.

A national efficient price for hospital services so hospitals are funded at a fair level for each service they deliver is vital for the future. This is very important legislation. I hope for the sake of the millions of Australians who rely on public hospital services that this legislation is passed without amendment. Patients, doctors and nurses have been waiting too long for the efficiency, transparency and proper funding that this bill will help to deliver. Our agenda is not over yet.

The finalised plans for Australia's secure, efficient e-health system were released by the government on 12 September. The concept of operations for the personally controlled electronic health record, PCEHR, system is a fundamental part of the move from paper based records to secure e-records. Patients will no longer have to remember every medical test, immunisation or prescription they have had. Doctors and other healthcare professionals will no longer have to rely on patients to accurately recall past treatment. This will enable doctors and patients to work together more easily to provide better care and treatment.

We are a government that is delivering on health. The Consumers Health Forum noted in their submission to the Senate Finance and Public Administration Legislation Committee inquiry into this bill:

CHF welcomes the establishment of the Independent Hospital Pricing Authority, as we anticipate that it should result in the introduction of improved transparency and efficiency in the pricing of hospital services.

The Australian Medical Association also noted that they are generally supportive of the bill.

This is a much needed reform that will result in better hospital administration and in effect better outcomes for patients. Paying buckets of money to hospitals does not encourage an efficient service. Hospitals should be paid for what they do, not just given a bucket of money and told to make it work. There should be an incentive for increased activity. I know that the only way to save money in health is to do it right and do it early. I commend this independent hospital pricing authority bill to the House. I implore those on the other side of this House to get on board with these sensible and important reforms of the Gillard Labor government.