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The Parliament of the Commonwealth of Australia

EFFICIENCY AND ADMINISTRATION OF HOSPITALS

Royal Commission of Inquiry

Volume 1: Report

December 1980

Presented by Command 26 February 1981 Ordered to be printed 12 March 1981

Parliamentary Paper No. 20/1981

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COMMISSION of INQUIRY into the EFFICIENCY and ADMINISTRATION of HOSPITALS

VOLUME 1 REPORT DECEMBER 1980

COMMISSION OF INQUIRY INTO THE

EFFICIENCY AND ADMINISTRATION OF HOSPITALS

VOLUME 1

RERJRT

DECEMBER 1980

Australian Government Rublishing Service Canberra 1981

©Commonwealth of Australia 1981

ISBN for complete set of three volumes 0 642 05940 3 ISBN for this volume 0 642 05936 5

Printed by C. J. THOMPSON, Commonwealth Government Pri nter, Canberra

29 December 1980

Your Excellency,

In accordance with Letters Patent dated 6 March 1980, I have the honour t o present to you the Report of the Commiss ion of Inquiry into the Efficiency and Administration of Hospitals.

I return to Your Excellency the Letters Patent dated 29 August 1979 and t hose dated 6 March 1980.

His Excellency Sir Zelman Cowen,

I have the honour to be sir,

Your Excellency's most obedient servant,

J.H. JAMISON Chairman

A.K., G.C.M.G., G. C.V.O., K.St.J., Q.C., Governor-General and Commander-in-Chief, G overnment House, . C ANBERRA. A.C.T. 2600

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29 December 1980

Your Excellency,

In accordance with Letters Patent dated 30 April 1980, I have the honour to present to you the Report of the Commission of Inquiry into the Efficiency and Administration of Hospitals.

I return to Your Excellency the Letters Patent dated 2 October 1979 and those dated 30 April 1980.

I have the honour to be sir,

Your Excellency's most obedient servant,

--­ J.H. JAMISON Chairman

His Excellency The Honourable Sir Stanley Charles Burbury,

K.C.V.O., K.B.E., Governor of Tasmania, Government House,

TAS. 7000

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29 December 1980

Your Excellency,

In accordance with Letters Patent dated 17 April 1980, I have the honour to present to you the Report of the Commission of Inquiry into the Efficiency and Administration of Hospitals.

I return to Your Excellency the Letters Patent dated 15 November 1979 and those dated 17 April 1980.

I have the honour to be sir,

Your Excellency's most obedient servant,

J.H. JAMISON Chairman

His Excellency Commodore Sir James Maxwell Ramsay, K.C.M . G., C.B.E., D.S.C.,

Governor of Queensland, G overnment House, BRISBANE. QLD. 4000

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29 December 1980

Your Excellency,

In accordance with Letters Patent dated 16 April 1980, I have the honour to present to you the Report of the Commission of Inquiry into the Efficiency and Administration of Hospitals.

I return to Your Excellency the Letters Patent dated 16 April 1980.

I have the honour to be sir,

Your Excellency's most obedient servant,

J.H. JAMISON Chairman

His Excellency Rear Admiral Sir Richard Trowbridge, KCVO,

Governor of Western Australia, Government House, PERTH. W.A. 6000

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COMMISSION OF INQUIRY INTO THE

EFFICIENCY AND ADMINISTRATION OF HOSPITALS

Mr James Hardie Jamison, O.B.E. Chairman

Dr John Samuel Yeatman Commissioner

Mr Charles William Lane de Boos Commissioner

Mr F .c. Boyle Secretary

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CONTENTS

Page

l EFFICIENCY AND ADMINISTRATION OF THE HEALTH INDUSTRY l

2 RECOMMENDATIONS 5

3 AUSTRALIA'S HEALTH CARE 23

4 FACTORS BEHIND COSTS AND COST INCREASES 27

5 EFFECTIVENESS OF MACHINERY FOR DETERMINING OBJECTIVES 31

Objectives 31

Policy 34

Resource Allocation 36

Funding Arrangements 36

Health Insurance 46

Manpower 51

Beds, Equipment and Services 53

6 IMPROVING EFFICIENCY AND CONTAINING COSTS 59

Consultation Processes 61

Utilisation and Quality 62

Budgetary Processes and Cost Accountability 63

Organisational Structures 65

Boards of Management 66

Community Health Services 68

Management 69

Purchasing 73

Auditing 74

Doctor Numbers, Training, Rights to Practice 74

Doctor Payment 76

Staff Utilisation and Training 78

Utilisation and Funding 80

Diagnostic Services 83

Funding Effects on Utilisation 84

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MATTERS FOR SPECIAL CONSIDERATION

Accreditation of Hospitals Ambulance Usage and Costs Aboriginals The Aged The Handicapped

CONSTRAINING COSTS

85

85 86 87 88

91

ACKNOWLEDGEMENT 95

APPENDICES

A Commonwealth Letters Patent 97

B Tasmanian Letters Patent 101

C Queensland Letters Patent 105

D Western Australian Commission 109

E Organisations or Persons from whom 284 Public Submissions Received 113

F Commission Hearings 121

G Exhibits Entered in the Record at Public Hearings 123

H Commisslvn Staff 137

I Visits to Hospitals and Institutions 139

BIBLIOGRAPHY 143

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COMMISSION OF INQUIRY INTO THE EFFICIENCY AND

ADMINISTRATION OF HOSPITALS

R E P 0 R T

To His Excellency Sir Zelman Cowen, Knight of the Order of Australia, Knight

Grand Cross of the Most Distinguished Order of Saint Michael and Saint George, Knight Grand Cross of the Royal Victorian Order, Knight of the Most Venerable Order of the Hospital of Saint John of Jerusalem, one of Her Majesty's Counsel learned in the law, Governor-General of the Commonwealth of

Australia and Commander-in-Chief of the Defence Force.

MAY IT PLEASE YOUR EXCELLENCY

1 EFFICIENCY AND ADMINISTRATION OF THE HEALTH INDUSTRY

One of the most telling facts that has emerged from this Inquiry is the

variation between the States and within the borders of each State in the cost of providing a bed in a hospital, and in the use of these beds. If all States in Australia had achieved the same average bed-day costs as Queensland and the same average bed use as Victoria in 1978-79, then the spending by

recognised public hospitals that year - which totalled $2664 million - would have been reduced by $964 million.

A saving of this magnitude is a challenging possibility, and suggesting how to achieve it encouraged the Commission as a goal. The possiblity of such savings must now be accepted as a challenge by Commonwealth and State health

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authorities, by every hospital board, and by the management of every hospital and health institution in Australia.

The thrust of the Commission's Report, the result of months of inquiry, i s

aimed at stressing these matters:

The role of the Commonwealth as a provider of funds, and with overall

responsibility for making available facilities which will promote the good health of the people of Australia, must be clearly defined. In providing funds the Commonwealth must lay down conditions which are to be met if funding is to continue.

The provision of efficient health services must be the responsibility of

the States. The States must take steps to see that the hospitals and institutions under their control are cost-effective, while maintaining the high quality of care. The States thus have the prime responsibility for conserving and using effectively the taxpayers' money. The procedures for providing funds from the Commonwealth to the States

and from the States to the hospitals and institutions and services must

be changed to ensure that funds are spent according to need. Management cost information must be developed. It should be uniform and controlled by each State to ensure that objectives are met and that hospital boards and managements have adequate data. Providers of health services must be seen by parliaments and the public

to be responsible and accountable. All citizens who are able to do so must contribute towards their health care, but provision must be made for pensioners, eligible veterans and the disadvantaged in a way that is easily understood.

A sound health insurance plan must be available to help those who are required to or wish to pay for health care.

Many other factors are mentioned in the Report which require attention.

These include:

closer involvement of the public in the formulation of health care proposals;

elimination of waste in all areas; proper use of staff;

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elimination of improper practices; development of preventative aspects of care; care of the aged, the disabled and the underprivileged, particularly out of institutions.

These and other matters referred to in the Report, if properly attended to, wi ll lead to greater efficiency, cost containment and the maintenance of the high quality of health care which all Australians expect.

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2 RECOMMENDATIONS

The Commission RECOMMENDS that:

Objectives and Policy

1. The Commonwealth must set its objectives in the health field clearly showing what it intends to do, and on what conditions.

2. The States, knowing the objectives of the Commonwealth, must set their own objectives.

3. It be accepted by all governments that objectives be continually revised.

4. It be the responsibility of all governments to make sure that objectives are being met.

5. A Bureau of Health Economics as proposed by the Commonwealth Parliamentary Joint Committee of Public Accounts in 1979 be established.

Funding

6. The present forms of cost-sharing health services should be discontinued and replaced by a method of formula funding.

7. Commonwealth grants to States be provided in the form of a block grant for health to include all present Commonwealth grants to the States and Territories for health, and to include an element for acute psychiatric hospitals, State government nursing homes and deficit-financed nursing homes.

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8. The block grants to be on a population base (per capita) formula adjusted for each State and Territory for age/sex population and Aboriginals. Other factors could also be incorporated in the formula such as a hospital size index or a standard mortality ratio. But the Commission believes the formula should be simple and easy to understand and initially should not include these other factors.

9. The grants be adjusted annually until such time as real costs of services and needs are established. The basis of adjustment will be determined by the Commonwealth on information then available but in such a way as to encourage the States to improve quickly their health and

information systems and determine measures of cost and need. The Commonwealth to provide additional funds for the specific purpose of

enabling the States to determine necessary measures of cost and need.

10. In the first year the grants be based on the actual amounts paid during the previous year adjusted for each State and Territory, plus the amount estimated as being required for additional services included.

11. The grants be adjusted for changes in revenue.

12. The formula-based grants run initially until sound minimum cost criteria are established to enable a system based on needs to be introduced, or until June 1985, whichever is the earlier. The grants then to be renewed for further five year periods as adjusted or be replaced by a

preferred system. Earlier change may be instituted should a needs-based system be developed before June 1985.

13. The grants not be tied to any specific health purpose, but be subject to the States agreeing to meet prescribed conditions as set out hereunder: (a) there should be no increase in the total number of beds provided in each State or Territory during the initial funding period, that is

to June 1985. Bed numbers should remain at existing approved levels incorporating private, public, Veterans' Affairs. This number includes those presently approved and in construction. The condition is not meant to prevent closure of beds and opening of new beds aimed at providing better facilities or a better distribution of facilities according to need.

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(b) assurance of: (i) guaranteed access to public hospitals for all patients; (ii) free treatment for eligible pensioners and eligible veterans; (iii) special arrangements for disadvantaged patients as

determined.

(c) public hospitals charges to be determined by the Commonwealth in consultation with the States and if necessary on a differential basis according to geographical location or facilities status. (d) the States to cooperate in the development of a system for the

determination of true costs in a manner outlined elsewhere in this Report. (e) specified information to be supplied to the Commonwealth as required for:

(i) determining true costs and needs; (ii) revising formula; (iii) monitoring standards and ensuring quality of care. (f) non-hospital services, for example, community health, dental

services, to be provided to an agreed minimum share of funds provided by the Commonwealth. (g) such other conditions as the Commonwealth deems appropriate.

14. The Commonwealth initially continue to provide: (a) the private hospital bed-day subsidy and to review this half-yearly with reduction in cost to the taxpayer in mind; (b) nursing home benefits.

15. The Commonwealth Grants Commission be the appeal mechanism for the States and Territories seeking additional assistance to that given by the formula.

16. The Commonwealth fund additional services and projects by Section 96 grants as it thinks fit, preferably in agreement with the States or Territory.

17 . South Australia and Tasmania separately be encouraged to agree to the

new arrangements but in lieu of agreement to continue with the existing

Cost-Sharing Agreements and special grants until June 1985.

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18. Governments appoint a working party to refine the formula and consider implementation aspects with a timetable such that agreements can be reached and the new arrangements introduced as soon as possible.

19. The consultative machinery presently existing between the Commonwealth and the States be retained and include consultation on health insurance .

Implementation Aspects

20. Recognising that the benefits of the proposal to include psychiatric hospitals and nursing homes in the formula funding arrangements ma y take time to arrange, the Commonwealth may, in the first instance, need t o leave some or all outside the new arrangements. This may remove a

barrier to rapid implementation of the formula arrangments. Eligible veterans may also be included later if this is desired.

21. Recognising that in making annual adjustments to the block grants provided by the formula there could be some convergence on a per capita basis, which will reduce the extent of differences between the States and may lead to greater equalisation of expenditure throughout Australia

than at present, the Commission is not convinced that all States need t o spend the same amount of money per capita. Funds should be provided only on a genuine needs basis, once these can be determined.

Health Insurance - Immediate Development

22. Payment of medical benefits be limited to the insured.

23. The uninsured to be able to obtain Commonwealth benefits by contributing for those benefits in relation to medical and hospital costs only, eligibility for taxation rebate be dependent on the carrying of insurance at basic or higher rates, but not for the Commonwealth bene fit only rate.

24. Hospital and medical benefits for short stay acute patients in psychiatric hospitals be included in basic tables.

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25 . The fund nursing home benefit be discontinued, and that all insured

patients in nursing homes be eligible for the Commonwealth benefit.

26. The hospitals special account be reintroduced.

27. If reinsurance fund arrangements are to continue, the Commonwealth should accept an obligation to fund a constant proportion of the deficit rather than a fixed amount.

28 . If the fund benefit for nursing homes is abolished and the reinsurance fund arrangements are to continue, the amounts required to be funded be divided equally between the Commonwealth, the States and the funds.

29 . Health insurance premiums be s tructured so as to allow a discount for

those who take both forms of cover (hospital and medical) with the object eventually of phasing out the separate single cover arrangements.

30. The registered funds cease offering cover at 100 per cent of schedule for medical benefits.

31. The terms of reference of the various advisory bodies be examined and the medical bene fits s chedule be reviewed in the dual interests of cost containment and patient care.

32. Waiting times for certain scheduled elective items, including maternity benefits, be increased to five months.

33. A charge be raised for non-urgent outpatient attendances, except for eligible veterans and holders of Pensioner Medical Benefit cards.

34. Separate charges not be raised in recognised hospitals for theatre services, prostheses and other items normally the subject of separate charge in private hospitals.

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Health Insurance - Longer Term Development

35. The Commonwealth institute immediate investigations into the principle of taxing the underlying benefits in kind received in public hositals by all free patients (other than those not required to lodge taxation returns), paying due and adequate regard to the need to avoid the imposition of any degree of financial catastrophe on the individual patients or their families.

36. A working party be established by the Government to devise for the future a new health insurance system which satisfies the principles of equity, freedom of access, and payment by those who can afford it, and promotes universal participation.

The Public Sector

37. Following widespread consultation with providers and users, States develop comprehensive health service plans which outline the future development of all components, including capital requirements, of the health system (public and private) on a regional and State wide basis.

38. Comprehensive and timely morbidity data be collected in each State covering both inpatients and outpatients in all institutions. Consideration be given to the Australian Bureau of Statistics carrying out an annual census on the provision and use of institutional beds in

Australia.

39. State health authorities take action more closely to coordinate the activities of their Planning, Finance and Functional divisions.

40. Any future Commonwealth State funding arrangements concerned with cost reimbursement be managed on an accruals accounting basis rather than on a cash basis.

41. Consideration be given to the introduction of a triennial basis for Commonwealth health funding, when true cost has been established.

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42. The Commonwealth and States take steps to develop a program of budgeting framework for the sy stematic presentation of proposed health expenditures, by functi on and purpose.

43. Commonwealth allocations for hospitals should continue to be advised t o the St ates prior to the commencement of each financial year .

44 . The Commonwealth in consultation with the States introduce an

appropriate day only hospital benefit limited to existing recognised hospitals and existing approved private ho spitals and that it monitor t he utilisation of da y fa cilities.

45. Improved communication and consultation patterns between central authorities and service providers be developed. Each health authority should review its performance in the light of criticisms which have been made and take steps to impro ve the present mechanisms for consultation .

46. Ex isting consultative machinery be reviewed in order to consolidate t echnica l and advisory committees into br oader based policy advisory committees and task groups, given clear policy direction and specific reporting times.

47. The involvement of consumer representatives in consultative machinery be expanded.

48. Urgent attention be given to solving the present problems preventing staff rotation between central health authorities and hospitals and that programs of staff rotation be arranged as soon as possible. Consideration should be given to the inclusion of the various

Departments of Health and private hospitals in these rotations.

49. State health authorites review their methods of setting staff establishments and consider ways of allowing institutions greater flexibility in the use of staff.

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The Private Sector

50 . The Commonwealth provide, as a short term measure, an additional direct

bed-day subsidy, over and above the $16 provided under section 33 of the Health Insurance Act, 1973, which all existing approved private hospitals should continue to receive. This additional subsidy should be made to individual hospitals on the basis of direct claims. Existing

individual hospitals should be able to claim on a confidential basis, presenting evidence of the need for subsidy through audited accounts and occupancy figures.

51. The Commonwealth allow private hospitals the right to admit Pensioner Health Benefit card holders and eligible veterans, and provide appropriate financial assistance, on the basis of special patient bed day payments, to those private hospitals which take advantage of this arrangement.

52. Moves to develop practical cooperative service provision ventures between particular private and public hospitals should be encouraged. While they may not be cheaper overall, they may lead to more efficient use of resources and can do no harm, provided there is prior negotiation of terms involving all parties including the appropriate State health authorities.

53. State and Territory health authorities have regard, on a frequently regular basis, to movements of privately insured patients in or out of public hospitals and take action promptly to reduce beds in the public sector where redundancy has occurred.

Utilisation of Institutions

54. Those States which have not yet passed legislation whereby certain long stay patients in acute hospitals will be required to contribute to their hospital costs after sixty days, be encouraged to do so without undue delay.

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55. The States examine and determine areas where hospital facilities could

be converted to· minimal care wards and to implement those conversions.

56. The States determine how to make use of low cost smaller hospitals as alternatives to more costly institutional care.

57. The States review the role of all teaching hospitals, by a task force,

which should include representatives from the Health Authorities, Education, Treasuries and the Medical Profession.

58. There be a formalised appointments system for the selection of medical staff in all hospitals.

59. There be routine assessment of performance of medical staff in hospitals.

60 . Delineation of hospital roles be undertaken.

61. The States assume responsibility for the quality of care in private hospitals.

62. An organisation similar in principle to the Professional Standards Review Organisations operating in the United States be established.

63 . The States require all hospitals to examine their administrative and

clinical practice for admitting and discharging patients .

64. States require all hospitals to integrate with local general practitioners and community services to ensure that patients receive appropriate attention and follow up care after discharge.

65. Hospital morbidity statistics be developed and collected to determmine standards for patient length of stay and relative stay indexes.

66 . The States take action to encourage hospitals, institutions and general

practitioners to use mobile home nursing and home care services more widely to assist in keeping patients out of hospitals and institutions.

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Accreditation

67. The accreditation program remain under the control of the Australian Council on Hospital Standards and continue to be voluntary.

68. For the present there should not be any link between accreditation and funding or licensing.

69. The Commonwealth Government encourage all States to participate in the accreditation program.

70. Governments give approval to the setting of a fee schedule for surveying which will meet the costs.

71. The Commonwealth and State Governments provide specific educational grants for the development and conduct of the surveyor training programs .

72. The program be re-evaluated within the next decade.

Accountability

73. The proposals put forward in the Report by CHS Consulting Pty Ltd (Volume 3 of this Report) form the basis for providing the necessary

management accounting information procedures and uniform reporting by hospitals and other institutions.

74. Collation of comparative statistics and financial data on a national basis be a function of the proposed Bureau of Health Economics.

75 . With assistance from the Commonwealth, the States place high priority on

the refinement of data collection from health service units and on techniques of evaluation, so that the possibilities of effective alternatives to institutional care can be promoted.

76. The States establish minimum audit specifications for public hospitals embracing requirements for full financial and managerial systems audit.

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77. The States establish formal licensing requirements for those seeking appointment as public hospital auditors.

Budgeting

78 . The States move as a matter of urgency toward the implementation of

output related methods of budgeting .

79. The budgetary systems adopted be compatible between States and provide an adequate basis for submissions to the Commonwealth for formula grants.

, 80 . Pending the development of such systems the Commonwealth and States make the best possible use of such information as is available to review future hospital budgets to determine that funding is related to established needs rather than to past expenditure.

Purchasing

81. Health authorities which have not already done so introduce centralised group purchasing either through government departments or independent bodies such as the Victorian Hospitals' Association Ltd or private suppliers. The financial benefits of group purchasing should be passed

on to the end user hospitals directly and not be retained as a profit or

surplus by the purchasing authority nor passed on to others.

82 . Health authorities introduce generic prescribing, dispensing and supply

of most drugs and pharmacy supplies used in hospitals .

83. Health authorities introduce broad scale standardisation of other supplies and equipment. Specification and quality control processes be introduced, but they must not be disproportionate to the costs or value of items to be acquired.

84 . State preferential systems which unduly favour local State suppliers be

discontinued. The advantages which would arise from suppliers being able to treat the whole Australian hospital market as one may outweigh those which are believed to exist under present arrangements and should be available to all if so desired.

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Organisationa l Structures

85. State health authorities review their organisation structures with a view to ensuring that the functions of planning and policy are more closely coordinated with those of financial allocation and management. This may be achieved by the creation of joint internal committees, by a broadening of the responsibilities of one division or another, or perhaps by an amalgamation of divisions.

86. The current number of metropolitan regions in New South Wales be reviewed. Urgent attention be given to reviewing the level of delegation with a view to reducing bottlenecks in the system.

87. Regional offices should not be involved in the direct provision of health services but should only act as monitoring and coordinating agencies.

88. Organised programs of rotation of staff between regional offices, hospitals and other institutions be commenced as soon as practicable.

89. Area health boards be established responsible to the appropriate health authority for the management, maintenance and operation of area health services. Members of area boards be paid an appropriate fee to emphasise their accountability.

90. The Capital Territory Health Commission be reorganised to separate major policy determination from the management of hospitals and other services. Policy determination to be the responsibility of appropriately knowledgeable Commissioners appointed by the Commonwealth Government. Management, maintenance and operations of hospitals and other services to be the responsibility of an Area Health Board, which may include elected or nominated representatives of local bodies.

91. Each State and Territory review the structure of middle management within the central health authorities with particular emphasis on the capacity of the system to deal expeditiously with the complex organisational problems.

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Health Manpower and Personnel Practices

92. There be much closer cooperation on a national and State basis between education and health authorities to facilitate the matching of supply and demand for medical manpower.

93. An alternative training program in general practice not leading to Fellowship of the College be introduced in the interests of the community and the emerging graduates.

94. An independent task force be established in 1981 to examine all aspects of medical post graduate education. The task force be composed of members appointed by and reporting to the Standing Committee of the Health Ministers Conference. Its terms of reference should include,

inter alia: manpower implications of vocational training;

actual and required numbers of training posts in each State; funding of post graduate training programs; the service commitments of trainees; and length of training programs.

95. All the Royal Colleges producing specialists likely to be in charge of hospital departments arrange suitable financial and personnel management training programs for their fellows and members, thus adding to their eligibility for senior positions.

96. The recommendations on general nurse training in the Report of the Committee of Inquiry into Nurse Education and Training (Sax 1978) be

supported.

97. Each State and Territory Government establish urgently machinery to enable course proposals from schools of nursing to be presented to the accrediting authorities.

98. An organisation be formed by the health and education authorities of the States and Territories to evaluate and compare college based and hospital based courses thoroughly and effectively, but quickly.

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99. The Victorian Health Commission guidelines for the appointment of

hospital Chief Executive Officers be adopted by the other States and Territories.

100. There be action to reduce the size of medical school intakes from 1982 with reviews annually thereafter. The extent of these reductions be determined by the individual universities in consultation with the appropriate State authorities. The basis of funding for medical schools should be reviewed separately.

101. The existing controls on the immigration of doctors into Australia remain, but be reviewed regularly.

102. There be an immediate reduction in the number of specialist vocational training positions with further reductions in future years to match any reduced medical student intake. These reductions should not, however, be made in training positions in community medicine, geriatrics, rheumatology or rehabilitation. Some positions should be converted to training posts for general practitioners as proposed by the Royal Australian College of General Practitioners.

103. There be an immediate review of the whole question of intern training.

104. The National Health and Vital Statistics Committee undertake a study into the adequacy of existing medical manpower data in Australia with a view to developing recommendations for improvement.

105. The Standing Committee on Health report to the 1982 Health Ministers' Conference on the most appropriate way for dealing with issues associated with health manpower planning in general and medical manpower planning in particular.

Staff Utilisation

106. Victoria's Hospower, or a similar system, be adopted by each State health authority so that comparisons can be made in staff utilisation by institutions.

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107. National and State manpower committees be established which have the capacity to forecast requirements in the various staff categories and the authority to adjust the intake of students regularly, to meet the anticipated demand.

108. States develop inservice training schemes directed to assuring that hospital administrators and more junior management have a full understanding of their roles, and of their accountability to their seniors, the board, the health authority and the community.

109. There be an urgent review by each of the employment authorities of rights to private practice in hospitals with a view to limiting its scope, consistent with the underlying intent of the contract between an individual patient and doctor.

110. The funding of the hospitals concerned be adjusted where appropriate and in line with State health policies, to ensure that essential equipment and services now provided from private practice trust funds continues to

be available.

111. Steps be taken to phase out over a period of years the right of private practice for full time salaried specialists.

Diagnostic and Paramedical Services

112. Action be taken to improve the awareness of all medical practitioners of the medical value and cost of tests, not only for pathology but for all diagnostic services.

113. Guidelines be issued by health authorities on the utilisation of radiology, pathology and pharmacy services.

Community Health

114. The States determine functions of the community health program to meet their special requirements.

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115. The States determine whether the community health program is to be attached to and controlled by a hospital or by other authorities.

116. The States set up task forces to evaluate the fundi ng of their community health programs.

117. Community health programs, if not directly under the control of hospitals, work in close cooperation with them.

118. Community health programs be used by States to assess patients to ensure that they obtain the most appropriate forms of care.

119. A program of widespread integration of hospital and community services be prepared and put into effect by each State to include firm target dates for the achievement of all stages of the program.

120. The support of the community be sought to attain the objectives of the community health program, even to the extent of raising capital from community sources for desired community projects.

121. The Commonwealth have no direct responsibility, financial or otherwise , for ambulance services, which should be the responsibility of the States.

Aboriginals

122. Where appropriate, every effort be made to provide Aboriginal interpreters in hospitals.

123. Further education be provided to enable Aboriginal people to take up skilled positions in the health services.

124. Suitable representation be given to Aboriginals on boards of hospitals which cater for large numbers of Aboriginals.

125. Suitable cooperation and consultation be arranged between Aboriginal people and local municipal councils, particularly in relation to health (including public health) matters.

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II 126. Special arrangements be included in the Commonwealth funding formula to cove r the special needs of Aboriginals.

The Ha ndicapped

127. Greater use be made of services less costly than institutions, such as community based health services.

128. Cooperation and regular consultation between hospitals and community based services be developed where needed.

129. Better cooperation and consultation be developed between all departments and authorities involved in the provision of services to the handicapped.

130. The availability, supply and maintenance of services, aids, equipment and appliances necessary for the welfare of the disabled be improved.

131. Ass essment, reassessment and rehabilitation be given much higher priority than at present, especially in institutions providing either short term or long term care.

132. States assess their land holdings presently occupied by psychiatric and other institutions to see whether surplus valuable assets can be disposed of or developed by entrepreneurs to release funds to provide an appropriate range of community based facilities for the handicapped or

for other health purposes. Long term leases with reversion to the Crown woul d ensure that there would not be permanent alienation of the land

involved.

The Aged

133. The States establish as soon as possible special geriatric assessment wards of about twenty beds at selected hospitals. Teaching hospitals should provide a consultative clinic service promoting greater cooperation between hospitals generally and community orientated

services for care of the aged. The units should be used to carry out research and undertake the training of health professionals in aged persons care.

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134. The States establish suitable rehabilitation centres at each suitable hospital for the rehabilitation of aged patients. Staff to be adequately trained in geriatric rehabilitation techniques.

135. Arrangements be made to ensure that patients are not admitted (exc ept i extreme urgency) to nursing homes without having first been assessed, and that once admitted appropriate rehabilitation be continued.

136. Services be developed for continuing necessary rehabilitation of patients discharged to their homes or other centres outside hospitals or nursing homes.

137. Special frail aged nursing homes be provided as appropriate.

138. All unassessed aged patients presently in institutions be exam i ned and their future care planned to meet their individual needs.

139. Consideration be given to the wisdom of continuing to use Commonwealth subsidised privately owned for profit organisations for the care of aged, or mentally and/or physically handicapped people.

140. Governments, where they have not already done so in a positive fa shion, institute, as a matter of urgency, intensive, irregular, without no tice inspections of nursing homes, accommodation houses, and any other premises licensed for the care of the aged, mentally and/or ph ysically handicapped people, and ensure that the standard of care in these institutions is improved and/or maintained in all respects at a de cent , humane, and health sustaining level.

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3 AUSTRALIA'S HEALTH CARE SYSTEM

The terms of reference require the Commission to examine not only hospitals

but the whole Australian health system. This system is complex and co nfusing. It consists of a multitude of facilities and services provided

through the public and private sectors and funded through mixed and complicated arrangements. The Commission was also aware that governments,

while anxious to constrain escalating costs, desired at the same time to m aintain the high quality of care provided throughout Australia.

The terms of reference sought criticism of the health system and it was not

surprising, therefore, to find so much critical comment in submissions and a concentration on shortcomings. But the system has many strengths and the Commission kept these in mind during its considerations. The dedication and

capability of health professionals, administrators and board members was obv ious to members of the Commission as they visited health institutions

throughout Australia.

At the same time the Commission also saw and learnt of many disturbing

features - the lack of clear and coordinated objectives, the inefficiencies of the system, its data problems and its disincentives to efficiency.

The most disappointing aspect was the unavailability of reliable, accurate,

up-to-date, meaningful and comparable data. By normal business standards health sector accounting systems are often archaic and they certainly do not enable administrators to determine the real costs of providing services. The y were designed more to suit the requirements of government authorities

than of those providing the services. From the business point of view the change from accrual to cash accounting for the convenience of the Hospital Cost-Sharing Agreements was retrograde, and the Commission was pleased to note that some hospitals have kept their accrual system.

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There i s also a lack of sound management information system s to enable the monitoring and eval uation of services . Had these been modern and efficient , the extent and causes of rising costs would undoubtedly have been identified at an early stage and the necessary remedial action could have been taken.

This Commission is concerned with making recommendations which will resul t in the system obtaining the best value for each dollar spent on health. To assess this, the performance of one hospital against another, performances of different areas within a hospital , and alternative methods of providing for the need s of patients must be capable of true comparison.

The Commi ssion agrees with the many submissions which said that performance

measures used are inadequate and often misleading . Items such as average daily bed costs, cost for each inpatient treated , length of stay, and per capita expenditure are affected by such factors as case mi x, role and size of i nstitution , population numbers, age and location, and availability of alternative or support services . Not one of these items, although commonl y us ed for comparison purposes, i s a measure of real pe rformance.

The Commission is even more concerned that, althoug h so many statistics are

collected on ho s pital utilisation and costs, virtually no public hospital in Australia is able to say how much it actually costs to provide specific services. The absence of such information makes i t impossible to make proper comparisons and assessments .

Funds ar e not limitless and with increasing cost s, especially t ho se associated with the salaries and wages of hospital staff, there i s an obvious need for close scrutiny of the costs of different methods now us ed to provide needed services and of alternative and - it is hoped - less expensive methods of providing them.

As Cochrane (1972) says , if there are two ways, both equally effective, the

overall working of the [British] National Health Service would be improve d by using the cheaper , whatever is going on in other spheres. The Commission agrees with this view and acco rdingly cannot see an y sense in continuing to use the costly facilities of teaching hospitals for standard procedures where

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t he needs of these pa t i ents can be adequately catered for in less costly pr ivate and non-teaching public hospital s.

The l ack of clear objectives an d responsibilities ha s not only led to ineffectiveness and inefficiencies, it has also made it easy to place blame elsewhere, even to the extent of one government blaming another, for lack of action or inadequacies in the system.

This Commission maintains that funding should be based on present needs and not on past expenditure . It believes the States are the best judges of their own needs and of how best to integrate all their health services which are now funded in such diverse ways. It acknowledges that the Commonwealth has a

responsibility to see that the funds it provides are used efficiently but not so as to interfere with the responsibilities of the States. (Throughout the Report, 'States' refers to States and Territories.)

The Commission recognises that sharp, sweeping changes can be disruptive and

impractical. In arriving at necessary and practicable solutions, the Commission has included appropriate short-term and long-term recommendations, realising that long- term cost constraint is not feasible until many of the existing problems, especially those associated with funding arrangements,

have been eliminated. Much can be gained from continual small measures, rather than from sweeping structural change.

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4 FACTORS BEHIND COSTS AND COST INC REASES

In the Commission's Interim Report it was shown that expenditure on health has been grow ing at a faster rate than total national expenditure as measured by gross domest i c product. Health expenditures have grown from 5.4 per cent to 7.9 per cent of G.D.P. in the period 1968-69 to 1978-79. This increase

reflected an increasing demand on the community's resources, particularly since these resources as measured by the G.D.P. were increasing at a slower rate in recent years .

The Interim Report i dentified several factors which contributed to the

increases in hea lth costs in the 1970s. These included:

inflation ; increase in population and in the ageing of the population; labour costs, including increases in salaries and wages, improvements in worki ng conditions, increases in training, salary 'catch up' and equal

pay decisions of the 1970s; the move to more skilled classification and specialisation of workers; increasing numbers of doctors and changes in the pattern of payments to doctors;

the introduction of new technology; increase in the intensity of care; increases in overall bed numbers; budgetary processes, especially in using past expenditure as a basis for

providing funds for future expenditure .

Australia is not alone in attempting to deal with the problem of rising health costs. In all industrialised Western societies there is public concern at the rising costs of health care and many of the factor s listed abo ve are under review in other countries as well.

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Hospitals themselves have contributed to the process of inflation in Australia . They are labour-intensive, have large numbers of female staff who have benefitted from 'catch-up' pay decisions, and salaries and wages now make up more than 70 per cent of their direct operating costs. Information

supplied by the Australian Bureau of Statistics shows that employment in the health industry rose by 54 per cent in the period 1971 to 1979.

New technologies and methods of treatment have been introduced in recent

years, usually in addition to existing services rather than instead of them. Increasing numbers of doctors and a need for more and different forms of specialist staff to handle new technologies have been associated with cost increases.

Unlike in other enterprises, new technology has not led to productivity and cost improvements, rather to the reverse. Duplication of such technology, or over-provision, compounds the cost problem. In the meantime patient expectations are increased by technology-led changes.

Changes i n the methods of payment to doctors have had an impact. In addition to increases in medical fees as such, public hospitals now pay visiting medical officers for services which had been provided without charge before 1975-76. Such payments in 1978-79 amounted to $85.7 million.

The building of new hospitals and the injection of a large increase in

Commonwealth funds into the health system in the mid-seventies have also

affected increasing costs. The initial cost-sharing agreements did nothing to promote efficiency and it was put to the Commission that some hospitals were out of control. New teaching hospitals have been established in a number of States and facilities in many old hospitals have been upgraded and

expanded. A tendency exists in the health sector for institutions to continue operat ing for some related purpose even after they are replaced.

Money spent in recognised hospitals in Australia in real terms on each

patient has risen by only three per cent from 1970-71 to 1978-79. In the same period money spent in real terms for each occupied bed-day has increased by 39 per cent. This means that care of greater intensity is being provided as

length of stay shortens.·

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The impact of teaching hospitals on overall costs is evident from utilisation

and cost data. Admissions per capita to teaching hospitals in this period

increased by 40 per cent, with per capita expenditures in teaching hospitals increasing in real terms by 45 per cent. The corresponding figures for non-teaching hospitals are 4 per cent and 21 per cent. In 1978-79, 50 teaching hospitals out of a total of 759 public hospitals, that is 6.6 per cent of these hospitals, consumed 49.5 per cent of hospital expenditure.

These teaching hospitals provided 37 per cent of the occupied bed-days in that year.

Australia's overall population has increased and so has the proportion of aged in the population. Moreover, the aged are now living longer and this has increased impact on the utilisation of health services. Information from one State shows that 58 per cent of all hospital beds in that State are

occupied by patients aged 65 and over, a group which makes up less than 10 per cent of the population.

The unavailability of suitable data has prevented the Commission from making

a comprehensive and detailed assessment of factors behind the costs and escalation of costs of health services in Australia. For the same reason it is not possible at present to determine the real costs of services provided nor to assess the total extent of genuine need for health services.

The Commission has also noted the statement in the Merrison Report (1979)

which said that spending more on health services 'will not make us proportionately healthier or live proportionately longer, though it may improve the comfort and quality of life of patients or the pay and conditions of staff' (335).

While this Commission has evidence of the increasing amount of money spent on health services over the past ten years, the measures of the quality of care and the overall levels of health in the community are so rudimentary that the Commission is unable to determine the effectiveness of the expenditure.

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5 EFFECTIVENESS OF MACHINERY FOR DETEHMINING OBJECTIVES

Term of Reference No. 2 required the Commission to inquire into the machinery

av ailable for determination of objectives, policy and resource allocation for

the health services of Australia, to draw conclusions as to its effectiveness, and to make recommendations, accordingly. The following sections indicate, in summary form, the results of these inquiries and show the Commission's dissatisfaction with much of this machinery. In essence,

the sources of this dissatisfaction are the absence of clear objectives, the need for clearly distinguished roles for the Commonwealth, the States and hospitals and related services, as well as a need to forge links between the process of determining objectives, policy and resource allocation so that

funds will be provided according to need, not according to past use or past spending .

Objectives

The Australian Constitution sets the limits of Commonwealth power in respect

of health matters. Two clauses of the Constitution give power to the Commonwealth to provide financial assistance for health services and hence to

achieve its health objectives. Under Section 51 (XXIIIA) the Commonwealth has power to give financial assistance to individuals through specified types of benefits, which include pharmaceutical, sickness and hospital benefits and medical and dental services. Under Section 96 the Commonwealth may provide

financial assistance to the States for such purposes as the Parliament sees fit. The two major Acts, the National Health Act 1953 and the Health Insurance Act 1973, derive from these constitutional powers and provide powerful vehicles for financial allocation from the Commonwealth to meet its objectives. Both are used extensively for this purpose. Other Commonwealth

Acts are of lesser significance but are pertinent to certain health- related objectives of the Commonwealth. The Repatriation Act 1920 gives the Commonwealth power to provide health services directly for repatriation

31

beneficiaries. Several welfare Acts give the Commonwealth power to provide financial assistance towards the care of the aged and disabled.

Government objectives in the health field evolve through the usual processes of government - Parliament and its committees, Cabinet and its committees, Ministers and their departments or statutory authorities. A multiplicity of advisory structures include a number of formal committees drawing upon

expertise from the community as well as t he professions and government

In addition to the Departments of Health, Veterans' Affairs, and Social Security, the Departments of the Prime Minister and Cabinet, Treasury and Finance are also involved in varying degrees in the determination of objectives fo r health care and in the review process for policy formulation and the monitoring of the achievement of broad Commonwealth objectives in health.

When the Commonwealth objective has been firm, and where the financial power

is considerable, the Commonwealth can force compl iance from the States through the existing machinery. The Commission has noted an important instance of this, where the Commonwealth has acted over the past three years to reduce the flow of Commonwealth funds into the health system and so reduce the rate of increase in health expenditure.

At the State level, legislation has established health authorities and

defined each State's responsibilities in the provision of health services . Each State has different organisational structures to achieve these ends . Some Acts specifically refer to the objectives set for the authorities while

others refer in narrower terms to the functions that the authorities are to perform.

Through particular structures each State is responsible for all the public hospitals, including the large proportion of them recognised for joint funding under the Health Insurance Act. They also control, under separate Acts, psychiatric institutions. The Commonwealth plays no direct role with these institutions.

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The States have available machinery for setting objectives for those

hospitals they control. Boards of hospitals and the management have limited power, and their actions can be controlled by Ministers through their health

commissions or departments. Objectives in the health services have most often been determined at hospital or service level, often by default rather than deliberately or explicitly. The Commission regards this as undesirable and believes this has permitted costs to increase without appropriate

responses from governments, at least until quite recently. In addition, few hospital administrators acted to restrain mounting costs, and many appear to have been concerned mainly to spend money allocated to them, as they had always done. There was little attempt to assess need, most being content to

base bids upon past activities and future aspirations.

It has been agreed that the pursuit of objectives at the service delivery level, particularly by administrators and doctors, and the ever-rising expectations of the public, have led to inaction by governments and their departments in setting clear objectives and policy . The system of setting

objectives needs to be sharpened, as do the objectives themselves.

There are no clear statements showing what the different parties in the health field (Commonwealth, States , hospitals and other health service suppliers) should be doing.

The Commonwealth must clearly define its intentions. The Commission believes

the Commonwealth's principal role is to make money available to the States on specific conditions and to ensure that the money granted is put to proper and efficient use. It is the financier with an interest in what is being done for the health of all Australians by the States .

This Commission does not believe that the problems in the health care field can be removed by the Commonwealth and States trying to formulate national objectives only . A sharper definition of the r oles and responsibilities of governments is required.

The States must accept full responsibility for the health services which are

delivered to the people in their States. They must declare what they intend doing with the money made available to them by the Commonwealth, and they

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must determine the amount of money which they themselves need to provide to discharge their responsibilities.

Each State must make it clear to hospitals and other recipients of health funds what it requires them to do, so that the State may achieve its objectives and discharge its responsibilities. Hospitals and other service suppliers must clearly state their objectives and outline the policies they propose to adopt to meet those objectives and to fulfil their obligations to the State.

It is critical that all recipients of funds (the States, hospitals and other health services) are required to report regularly to the provider of the funds in a meaningful way on the extent to which objectives are being met . These reports should be made available to the public. Where a long-term objective is set, and it is a condition of the provider of the funds that the objective must be achieved in say three years, interim reports should be prepared at not less than yearly intervals.

The Commission believes that there must be a link between objectives,

policies and resource allocation, but the States should determine their actions in accordance with the needs of their own people. There should be no attempt to force uniformity of objectives between the States.

Policy

Policies and priorities are closely linked with objectives. Thus many of the criticisms made regarding objectives, especially at government level, were made also regarding the effectiveness of machinery for determining policy.

There is a general lack of policy direction at all levels. Where there are no clear objectives, there can be no clear policy guidelines.

Policies, like objectives, will differ between the various levels of government and between different departments of the same government. Reports to the Commonwealth Government in recent years have been critical of the machinery for policy formulation. In an attempt to improve co-ordination and

34

obta in broader-based policy advice in the health and welfare areas, the Commonwealt h Government established the Social Welfare Policy Secretariat.

This Commission recognises that each State may choose whatever structure it fe els most appropriate and does not consider that any one structure

necessarily provides the best means of ensuring that the determination of policy is effective.

Commit tees are frequently set up to deal with policy advice or differences at

all levels of the system, whether government or institutional. Examples are the Committee of Officials on Medical Manpower at government level and medica l advisory committees, drug committees and planning and development committees at the institutional level. In between there are area or regional

advisory boards.

The efforts of most of these are not as effective as they could be because of

a lack of appropriate information on which to base policy advice and decisions or to evaluate them. Unfortunately, analysis of the relative costs and benefits of policy decisions is not well developed in the health area, making advice on policy options for one type of health expenditure as against

another highly subjective. Even less well developed is machinery for ana lysis on which to base policy decisions on the relative value obtained from allocations for health services, as against allocations for non-health

services such as education, housing or sewerage, which all have an impact on hea l th.

O ther frequent criticisms of policy-making referred to the degree of board autonomy, lack of consultation, especially with health professionals and commu nity workers, the influence of political considerations, the low

priority given to psychiatric services, and difficulties of implementing pol icy because of breakdowns in the consultative processes.

There is no clear machinery for forming policy at governme nt level for private hospitals, and State and Territory policies differ. The Commission has noted the efforts of the National Standing Committee of Private Hos pitals to establish policy guidelines for its members.

35

Community health services include a wide variety of services provided through

voluntary organisations or by State or local government bodies. The Commonwealth provides funds and thus· is able to place pressure on the

policies and objectives of different services. Where a service is supported by more than one funding source there must obviously be some conflict both i n

policy determination and daily administration, as for example with domiciliary care services. Another good example is in the differences in policies and objectives of the providers and users of funds for Abori ginal health services.

All the evidence provided to the Commission points to the fact that the machinery for determining policy is not effective, mainly because there is no clear pattern of responsibilities between the Commonwealth and the States. In the Commission's view the States have a responsibility for determining policy on all matters under their control and a duty to supply statistical data to the Commonwealth to enable it to evaluate how effectively its funds are being used and to reassess its policies.

Resource Allocation

The allocation of resources depends on needs, priorities and available

resources. These in turn are affected by the objectives and policies of those allocating the resources at the various levels.

The most fundamental and essential resource is money, without which health

services can neither be provided nor utilised. The next most essential resource is manpower. As the health system is highly labour-intensive, manpower plays an important part.

For this reason, the Commission decided to consider funding arrangements first, then manpower, then equipment and services.

Funding Arrangements

The Commission has devoted a considerable amount of its time to the

Commonwealth and State funding arrangements because of the important role

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played by the Commonwealth in the overall funding of health services, especially through the Hospital Cost-Sharing Agreements.

The Commonwealth now provides funds to the States for institutional care and

for special programs. Most of these funds are cost-shared, usually equally. The greatest proportion of these funds is for institutional care either in

hospitals or in nursing homes.

The Commonwealth has provided financial support to hospitals since 1945,

primarily by means of bed-day subsidies paid to hospitals for uninsured patients and pensioners and to health insurance organisations. These bed-day subsidies provided an incentive for hospitals to increase admissions and extend lengths of stay.

In return for the States agreeing to the basic principles of the Medibank scheme - standard ward treatment and outpatient services at no charge,

provision of medical services on a salary, sessional or contract basis and standardisation of bed-day charges for private patients - the Commonwealth proposed in 1973 to reimburse States for 50 per cent of the net operating costs of their public hospital systems, excluding State psychiatric

institutions. In 1980-81 payments to recognised hospitals (in the States, Northern Territory and the Australian Capital Territory) under the cost-sharing arrangements are expected to amount to $1316.1 million or 36.1 per cent of the Commonwealth's health budget.

Private hospitals are not covered by these arrangements, but receive a Commonwealth subsidy of $16 a patient a day. In 1980-81, this subsidy is

expected to amount to $71.0 million or about 1.9 per cent of the Commonwealth's health budget.

Commonwealth funds are also provided to the States and Territories for other health services, in particular, the Community Health Program and the School Dental Scheme.

The Community Health Program was established in 1973-74. Payments under this

Program are made to State, Territory or local government and to non-government organisations providing services at a State or national

37

level. Expenditure for 1980-81 is estimated at $67.5 million or about 1.8 per cent of the Commonwealth's health budget .

The School Dental Scheme is a preventative program designed to ensure free

dental treatment for primary school children. An estimated 37 per cent of these children are now covered by the scheme. Expenditure for 1980-81 is estimated at $23 .3 million or 0.6 per cent of the Commonwealth's health budget.

The present arrangements are fragmented and tend to work against effective

integration and utilisation of the various health services. Some services are also excluded from the Commonwealth funding mechanisms.

Because of their impact on overall health costs and because the Hospital Cost-Sharing Agreements are due for renewal in all States - except South Australia and Tasmania, where they are not due for renewal until July 1985 -most of the submissions put to the Commission addressed the issue of whether

the Agreements should be renewed or varied or replaced. The Agreements have both advantages and disadvantages depending on the objectives sought.

The Agreements, based since October 1976 on 'agreed' budgets derived from the

previous year's expenditure, have in part been successful in lowering the rate of increase in real gross operating costs of recognised hospitals from 13 per cent a year in 1975-76 to 2.4 per cent a year in 1979-80.

The National and State Standing Committees of Commonwealth and State Officers

have provided a vehicle for considering rationalisation and other cost constraint proposals. The major consequences of the Standing Committees have included:

State and Commonwealth Treasuries, through their participation on these committees, are taking more interest in the scrutiny of State hospital budgets; State authorities are thinking more positively about rationalisation and sharing their ideas with other States; good consultation machinery arrangements have been established.

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The Ag r eemen t s are, however, perpetuating a system which is biased towards

institutional care 1 particularly in hospitals. Hospitals now consume relatively mo r e of t he Section 96 grants from the Commonwealth than they did at the st art of cost-sharing. The concentration of funds on hospitals limits the ca pacity of States to substitute one mode of treatment for another.

The main shortcomi ng of the Agreeme nts is the concentration on expense

reimb ur seme nt , with insufficient account being taken of the relative needs wi t hin States fo r health services. Those States which were spending relatively mor e on ho spital services at the start of cost-sharing continue to recei ve pr opo r t i onately more funds today irrespective of the need. In

add ition, the Agre ements have created anomalies in payments for different l eve l s of pati en t car e. Psychiatric patients in acute hospitals benefit from co st - sharing , whi le those in State-run institutions do not.

In s ummar y, the Cost-Sharing Agreements have perpetuated rather than solved so me of the ma i n problems in Australia 's health system: the over-co ncentration on acute curative services, especially in teaching hospitals;

the over-supply of hospital beds and facilities, distributed in a way that, in m any areas, is unrelated to present need; over-use of hospital services for discretionary surgery and other procedures;

si gni ficant dif ferences in costs and utilisation patterns between the Stat es; basi ng fun ding on raw expenditure instead of on properly assessed mi ni mum cost criteria.

In reviewing the strengths and weaknesses of the existing financing arrangements, as well as possible alternatives, the Commission was concerned to determi ne the principles of health care funding and the respective roles of the Commonwealth and the States in pursuing those principles.

The Commission recognises the fundamental principle that:

'it is the responsibility of the States to maintain an efficient and adequate ho spital system.' (Re po r t on Rationalisation, 1979, 3)

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While the Commonwealth has a responsibility to ensure that funds provided are utilised to achieve ma ximum benefits, it should nevertheless be the responsibility of the States to develop and implement cost containment and efficiency programs.

The Commission considers that the States themselves are the best judges of

their needs and priorities. While the Commonwealth has its own national objectives, especially in managing the national economy, and cannot ignore accountability factors, its role in the provision of funds for health services should not impede State objectives. In relation to service levels and utilisation, its role should be advisory and not over-ride State practices and policies.

However, because of the Commonwealth's responsibilities for overall fiscal management, for ensuring the health needs of special groups such as Aboriginals, pensioners and veterans, and for the payment of medical and other benefits, it has a responsibility for ensuring that machinery be available for it to:

collect and disseminate data on utilisation, costs and standards of service provision; monitor performance of State health care delivery systems; evaluate specific programs; develop initiatives and incentives for cost containment and efficiency.

A range of possible funding arrangements has been examined by the Commission to see if a scheme could be devised which would retain suitable characteristics of the existing system, particularly the significant potential of the consultative mechanisms. Recognised problems such as funding based on cost reimbursement rather than on needs and preference being given for hospital services rather than less costly care, should be removed. States should be free to move funds so as to substitute care under one program for care under another.

The options examined by the Commission fell into the following categories:

Renewal of existing arrangements, with incorporation of a statement of

objectives, agreed guidelines and conditions and retention of separate specific purpose grants;

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Non-renewal of agreements and incorporation of cost-sharing allocations in tax sharing or general purpose payments to the States; Introduction of replacement arrangements, retaining existing consultative mechanisms, incorporating all health services related to

needs rather than cost reimbursement, possibly by way of a formula grant.

Gove rnments, whether Commonwealth or State, are the guardians of public funds

and in allocating funds for health services have a major responsibility to see that those services are conducted efficiently to provide a high standard of health care and to control expenditure. The Commission believes that the Commonwealth should clearly state its objectives in the health field

indicating what it intends to do and on what conditions. The Commonwealth should not normally interfere in the internal proceedings of the States in their provision of health services. Health services should be based on needs and the States themselves are the best judges of what their needs are.

Never theless, States must take note of the objectives of the Commonwealth in

the provision of funds for health services and ensure efficient use of health care funds.

The problems, inefficiencies, disincentives and restrictions associated with

the existing Cost-Sharing Agreements and fragmented funding for other health services should be avoided or at least minimised in any future funding arrangements. It is recognised that to achieve this changes cannot be made immediately to all areas of health services and to all funding arrangements.

Moreover, States will be accountable to the Commonwealth for the way in which funds are used.

For these reasons the Commission has recommended that the present forms of cost-sharing health services should be discontinued and replaced by a method of formula - funding in the form of a block grant for health. The grant initially should include all present Commonwealth grants to the States and

Territories for health and include an element for acute psychiatric hospitals, State government nursing homes and deficit-financed nursing homes.

This block grant should be on a population-based formula adjusted for each State and Territory for age and sex of population and Aboriginals. Other factors could also be incorporated in the formula such as a hospital size

41

index or a standard mortality ratio. But the Commission believes the formula should be simple and easy to understand and initially should not include these other factors.

The grants should be administered and adjusted in accordance with the

recommendations and conditions contained in this Report. These conditions will include provision for treatment of pensioners, veterans and disadvantaged patients as well as providing management information for determining true costs and needs.

The Commission, in recognising the benefits of the proposal to include

psychiatric hospitals and nursing homes in the arrangements, understands that the Commonwealth may need to leave some or all of them outside the new arrangements in the first instance in order to get the formula arrangements implemented. El i gible veterans may also be included later if this is desired.

While the Commonwealth may legislate immediately in general terms to enable the introduction of a formula approach to funding, it may be necessary for the existing agreements and grants to be continued until further details have been worked out .

The Commission recognises that in making annual adjustments to the block

grants provided by the formula there could be some convergence on a per capita basis which will reduce the extent of differences between the States. While this may lead to greater equalisation of expenditure throughout Australia than at present, the Commission is not convinced that all States need to spend the same amount of money per capita. The Commission is of the view that funds should be provided only on a genuine needs basis once these can be determined, together with the costs associated with servicing those needs .

State responsibilities lie in the prov1s1on of a comprehensive and accessible system of health services, the rationalisation and co-ordination of those services, and the monitoring and evaluation of policies and services. The States are also responsible for providing assistance to other agencies , identification of needs, promotion of research, promotion of the education of health workers, and the aissemination of information to the community.

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Evaluati on of the effectiveness of f und allocation at State level must exa mine the allocation process in terms of the following: the priority accorded to health in relation to the other services which make demands on the State budget - ed ucation, law and order, public

transport and so on; the priority accorded to the different types of health services falling within the ambit of the State health authority; the basis for the geographical distribution of funds.

Machiner y for allocating funds can be judged as effective to the extent that it allows implementation of State and State health authority policies, fulfils broader health objectives and ensures reasonable equity in regional allocation.

Funds for health services within the States come from the Commonwealth, the

State go vernment, local authorities and the private sector (health insurance, individual patient payments and private, including 'charitable', investment).

Services funded solely by the State include State psychiatric hospitals and associated services (except pharmaceuticals) , State nursing homes, some public health services , most of the ambulance services, and assistance to some independent organisations such as the Anti-Cancer Foundation, Mothers

and Babies' Health Associa tion, and some pathology laboratories, for example the Institute of Medical and Veterinary Science in South Australia.

A comparison of relative Commonwealth and State Government expenditures is shown in Table 1.

At the State level, the administrative machinery for allocating funds

available lies with State Treasuries.

As at the Commonwealth level, there is competition at State level between

departments fo r a larger slice of the budget. The final amount allocated for health is influenced partly by State negotiations with the Commonwealth for specific purpose grants including matching State funds, and partly by the State health authorities' capacity to negotiate with State treasuries for

untied funds from State resources to meet the cost of health services which the Commonwealth chooses not to fund.

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1974-75 1975-76 1976-77 1977-78

Table 1 Expenditure by Commonwealth and State Governments

Less Per cent met

Total grants Net from

State from State Commonwealth

outlay C'wealth outlay funds

$ million $ million $ million Per cent

1419.7 108.0 1311 . 7 7.6

2172.8 867.3 1305.5 39.9

2557.5 1068.4 1489.1 41.8

2824.5 1107. 2 1717.3 39.2

Source: Australian Health Expenditure 1974-75 to 1977-78: An

analysis, Commonwealth Department of Health, June 1980. Questions on the allocation between different types of health services are normally put in terms of determining priorities between institutional and non-institutional services. State health authorities argue the desirability

of diverting funds where possible from institutional services to some non-institutional services, mainly because of their belief that this will provide cheaper alternatives to health care. In practice, however, decisions on which services will be funded are substantially governed by existing

patterns and priorities in health expenditure. Thus, not surprisingly, in 1977-78, 87 per cent of State (and local) government expenditure on health was spent on the institutional sector (Interim Report, 20).

Most State health authorities have a separate finance division or its

equivalent. Some also have a committee structure to coordinate advice on financ ial allocations to different health services. Although it is the responsibility of State health authorities to ensure the appropriate distribution of health services throughout the State, inequities are still obvious in the uneven geographical distribution of financial resources by State and Commonwealth governments, which cannot fully be explained by differences in the characteristics of the population and the pattern of service provision.

The New South Wales Health Commission is further advanced with a process of

regionalisation than other States and has for some time been working on a regional allocation formula designed to ensure that funds are distributed as

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equitably as possible. The use and validity of this method of fund allocation becomes more important in the context of recommended changes to the method of fund distribution from the Commonwealth to the States and the flexibility these changes will give to the States.

The Commission considers that geographical areas are the most logical and

valid basis on which to assess need and to plan and allocate the distribution of appropriate resources. In some States, however, regionalisation of administrative functions appears neither appropriate (for example, Tasmania) nor desirable (for example, Victoria).

The Commission considers that existing machinery is not effective because it

does not achieve proper co-ordination of services, it does not ensure that services are comprehensive or that priorities are correctly accorded, and it does not provide a basis for the determination of needs.

The Commission is convinced that until States know real costs of services and

have sufficient information to determine genuine needs as well as to monitor and evaluate performance and results, they will not be able to allocate resources as effectively as they should to achieve their objectives.

The Commission believes that under existing arrangements the most significant

constraint on State health authorities' ability to allocate funds between different types of health services and to different areas is the extensive involvement of the Commonwealth, not only in providing the money but also in regulating the way in which it is spent. The division of responsibility

between Commonwealth and State must be clarified. The States' responsibility for allocating finance for the services they administer must be strengthened.

Steps should be taken to ensure that present and future priorities for different types of health services are determined more appropriately by the States, as the bodies responsible for service delivery. The functions of policy and planning should be more closely co-ordinated with those of

financial allocation and management.

The Commission also believes that the States, with assistance from the

Commonwealth, should give priority to the refinement of data collection and

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techniques of evaluation from health service units so that the effectiveness of alternatives to institutional care can be assessed , and to determine whether funds are being allocated and used effectively and efficiently .

Health Insurance

Individuals directly pay for health care services in several ways - by paying for services which governments do not subsidise, by paying premiums for medical and hospital insurance, by patient contributions tow ards subsidised services, by paying premiums for motor vehicle third party insurance and

public liability insurance, and by supporting charitable services .

Business enterprises provide funds for health services through motor vehicle third party insurance, workers' compensation insurance, public liability insurance, charitable donations, and by support of health research . Some investors also provide funds for private hospitals and nursing homes and some other services.

These private sector sources provided 40.1 per cent of current operating health expenditure in 1977-78 (Interim Report , Tab le 9). The effectiveness of the machinery which mobilises these funds is therefore of great importance to governments which meet remaining costs, to private sector suppliers and voluntary health insurance funds whose economic well-being or even survival is dependent on their continued flow, and to the 61 per cent of Australians who now elect to insure for hospital or medical services .

The Commonwealth's objectives as stated by the Minister for Health are to

encourage responsible use of one of the best health services in the world , to ensure that over-use and abuse are reduced to a minimum, to obtain t he best value for the taxpayers' dollar spent on health care, and to promote competition and innovation in private health insurance while still aiming for universal protection against higher cost items of medical service

(Ministerial press statements 24 May 1978 and 24 May 1979).

State governments are providers of services through their ownership, operation, and deficit-funding of public hospitals. They are concerned with the limitation of their 'financial liability for cost-shared services, both

46

in hospitals and i n community health, and with the absence of private sector support for the services for which they are wholl y responsible - the psychiatric hospitals and the State owned long-stay hospitals and nursing homes.

The main aim of the health insurance funds is to survive in an environment in

which the burdens placed upon them have increased, while the major inducements to membership which formerly supported their operations have been affected by government policy changes over the past decade.

Patients desire the assurance that they can obtain appropriate treatment when neede d and preferably by a practitioner of their own choice and in a place of their own choice. They also wish to control their out-of-pocket expenses at t he time of service and to minimise total outlays. These factors, together

with the health insurance arrangements at the time, determine whether an individual contributes to health insurance. Today, 61 per cent of all Aust ralians are covered by hospital or medical insurance, some 20 per cent including those regarded as disadvantaged have no cover, and the remaining 19 per cent are covered under the pensioner medical benefits or veterans'

provisions.

The objectives of health professionals and private hospitals are to provide

high quality care for patients and to earn an adequate income. Their capacity to do so is linked with methods of payment and health insurance arrangements. Because it removes the relationship between service delivery and payment, insurance unquestionably has an impact on fee level, on the

location of service delivery, and on the incomes of private prov iders, whether they be practitioners or hospitals.

There is some conflict between the objectives of all concerned. However, submissions and comments made to the Commission by patients and providers have been unanimous in their desire for a health insurance system that is simple and equitable. Recent changes to the health insurance system have

done little to improve the health system . On the contrary, the continued existence of the private hospital system and of the health insurance funds, both of which are essential elements in the Australian health system, has been threatened by the existing arrangements .

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For these reasons the Commission has given detailed consideration to va rious insurance options. In doing so, the Commission has been aware of the impact that health insurance premiums may have on the consumer price index and on the economy.

Insurance is a vital part of the machinery for maintaining the mixed provision of health care services, through both the public and private sectors. It supports private medical practice wherever it is conducted and is important in the determination of private hospital charges. It also provides a measure of financial security for those who contribute.

Five major features of the existing health insurance arrangements are: distinction between hospital and medical insurance (people may select both, either or neither); role of the Commonwealth in supporting the funds and in controlling their operations; limited involvement of State governments; significance of the Medical Benefits Schedule as a vehicle for implementing Commonwealth Government strategies, and for responding to pressures from health professionals for fees adjustment; relationship between maximum benefits offered and fees charged by both doctors and private hospitals.

In considering alternative arrangements, the Commission decided that the maintenance of a mixed economy in health service delivery is desirable with private sector facilities, subsidised or not, co-existing with government funded facilities.

Important reasons for retaining a mixed structure include:

disruptive effect of major structural change; recognition of the major role played by the government in funding services as they are now constituted; need to make provision for the chronically ill, the aged and low income earners; measure of existing government support to private sector service provision.

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Many proposals for amending the existing insurance arrangements were made to

the Commission. To assess their merit, the Commission kept in mind the following criteria: access to necessary services should not be dependent on ability to pay; determination of medical necessity must lie with the clinicians

concerned; where the user has the financial capacity he should make some contribution towards the total cost;

arrangements for funding of services should not discourage necessary use of facilities, but should not promote procedures or treatments of questionable benefit to the patient; means test at point of service is not an acceptable basis for

determining access to free services; arrangements should ensure the future viability of the private hospital system and private medical practice which are major components of Australian health care services;

those wishing, or required, to pay should have available to them an insurance mechanism for funding services received and appropriate incentives to use it; proposals should recognise that users of services differ in their

personal financial circumstances, and should endeavour to achieve equity.

Existing arrangements satisfy some these criteria. Changes considered fell into three categories: radical, reactionary (putting-back-the-clock), and evolutionary.

The objectives of the proposals considered by the Commission have been to

encourage as many people as possible to make provision through insurance for their hospital and medical care while retaining the voluntary character of insurance arrangements. The purpose of this is to widen the insured co mmunity and avoid adverse selection and consequent rises in contributions.

The Commission believes the taxation system is the best system available in Australia for achieving equity. The Commission is attracted to the proposal that public hospital inpatient treatment be classified as a taxable benefit i n kind, for it not only presents a means of achieving equity but also

prov ides admi nistrative economy and establishes a contribution by those

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uninsured who are able to pay, while ensuring that access to full services is not denied to the needy. The Commission recognises that there may be administrati ve and political difficulties inherent in such a scheme. However, this principle may well be incorporated in other schemes as yet not designed. The Commission is not i n a position to design such a scheme.

In the short term , however, the Commission is concerned to make changes to the existing system which will encourage more people to insure. The steps are aimed at reducing premiums and offering taxation and other concessions to insured persons only. The limitation of Commonwealth medical benefits to the

insured will create a major incentive to insure. The Commission is aware of the potential for increased utilisati on consequent on an increased number of medically insured people, and considers that the re-introduction of an uninsurable payment at the point of service, away from hospitals and related institutions, may act as a mild disincentive to utilisation and may possibly promote reduction or stability in medical fees.

For this reason the Commission's recommenda tions have included the limitation of all medical benefits to the insured, abolition of gap insurance , and restriction of tax rebates for medical and hospital costs to those insured at basic or higher levels.

The Commission gave special consideration to fees in recognised hospitals.

In considering the possibility of inpatient charges for the uninsured, the Commission was conscious of the importance of not erecting too large a price

barrier to the consumption of health services . This could have the effect of limiting access to essential care by the chronically sick and the needy. The Commission was also aware of the increasing number of uninsured people in the community and of the increase in numbers seeking free hospital services . It believes that some of these patients are capable of contributing directly towards the cost of their health care.

The intention of the Commission's recommendations on health insurance is to

encourage this group of patients to take out insurance. If the strategy is successful, then it will not be necessary to institute charges for the uninsured. If it is not successful, then governments may be required to review the charging policy.

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There are several alternatives open to the States to vary the charges supplementary to the basic (shared accommodation) charge and these should be considered. The Comm i ssion does not suppo rt , however, ancillary charges such as theatre fees in recognised hospitals. Anomalies in psychiatric hospi tal

charges should be corrected .

Several submissions suggested that charges should be made for all outpatient and emergency servi ces. Th e Commission recognises that decisions to charge

patients for outpatient services are a matter for determination by the indiv idual States. It would not wish to see the situation now ap plying in relation to emergency care disturbed.

Howeve r, it can see a number of advantages accruing from the adoption of a

charge for all patients for non-urgent outpatient attendances, except for the holder s of Pensioner Medical Benefit Cards and eligible veterans . It sees such charges as a form of co-payment. More importantly, it sees them as a means of encouraging patients towards general practitioners in the

community. They already have the facilities to treat the disadvantaged away

from the relatively costly outpatient services of recognised hospitals.

The Commission recognises the important place of private hospitals within the

health system and the s erious problems some private hospitals are expe riencing as their occupancies fall. The recommended health insurance changes may well reverse the trend in occupancies as additional patients seek private hospital care, but in the intervening period some additional

Commonwealth bed-day subsidy for individual private hospitals may be required .

Manpower

The machinery which allocates health manpower is different from and more

complex than the machinery providing other health resources because education authorities are involved.

The supply of most health occupations is largely determined by education and

training authorities while the number of positions to be made available rests with the government health authorities and with individual private entrepreneurs . The relationship between the education and health authorities

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is complex for political and industrial considerations impinge. In addition, there has been a significant increase in the number of occupations involved in providing health care and this division of labour in itself has had industrial consequences when allocation of manpower is considered.

There are no uniform standards for staffing health care i nstitutions and marked interstate variations are apparent, with Queensland clearly having smaller staff establishments than other States and a resulting lower cost in providing service. While control over new positions is reasonably strict,

there appear to be no regular reviews of total staff establishments in hospitals. The Commission has been told that some hospitals have never had their full staff establishments reviewed, although the use of staff ceilings has become more prevalent in recent years.

Standards are applied in setting establishments for some areas, especially nursing, where different standards are based on the number of hours of nursing required for each patient each day. The result of the variations in approach are demonstrated in Table 2, which shows the number of total staff

for each occupied bed in the States from 1977 to 1979.

Table 2 Staff per Occupied Bed

QLD NSW VIC SA WA TAS

1976-77 2.81 3.49 3.22 3.95 3.59 3.01

1977-78 3.02 3.54 3.24 3.74 3.58 3.17

1978-79 2.98 n.a. 3.33 3.67 3.61 3.12

Source: Queensland Department of Health Submission 711, 12.7.

The lack of formal authoritative links between the education and hee th

sectors has produced significant difficulties in equating supply and of health workers. In particular, medical mar ower is being produceo in Australia at a rate almost double Jther countr •s with similar standards of living and altering this rate of supply is a major machinery problem. There is an oversupply of specialists in some fields, while in others, for example in geriatrics, there is an obvious shortage.

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N ur si ng education has tradit ionally been a responsibility of the health sector but nurses themselves are pressing to have it transferred to the education sect or and the ch angeover is slowly taking place. Consequently, the establishmen t of close links between colleges of advanced education and

t he health field is seen to be important.

Machine r y problems exist also in the education of other health professionals

as Aust ralia appears to be heading for an oversupply. In the training of hospital administrators, however, a serious machinery problem has been brough t to t he Commission 's attention - the separate paths of training for future administrators in the central health authorities and those in the

institutions. The Commission believes that arrangements should be made for hospital administrators to be promoted and transferred freely between hosp i tal s and the central authorities.

The Commi ssion also believes that training courses for health professionals

shou l d place greater emphasis on matters relating to cost control. Courses shou l d i nclude a segment on how to interpret and use management information,

especial ly t ha t r elating to utilisation and costs, on scientific management and adm ini stration . The Commi ssion is of the opinion that it is essential

for the Co mmonwealth Government to take the lead in developing effective manpower planning machinery .

Beds , Equi pment and Service s

Machinery available to governments for determining and regulating the

dist ribution of beds, equipment and services includes:

l egisl ative pr ovisi ons and judicial processes; the political decision-making apparatus, especially Cabinets and parliamentary committees;

organisational, administrative and regulatory structures , including consultative and advisory mechanisms, and implementation arrangements ; financial arrangements and allocations.

In general terms the Commonwealth has assumed greater responsibility for

legi slat i ve regulation of private sector services and the States have had

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responsibi l i ty for the public sector. In recent years, howe ver, and particularly since the introduction of the Hospitals Cost-Sharing Agreemen t s , there has been growing emphasis on joint respons i bility.

The major area of direct Commonwealth control over the level and t ype of

health care services is in nursing home accommodation, a sector cr i tical ly dependent upon Commonwealth subsidy. Throu gh a variety of consultative and legislative machinery the Commonwealth can exercise controls on fees, admissions and increases in bed capacity.

The Department of Veterans' Affairs is responsible for providing treatmen t to

veterans for disabilities related to military service. It is responsible fo r the supply of beds, equipment and services in repatriation hospitals . Because of reduced use by veterans the repatriation hos pitals have provi ded treatment for non-veteran patients in recent years.

Arrangements to treat non-veteran patients must be made only with the agreement of the States and should be subject to the same processes of review as applies to all hospital beds within the States. The alternative arrangement , whereby eligible veterans can be appropriately treated in public and private hospitals near their homes, is supported by the Commi ssion. Responsibility for veteran patients must, however, remain with the Commonwealth.

The registration and licensing of public and private hospitals and nursing

homes is the preserve of State governments, and their power is variously

described in Acts and Regulations. The proprietor of a hospital licenced by a State applies to the Commonwealth to be eligible for benefits under the Health Insurance Act.

Health insurance funds pay medical, hospital and nursing home benefits t o members who occupy approved beds in recognised or approved institutions.

Under the Hospitals Cost-Sharing Agreements there is scope for the Commonwealth to restrict the number of beds it will recognise fo r

cost-sharing purposes. The Commonwealth during the past two years has refused to cost-share additional beds and services. Consequently, an y new

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facil ities in the States or additional beds in an existing institution have only be en included for cost-sharing purposes when deletion of beds and services has achieved equivalent savings. This does not prevent the States from fully subsidising additional beds and services if they wish.

State legislation confers on State health authorities substantial ad mi nistrative and financial control that can influence directly and

indirectly the size and range of services provided by public hospitals, including con trol of beds and equipment . Legislation in each State controls the cons truction and operation of private hospitals and nursing homes.

Signifi cant differences exist between the States in the objectives and scope of legislative control. Generally, regulations in the Acts are concerned with safety, sanitation and construction standards, rather than with overall health service needs. Only New South Wales and Victoria have legislative

authority to apply needs-based criteria to private hospital registration.

The Co mmonwealth has attempted to use its 'power of the purse', particularly through the Hospitals Cost-Sharing Agreements, to attract State support for a number of service objectives, including:

no real growth in health services during 1979-80 and 1980-81;

1100 occupied bed-days in recognised hospitals for each 1000 population, equivalent to 3.5 beds for each 1000 population at 85 per cent occupancy .

There are no internationally accepted guidelines for the provision of services. For example, the ratio of acute beds for each 1000 population in other countries varies from 3.0 to 7.0. Even allowing for differences in types of beds included in these figures and recognising that the level of

facilities such as nursing homes, hostels, community and domiciliary services differs, these differences in acute bed provision throughout the world make it impossible to base recommendations on international standards.

The Commission recognises the general consensus that there are too many

hospital beds in the system and that there is a maldistribution of those beds. Close monitoring of additional beds is essential if costs are to be cons trained, and priority should be given to using wherever possible those

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beds wh i ch adequately satisfy the needs of the patient at least cost to the total system in mone y terms.

All States as well as a number of professional groups and associations agree that any rationalisation of beds must consider all beds in the total s ystem, in particular those in public and private hospitals an d repatriation hospitals.

Several times during visits to hospitals and other hea lth fa cilities in man y parts of Australia, Commissioners were told that political decisions were the reason many facilities were located where they were .

At the same time as the number of beds and facilities has been increasing,

the health system has seen a remarkable growth in technology and equipment. The greatest use of equipment in the hospital sector occurs in clinical areas, and the expensive equipment i s associated with the so -called ' high technology super-specialties', particularly equipment used for diagnostic or therapeutic purposes.

The Commonwealth, the States and a numbe r of professional organisations have

ex pressed concern about the cost implications of this growth in medical technology. The Commonwealth established a Committee on Applications and Costs of Modern Technology in Medica l Practice wh ich reported in 1978 . This Committee recommended that new technologies should be evaluated at the national level and existing technologies should be rationalised by the establishment of consultative advisory committees in each State to de ve lop the necessary policy guidelines. Establishment of an expert national advisory panel to assess the optimal provision and utilisation of new technology, as well as the development of an information sys tem, was also recommended.

Action has started to establish such a panel to be known as the National Health Technology Assessment Advisory Panel . This panel will eva l ua te and advise on the cost effectiveness of new and existing medical technologies. It will comprise representatives of State health authorities, manufacturing industry and medical practititoners, as well as people versed in health

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economi cs, evaluation, administration and en gineering. W hether the panel is granted effective executive powers and will use those powers effectively remains to be seen.

The Commonwealth has the power to adjust medical benefits applied for various

t ypes of t echnology and it has done t his with the CT s can . In evidence, an officer of the Health Commiss ion of New So uth Wales stated that 'one of the most effective means of rationalisation in recent years was the reduction in

m edical benefits for CAT scanning' (Transcript, 2301) .

Al t hough assessment machinery has been proposed, rationalisation of

technology and super-specialty servi ces appe ars to be in its infancy. While the medica l benefits schedule is said to be a power f ul instrument fo r limiting the utilisation of expensive techno logical services, its potential has no t been fully evaluated. Assessment of new technology and guidelines

for its installation and use have not been devel oped to an operational state; considerable authority in this area remains i n the hands of the States .

The Commission has concluded t hat the machinery for determining resources in t he fo rm of beds and equ i pment to be made available is not effective. The failure of the machinery t o allocate the resources of beds and equipment h8s to be overcome to allow imp rove ment of efficiency and some constraint on

costs. Rationalisation is a part of the answer.

The Co mmi ssion believes that the States should strengthen legislation to

allow the co ntrol of beds and equipment to be dependent on the overall needs of the State. Need clauses should make sure that the total range of beds and equipme nt in public and private hospitals and nursing homes as well as

re patriation hospitals is taken into account when determining these needs. It should be noted that to close beds in public hospitals and allow additional beds to be opened in private hospitals defeats the objectives of any rationalisation program.

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6 IMPROVING EFFICIENCY AND CONTAINING COSTS

In co nsidering Terms of Reference 3 and 4 the Commission took into account the matter s listed in its Letters Patent as matters to which the Commo nweal th, States and Terrritories required the Commission to give

particular attention. Several of these matters have common elements and this is refl ected t hroughout this chapter.

Earlier chapters have given details regarding the role and objectives of governments in the provision of health services. In this section actions of governm ents which have an impact on efficiency aspects of those services, and in some cases ar e directly associated with inefficiences , are considered . Consider ation is also given to ways in which governments can help to improve

the effi ciency of health services.

The mat t ers considered fall broadly within the following areas:

di stribu tion and use of facilities and services; fu nd i ng and planning inefficiencies; consultation processes ; ways of influencing utilisation and monitoring quality.

Each of thes e has s ome effect on the other and for this reason should not be

considered in isolation.

Info rmation provided to the Commission shows a general over-supply of hospital be ds in Australia, significant differences in total provision betwe en States , maldistribution of beds within the States and a close relationship between the suppl y and use of hospital beds and facilities.

This is a reflection of historical priorities, past population settlement patterns, and in some cases politically motivated decisions. This excess bed capacity, together with the present financial incentives of bed-day subsidies, deficit funding and guaranteed payments for providing and using high cost

public fa cilities, has meant that overall utilisation has been increasing steadily in acute hospitals.

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The Commission has sufficient evidence to show that medical technology is

proliferating, without proper assessment, and that avoidable variations in staff numbers exist between hospitals of equivalent size and function.

Financial allocations are a key instrument for achieving desirable changes in the pattern of service provisi on and use. Divided financial and functional responsibilities between the Commonwealth and States have contributed to inefficiencies .

Until very recently , Commonwealth and State funding arrangements have tended to emphasise the expansion of institutional services so as to improve access and quality of care. The States have been encouraged by the hospital cost-sharing agreements in particular to devote a large share of their health budgets to hospitals.

Other ineffi ciencies in service provision and delivery have been generated by the instability of Commonwealth funding appropriations, especially for non-institutional services , by the incentives to use high cost rather than low cost facilities, and by the exclusion of psychiatric institutions from

the hospitals cost-sharing agreements.

As stated already , the Commonwealth since 1978-79 has attempted to use its

'power of the purse' to effect some rationalisation of hospital facilities. Although the original program aimed at moving towards a specific planning target (1100 occupied bed-days for each thousand population in recognised hospitals) , it has been implemented by a Commonwealth 'no growth' funding policy based on maintaining real activity in health services at 1978-79 levels. The exclusion of super-specialty services, private hospitals and repatriation hospitals from the program provide anomalies for this objective.

The submission from the Queensland Department of Health points to some of the

major barriers to the implementation of rationalisation measures describing them as :

'the vested interests of individuals, institutions or communities . .. .. A community faced with the loss of beds, or of a local hospital, can exert

pressure on policy makers through many channels. A ho spital which sincerely

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be lieves it needs a particular super specialty for it to perform the role it sees for itself is not very receptive to rhetoric of rationalisers, and can usua lly produce arguments against which the only recourse may be arbitary edict - which authorities are reluctant to use.' (Submission 711, 15 .2)

Criticism has been made that and State health authorities have

not adequately discharged their planning functions and that this has affected the efficiency of the operation of hospitals and related institutions. State and regional plans should be directed towards producing a distribution of

services and facilities that is adequate, appropriate and accessible, while at the same time being efficient in terms of resource use.

The Commi s sion considers that the Commonwealth should cooperate with and assist the States to develop integrated physical and financial plans for healt h care delivery. States should assemble data on health need s and services, develop service standards and planning guidelines following

appropriate consultation with service providers, and evaluate the effectiveness of programs. The aim should be to establish a blueprint for t he future development of health services at a State and regional level.

O nce such plans have been developed, rationalisation programs will have a more logical basis, directed at both the supply and use of services in the long term as well as in the short term. State health authorities have the major responsibility for developing and implementing rationalisation

initiatives. The Commission accepts that complete uniformity of service provision and utilisation levels between the States is neither practicable nor desirable.

Consultation Processes

If policies are to reflect the needs of the community and be acceptable to providers, the present processes for consultation and liaison at all levels will need to be strengthened and improved . This is required between governments themselves and between governments and service providers .

Appeals for better communication and liaison on the part of central health authorities have come from hospital boards, administrators, clinicians and

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other special interest groups. State health authorities have been accused of making policy decisions without consulting those who will be affected. Decisions are not satisfactorily explained and decision makers are often isolated from the point of service delivery.

Complaints have also been made about the lengthy delays experienced by hospitals in receiving approval for specific initiatives, especially those involving capital works and in obtaining responses to requests for advice from State health authorities. Control of day-to-day activities by public

service bodies appears to be incompatible with initiative, innovation and efficiency by hospitals and their capacity to respond to changing needs. Establishing inflexible budgets on the basis of past expenditure provides no incentives for efficiency but instead penalises efficient administrations and continues to reward the inefficient.

It has been argued that regionalisation overcomes these problems and provides greater coordination of services and quick responses to changing needs. But without capable administrators and adequate delegation of authority, regions merely add a further layer to cumbersome bureaucratic structures.

Utilisation and Quality

Strategies to influence the utilisation of services and control costs can be directed to where services are delivered or carried out by Commonwealth and State action affecting the supply of beds and services. Utilisation can be affected by linking funds to utilisation targets such as 1100 occupied bed-days for each thousand population, and through the introduction of utilisation review techniques at the institutional level. These should be aimed at reducing unnecessary use of services by tightening the criteria for admission to hospital and other institutions and eliminating unnecessary

lengths of stay.

Two problems that will need to be overcome by State health authorities before

they can effectively assist hospitals in this area involve the development of an adequate and up-to-date information system incorporating relative stay indices, and development of appropriate management expertise. Establishment

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I

of criteria for admission to hospital should depend on the delineation of the role and function of each hospital.

State health authorities have a role in monitoring overall levels of utilisation and setting service provision guidelines to ensure the efficient use of resources and to see that minimum standards of quality are met. They have a responsibility to ensure that adequate standards of patient care are

maintained in all institutions that provide patient services. To fulfil this responsibility they should promote and assist in the development and implementation of mechanisms which help institutions and individuals to be responsible and accountable for the quality of patient care. These

mechanisms should include delineation of privileges for doctors, peer review,

quality assurance programs and the development of standards and guidelines similar to those used by some of the more successful professional standards review organisations in the United States. Emphasis should initially be on cooperation and self regulation rather than on the rigid imposition of

mandatory procedures.

The Commonwealth should help the States in these matters in whatever way it

can. If necessary, it should provide additional resources to help in the development, implementation and evaluation of appropriate actions by the States. The Commonwealth has already set a precedent by its funding of one national statistics unit and this Commission believes it should also assist

the States by providing the resources for an independent body to provide national morbidity and utilisation information.

Budgetary Processes and Cost Accountability

Budgets in the health sector are not budgets as known in the commercial world. They are merely a means used to request finance. Budgets should provide the main mechanism used by Commonwealth and State governments to control and constrain costs. The present budgetary processes are cumbersome

and time consuming.

Budgets are prepared on the basis of the previous year's expenditure. As stated earlier in this Report, the Commission believes the worst feature of the present process is having budgets prepared on the basis of past

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expenditure and not on the basis of need. In addition, the process tends to penalise the efficient and reward the inefficient . The Commission has had evidence of the year- end spend up by hospitals irrespective of needs so that funds will not be reduced in the following year.

Several options were put to the Commission, including global budgeting, incentive reimbursement schemes, integration of physical and financial planning, zero-based budgets, lengthening the budgetary cycle and revising the budget time-table. The Commission believes there is a genuine need for greater flexibility with budgets but recognises the failure of many hospitals to develop adequate measures of expenditure control. For this reason, the Commission cannot support hospitals being given more autonomy until they have the required cost management information to enable them to be accountable .

Cost accountability requires that financial performance be reported to, and evaluated by, a responsible authority. Existing reporting systems are more concerned with control and with the reporting needs of government than with true cost accountability. At present there are two major barriers to effective cost accountability in the hospital system. First, there are no agreed ways of measuring hospital output; financial systems are now operating on a cash flow rather than on an income and expenditure basis. Second,

management structures in hospitals and health authorities fail to link clinical accountability to cost accountability despite the fact that clinicians play the dominant role in the provision and utilisation of health services.

There are some encouraging developments in improving the data base from which to assess and compare hospitals' financial performance and on which to establish the real costs of providing services that might be required. From this information, minimum cost criteria could be developed which will provide benchmarks for assessing efficiency and identifying how costs might be contained in specific areas. The development of output- related measures for budgeting linked with minimum cost criteria should improve the overall efficiency of the system, provided appropriate adjustments are made according to variations in need and any changes in objectives of the institution concerned .

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In s ummary, the Commission believes that budgets should not be based on past expenditure but on assessed need. To enable this to be done greater emphas is sho uld be placed on and support given for development of cost- centre and departmental budgeting systems. Reporting systems should incorporate

information on both costs and activities and the lines of responsibility and acc ountability should be established. Appropriat e reports should be provided for all those who are accountable for expenditure. In the meantime, i nstitutional managements should alter their procedures and make an attempt

to con trol expenditure based on the need, not on the funds available.

Orga nisational Structures

Mo st of the evidence before the Commis sion on the issue of organisational

struct ures highlighted the problems of communicat i on and integration of widely dispersed and fragmented heal th servi ces . This evidence can be grou ped under these headings :

State authorities and their relationships with service providers; Board s of management and the need for greater involvement of health professionals and patients in the managerial process; integration of community health services with institutional services.

Mos t of the arguments about State authorities revolved around the questi on of

centralised versus decentralised administration. There is little doubt that centralised administration is advantageous for control and accountability. Quee nsland provides ample pr oof of the effectiveness of this approach as a

means of constraining costs. But there is also little doubt that

de centralised administration, provided it is accompanied by adequate

delegation of authority, is more responsive to the needs of patients and service providers.

The Commission believes a mixture of both forms i s probably the most

appropriate f orm of administration in the Stat es. However, it should be recognised that what might be appr opriat e fo r one State because of its size, spread of population and needs, wi l l not necessarily be best for another St at e.

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It is apparent from a consideration of the relationship of State health authorities with boards of management that middle management skills are underdeveloped and contributing to communication failures between the central authority and the institutions, particularly as the complexity of the issues

increases. It is considered that a review of the internal administration of State health authorities is necessary.

Boards of Management

One of the most frequent topics in evidence to the Commission concerned the

role of hospital boards.

Most recognised hospitals, many related community services, and some private

hospitals are controlled by boards of directors with powers which vary from State to State in accordance with the legislation under which they are established. In general terms, boards have the responsibility for the governance of the hospital, ensuring that it achieves its objectives, and provides good quality care in an effective way and in accordance with the needs of the community and patients it serves.

While many witnesses spoke of shortcomings and tended to take the strength of boards for granted, the Commission has no doubt of their value and supports the principle of having voluntary boards of directors managing health care facilities and services throughout Australia. They should be encouraged and given greater freedom of action once they have information that will enable them to promote efficiency in resource use and effectiveness in integration of services.

Board members are usually prominent citizens and citizens who are seen as representatives institution. Some are political appointees.

- they are businessmen and women of the community served by the The Australian College of

Health Service Administrators, New South Wales Branch, said all directors 'should operate as a policy group with a performance monitoring function, as well' (Submission 331,70).

The value of having a doctor on a board to provide independent medical advice

was stressed by the Federal President of the Australian Medical Association,

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who has been on the board of a hospital for many years and who said in

ev idence:

' On ce rtain issues the board of directors needs a medical input that does not have a vested interest from the medical staff of the hospital and is separate from its own servant, the medical superintendent ... in most large hospitals

it is criti ca l that the bo ard of directors have some technical input which is detached. ' (Transcript, Australian Medical Association, 2380 .)

The Comm ission has heard much criticism of the dominant role of the medical

profession in determining what resources are needed and how they will be used. It has been alleged that 'doctors control 70 per cent of personal health care expenditures' ('Medicine in the 80s', 11). But doctors have not been i nvolved to any great extent in the managerial processes and have

certainl y not, as a general rule, been provided with appropriate information re ga rding utilisation and costs. The basic principle, that those at the work face shou ld be co nsulted on all important matters affecting the quality of their work, should not be overlooked.

The Commission believes greater emphasis should be placed on the role and

informa tion needs of boards. Board members should be chosen for their personal qualities and ab ilities , not for reasons of political affiliation. Effective channels of communication and consultative processes between boards and the professional and non-professional groups within institutions

are required.

The Commission does not encourage worker representation on boards of

management and health commissions. The unique arrangement of the Capital

Terr itory Health Commission with its system of elected and appointed members is seen to be antagonistic to effective policy making and resource allocation, so changes to that structure are seen to be necessary.

The Commission believes that there should be greater co-ordination and

integration of all health services. After examining the evidence the Commission favours the development of area health boards which should be

given the responsibility for organising all the health services for a defined population, rather than controlling one institution within the area. It has

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examined a number of the area boards in Australia and considers that the results are such that they should be seen as the long-term approach to the management of all health services. Area board members should receive an appropriate fee to emphasise their accountability. Establishment of area boards by evolution is seen to be the most appropriate way of bringing this about, but government policy changes may also be required if progress is slow.

It has been submitted that greater recognition should be given to the views of patients and to their expectations. Some submissions sought greater involvement of the community on boards of directors, the development of effective avenues for consumer complaints - even to the extent of appointing hospital ombudsmen -and greater attention to detail by professional staff, such as doctors, nurses and pharmacists, when explaining treatments to their patients.

The Australian Consumers' Association in supporting greater involvement of

patients stated:

'A consumer input may be a source of friction and add to the time taken for

decision making, but without it the system may act to the disadvantage of those whom the hospitals (and other health care services) should be serving.' (Submission 372, 12)

The Commission notes, however, the model for such participation provided by

the Community Health Councils established in Britain.

Community Health Services

All submissions which addressed the issue of integrating community health services with institutional services supported greater co-ordination of all services. Much of the evidence dealt with whether community health services should be under the control of hospitals or independently operated. The strongest evidence shows that, provided there are adequate safeguards to prevent institutional biases from dominating, community health services would be better served under the control of hospitals and area boards. Transfer of

this control will be a long-term function and should be gradually

phased in with proper and adequate evaluation.

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Th e advantages of community health services in terms of benefits to patients

and their families and likely costs to the community overall are such that this Commission believes that more institutional resources should be divert ed t o t hese services. The States should develop and coordinate all community servi ces as they consider best. Emphasis should be placed on using the

ser vices to try to keep patients out of hospital, by treating them at home, or hav ing them placed in the most suitable location.

Management

The m ajor burden of ensuring efficient use of available resources and of securing effective constraint of expenditure on hospital services rests with t he management of individual hospitals. The Commission in its visits and discussions paid particular attention to this aspect, and many submissions

de 8lt with facets of hospital management. The Commis sion recognises the

co ns traints imposed upon managerial effectiveness by traditional ho spital or ganisation structures, and by inadequate accounting, budgeting and f i na ncial management information systems in recognised hospitals. The C ommi ssion also acknowledges the dedication and competence of some hospital

mana gers. Nevertheless, much that it saw in hospitals of all sizes in all

States was unimpressive.

Hos pitals have been described as hotels which provide medical services for

their guests. They are responsible for the expenditure of vast sums of money, some of the large hospitals having annual budgets in excess of

$70 million. As Smith and Morris said in their submission:

' Health care is big business, we should handle it as such.' (Submission 923)

In addition to providing hotel services, hospitals provide a complex and highly specialised range of services which need expensive equipment and support facilities.

To manage such institutions efficiently, high standards of training,

management expertise and information are regarded as essential . Several groups, including national and State associations, have stated that many hospitals leave much to be desired in these respects. This too has been the

69

impression gained by the Commission both from its visits to hospitals and from the evidence it has received.

The Commission recognises that governments and hospital boards both play an

important role in how effective management is. There are three major elements affecting management standards:

quality, training and experience of managers; degree of delegation and autonomy; availability of adequate management information.

The quality of hospital managers varies markedly throughout Australia, with a

tendency for the more qualified and experienced administrators to end up in the larger institutions. Criticism was made of the problems created by the inexperience of officers in central offices and of their inability to understand the complexity of hospital problems. Unfortunately, there is little staff movement between hospitals and central authorities. This Commission considers interchange such as this is desirable for the development of managers and to enable officers from each to gain an appreciation of the problems and responsibilities of each other. This should make for a better career structure and a more efficient total system and

should be encouraged. Appropriate inservice training programs should also be provided.

Queensland is ahead of other States on· the transfer of staff between the central authority and hospitals, facilitated by the fact that all hospital managers are employees of the central authority and not the hospital board. It is for each State to decide who is to be the employer of hospital staff.

While government authorities have a responsibility to see that funds are expended in accordance with approvals, control procedures are directed towards government inspection and audit requirements rather than designed to produce efficient results.

The amount of delegation and autonomy accorded to hospital boards and

administrators can be crucial to obtaining the best and most efficient use of funds provided to them. But such flexibility should not be abused. The

70

Commiss i on was not impressed by the irresponsible behaviour of those boards

and manage ments which allowed their hospitals to overspend.

Also essential for efficient management are sound and appropriate information

systems . In hospitals these are needed for costs and utilisation. Several systems are in use or under developme nt covering both clinical and financial manageme nt . The y have taken a surprisingl y long time to develop but some

systems ar e beg inning to produce useful information. Examples are fo und in the New Sou th W ales Management Information Review System, the Victorian Hospower sy stem and the associated Victorian cost centre accounting pilot

proj ect. Th e Com monwealth Department of Health's Cost and Performance Anal ys is Sys t em is another with potential.

N eve rtheless, despite the current widespread interest in the containment of hospital costs, there is still no really useful comparative data available in Aus tralia which will permit the efficiency of a single hospital or of all the

hospitals in a State to be evaluated properly. It seems that some managers have used the lack of comparative information as an excuse for inactivity. The Comm ission was, however, impressed with the activities of those few using

availabl e comparative information and seeking to use more effective and objective co s t and statistical data.

The value of information depends to a large extent on the attitudes and

objectives of mana gement at different levels. Information is valuable only if it is wanted, understood and used by those to whom it is provided. This requires that it be internally and externally consistent - that is, prepared on a co nsistent basis over time in individual hospitals and in all hospitals

in the system - that it provides informa tion i n a manner which is understood by those to whom it is directed, and that it be supported by clear lines of

delegation and by a full understanding of individual authority and responsi bility.

But as stated earlier, the attitudes and efficiency of some hospital

admi nistrations has not been impressive. The Commission has evidence of ridi culous and unsubstantiated demands for additional staff, inefficient alloca tion of staff and rostering of overtime, and reluctance to introduce measu res with proven cost savings such as contract cleaning. Other examples

71

of wasteful practices include rosters deliberately organised to ensure that certain employees had a guaranteed overtime component in their wages, whe ther the hours needed to be worked or not, and arrangements for payment of salaries and allowances in excess of award provisions, sometimes with authorisation from the hospital's board but commonly without approval of the appropriate health authority. The Commission regards these as manifestations of poor managerial control and of a total lack of appreciation of the managerial function in publicly funded institutions.

At the same time, the Commission does not believe that information should be

gathered unless it is for specific and useful purposes. The Commission was told that in recent years there was an increase in financial and statistical returns, coupled with greater emphasis on budget control and staff matters. The validity of governments requiring specific returns is not questioned, but

the need to avoid duplication and the costs involved needed reviewing. One small hospital told the Commission that 10 per cent of its staff were needed for maintaining medical and statistical records. The prime objective of hospitals is to look after the health needs of patients. While the collection of data is necessary for management and can provide a useful weapon in constraining costs, the welfare of patients must always take

priority.

The Commission has been surprised that greater use has not been made of

computers and industrial engineering techniques throughout the health system. There is obviously a need to proceed with some caution in the development of computerised systems and there has been a tendenc'· to sacrifice efficient total systems to satisfy users' priorities. The design and implementation of computer systems demands careful planning, involving

full consultation with those who will operate the system and use its output, a detailed weighing of costs against benefits, and a structured program for review of progress at each stage up to and including the final implementation.

The Commission has noted that some central authorities have tended to

frustrate or delay attempts to install good computer systems in individual hospitals which, if allowed to proceed, might now have been able to say wha t it really costs to provide services. Computer costs and software packages

72

have r eached a stage where greater priority should be given to using computer s in ho spitals .

Greate r us e should also be made of industrial engineering techniques, and approp riate staff or consultants should be used to carry out continuing efficiency reviews of systems, methods and procedures and to be on hand for reso l vi ng unforeseen problems.

The Co m mission has noted that the New South Wales Health Commission has only

recentl y substantially incr eased its management services di vision . The impac t of this on the efficiency of hospital systems in New South Wales wi l l

be watched wi t h interest .

Purchasing

Most of the submissions which referred to purchasing policies stressed the

advan t ages or disadvantages of centralised versus decentralised systems . In gene ral , most submissions fa voured some form of centralised or group

purchas i ng system provided there was sufficient flexibility to cope with emergenc ies and to enable hospitals to acquire goods at less t han total cost w he r e t his difference was demonstrably significant and did not appreciably affect overall purchasing leverage.

The Commission was told of ridiculous examples of extra costs and delays

i ncu rred by ho spitals after adhering strictly to regulations and instruct ions rega r ding use of central purchasing systems. These examples usually i nvolved maintenance costs, unavailability of essential components or replacement parts, the effect of freight charges on total costs, and availabilit y of

service technicians. Most of the examples cited were from country hos pitals and for obvious reasons these hospitals require greater flexibility provided

it is not abused.

The Commission was impressed with the record of the Victorian Hospitals'

Assoc iation Ltd in the purchasing field generally, but particularly with t he savings it demonstrated through emphasis on generic prescribing and supply of dr ugs.

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The Commission supports centralised or group purchasing schemes as a means of

constraining costs provided appropriate and adequate flexibility is maintained.

Auditing

The Commission has been concerned at the form and nature of the external

audits conducted for hospitals.

In some States no more is required than a certification that monies received have been properly dealt with, and that expenditures made have been duly authorised. In part, this is a reflection of the inadequate base of hospital accounts . While these continue to be maintained on a receipts and payments basis, there is little else to which auditors can certify. But the Commission believes that external auditors have functions which extend beyond the simple validation of receipts and payments: that they should concern

themselves with the efficiency of operations, the value secured for the taxpayers' monies expended, and the control systems, including the accounting and physical control over consumables and fixed assets.

To enable this to be done effectively the Commission believes that only

auditors who have special qualifications for hospital auditing should be allowed to conduct these audits and the auditors should be approved by the State health authorities. This is being done in at least one State in respect of local government authorities.

The Commission also believes that minimum audit specifications for hospitals

should be reviewed and incorporate requirements for full financial and managerial systems audit. All recognised public hospitals should be required to publish accounts accompanied by a detailed report from the external auditor . The public has a right to know how its institutions are managed .

Doctor Numbers, Training, Rights to Practice

Because of the importance of doctors in the allocation of resources and the generation of expenditure in hospitals and the health care field, the implications of an increasing supply of doctors are widespread. Although

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m edical manpower data is generally regarded as poor, there is evidence of an appa rent oversuppl y of doctors in Australia. With the numbers of students in

training this could bec ome a matter for concern.

In Marc h 1980 there were 27 578 doctors in Australia, or one doctor for every

528 people, which compa res favourably with international doctor:population ratios . Although the distribution of doctors varies by area and specialty, the re is no evidence that these area and specialty shortages would disappear if the total supply of doctors was increased.

There are advantages and disadvantages associated with an increasing supply of doctors. The advantages include possible improvements in the availability and accessibility of medical care and a reduction in the price of medical services. The disadvantages include increased costs resulting from the

ability of some doctors to generate their own demand with no guarantee of imp rovements i n health status. Overall, the disadvantages of a doctor

surplus seem to outweigh the advantages. In particular, a doctor surplus combined with a predominantly fee-for-service method of payment raises the pos si bility of over-ser vicing by some. An increasing supply of doctors also has impl i cations for their training and rights to practice in hospitals .

Gove rnments can influence only some of the factors affecting the demand for

and supply of doctors. Moreover, policy changes take several years before

their impact is felt.

The Commission believes that the size of the total medical school intake

shou l d be reduced and controls on the migration of doctors to Australia should remain . The nature and size of medical school intakes should be determined by State health authorities in conjunction with the universities.

The number of specialty training positions, except in specialties with

under-supply such as community medicine, geriatrics, rheumatology and

rehabilitation, should be reduced and subjected to further periodical reviews. A similar reduction in the number of intern positions should also be made, but only as part of an overall r eview of the arrangements for intern

training.

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Medical manpower supply needs to be kept under constant review. Manpower forecasting is difficult at the best of times, but medical manpower forecasting is further complicated by poor data, difficulties in assessing nee ds , and changes in the structure of the workforce such as the increasing proportion of women in the profession.

Doctor Payment

In Australia the primary methods of payment of medical and other practitioners are fee-for-service, sessional, and salaried. The method used varies according to the insurance status of the patient, the employment status of the doctor and the location of service. Thus a 'hospital' patient 1 may be treated by a salaried doctor employed by the hospital or by a visiting!

medical officer paid by the hospital on a sessional basis or contract fee-for-service. A private patient in a recognised hospital may be treated on fee-for-service by a private practitioner, a salaried specialist using his

rights to private practice, or by a variety of medical staff, interns, residents or registrars, who are unable to charge. All outpatients in recognised hospitals are treated by doctors paid by the hospital on a salary, sessional basis or contract fee-for-service. A private patient in a private hospital or a private patient not in an institution will usually be treated by a private practitioner on a fee-for-service basis.

Because many practitioners treat more than one type of patient an individual practitioner may be paid by a mixture of methods.

There is virtually no control over the fees that private medical practitioners may charge for their services but there is control over the benefits payable by health insurance funds and the Commonwealth Government, as well as the amounts paid by hospitals under contractual arrangements. All l these payments are related in some way to the Medical Benefits Schedule which l is based on a Schedule of Fees determined by an independent tribunal and published by the Commonwealth Government.

Nearly all medical services within private hospitals and nursing homes are provided by individual .private practitioners. Even within the public

76

hos pitals about half the patients are treated as private patients, although this varies across States and across hospitals of different size and function.

Expenditure for medical services in 1977-78 through private contracts am oun ted to $1176 million or 17.4 per cent of total health expenditure. Exp end iture in 1979-80 by recognised hospitals on doctors services amounted to $3 08 .2 million. Of this, 34.1 per cent ($105.2 million) went to visiting

m edi ca l officers, that is doctors on part-time contracts, either sessional or m odified fee-for-service, and 65.9 per cent ($203.1 million) to full-time sa l aried doctors, including interns, residents, registrars and staff speci alists.

In t he same year, 41 per cent of payments to visiting medical officers were on t he basis of a proportion of the scheduled fee (modified fee-for-service) amounting to $42.7 million, and the remaining $62.5 million were payments on

t he basis of a sessional rate.

The mi xed system of payments in Australia is undoubtedly costly. The rights of sal aried specialists to treat and charge private patients and the ano ma lies in that system were issues which received considerable criticism in

evidence before this Commission. Definition of the term 'private patient ' within the hospital is seen as a significant problem. Charging of patients referred by local practitioners or other specialists (or directly to a doctor by patients themselves) is considered to be normal practice in Australia.

The sy stem that has developed provides for charging for services not

specifically sought by referring doctors or patients, but based entirely on insurance status. This is a costly anomaly and should be stopped.

The Commission recognises that there are certain advantages of the limited

rights to private practice of salaried specialists in public hospitals, especially those associated with continuing education and provision of equipment. However, in the light of all circumstances and the evidence, the Commission believes that steps should be taken to phase out this system over

a period of years through a process of attrition, consultation between all parties, adjustment of the remuneration of salaried specialists to appropriate levels by normal means, and by ensuring that from a date to be

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fixed no newly appointed salaried specialists in public hospitals be given the rights of private practice.

No evidence has been provided to show that there are an y significant

differences in the quality of care provided by doctors paid under the different systems. But the overall costs of these systems will obviously vary. Broad comparisons are often made between those countries which have predominantly one or other method of payment. While fee-for-service is generally more costly than salaried payment, no country has a 'pure' system and all appear to have problems in controlling costs, irrespective of the system. Whatever the method of payment all countries are developing systems

for monitoring services whether through clinical audit, peer review or utilisation review.

In the Australian context various factors affect any assessment of the various schemes. These include the location and type of hospital, back-up by resident medical staff, number of doctors in the district, and need for 'on-call' and 'call-back' arrangements. On evidence before it, the Commission believes that sessional payments are more efficient for the major specialties in large hospitals during normal hours. In other contexts, the most efficient method is open to question and will depend on the needs and circumstances of the time. Efficiency cannot be the only criteria in selecting the most appropriate method of payment, and questions of clinical autonomy, accountability, acceptability and the cost of review machinery must also be considered.

On the issue of charging practitioners for the use of facilities and

resources, the Commission believes it is impractical to alter the existing arrangements. Charges for diagnostic specialties seem satisfactory to all parties and any additional charges would be passed on to patients, leading to further complications with insurance and payment methods. Any variations considered essential should be considered in conjunction with reviews of the Medical Benefits Schedule.

Staff Utilisation and Training

Although salaries and wages comprise 70 per cent of hospitals' recurrent

78

\ ,,

' ·'

costs, sur prisingly little attention has been given to issues associat ed with the deployment of health staff. In particular, little attenti on seems to have been paid to:

the size and functional distribution of the health workforce; the productivity of health staff; differences in staffing patterns among hospitals of similar size and case-mix; ensuring that non-professional staff who deal with patients have appropriate training.

Ove r the past 30 years the number of functionally distinct occupational

categories in the health field has increased from about 12 to more than 100. Not only has there been a marked increase in the degree of specialisation in

the health workforce but there has been a general increase in the proportion of skilled staff. While this has been associated with increased costs, there is little evidence of either better performance or improvements in the quality of patient care. There has also been an increase in the

incidence of demarcation disputes.

Any benefits in further specialisation within the health workforce is

doubtful. Indeed, the work of some groups could well be amalgamated. Some State health authorities have already used management consultants to improve staff rostering and overall deployment. The Hospower management information system developed in Victoria could be extended to other States as a means of

comparing and improving staff utilisation within hospitals. Under this system, the number of hours of productive staff time is related to the number of inpatient days adjusted for the average length of stay and the number of outpatient attendances.

On staff training, there is a clear need for closer liaison between

educational and health authorities to match the supply of and demand for various types of health staff. The cost implications of this division of responsibilities can no longer be ignored. Closer liaison could be promoted by the establishment of national and State advisory committees on health

manpower, as recommended by the Committee of Inquiry into Education and

Training (1979).

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The Commission believes that to achieve greater efficiency in staff

utilisation and training a regular system of review and adjustment i s needed.

Utilisation and Funding

In considering utilisation of facilities and resources, the Commission was provided with evidence of inappropriate utilisation, over-utilisation and under-utilisation. Several indicators are commonly used to measure utilisation, such as the number of occupied bed-days, the number of separations, the number of inpatients treated, the number of outpatient occasions of service, average length of stay, average occupancy rates and

incidence of diagnostic procedures.

Several factors have a bearing on utilisation such as financing methods, charging procedures, supply and availability of facilities and services, the number of doctors, community expectations, demographic factors and the availability of alternatives.

The Commission believes that, in general, patients do not go to doctors nor

seek hospitalisation or treatment in other institutions unless they believe it is necessary and it is recommended by their doctors. Evidence before the Commission indicates that the two major influences on utilisation are the decisions and habits of doctors and funding arrangements. From a cost point of view, another important factor is the availability of less costly

facilities and methods of treatment.

A study undertaken on behalf of the Commission into length of stay (for specific diagnoses) in different States and in different types of hospitals, showed marked variations between hospitals and between different specialists in the one hospital. The study showed that explanations given by the doctors

for the longer length of stays were associated either with the customary practices of the doctors concerned or with access to aftercare, rehabilitation or nursing home facilities.

The Commission believes that State health authorities have a role in

monitoring overall levels of utilisation and in setting service provision guidelines to ensure the. efficient use of resources and to see that minimum

80

st anda r ds of quality are met. Governments can influence utilisation of ser vices an d overall costs by controlling the supply of beds and services. Ut ilisat i on can be affected externally by linking funds to utilisation

ta r gets such as 1100 occupied bed - da ys for each 1000 population, or internally t hrough the introduction of utilisation review techniques at the institutional level. These techniques would be aimed at reducing unnecessary use of servi ce s by tightening the criteria for admission to hospital and other i nstitutions, applying peer review techniques to methods of treatment and eliminating unne cessary lengths of stay. However, the Commission

recogn i ses that the patient's doctor must continue to have the right to decide, within reasonable limits, the nature of treatment and the length of the patient 's stay in hospital.

Governments should not interfere in day - to- day clinical management of

patients but they have a responsibility to ensure that certain processes are carried out, for example peer review and delineation of privileges, and to see that me chanisms exist to enable institutions and individuals to be held respons i ble and accountable for the quality of patient care.

To assist in this process adequate information systems should be developed

and essential, up-to- date data on utilisation and costs should be provided to

doctors . Collection and subsequent availability of national hospital mo rbidity data would enable hospitals to carry out peer review at the

institutional level. The Commission notes that the Commonwealth already funds a Peer Review Resources Centre for doctors and believes that it should pr ovide funds for the establishment of a similar unit for hospitals.

Ut ilisation patterns for other forms of institutional care, especially in

nursing homes and hostels, show far higher occupancy levels, and beds in such ins titutions are always in demand. In several country areas patients who wou l d normally be in nursing homes are accommodated in hospitals because

appr opriate facilities are not locally available. Some studies have also shown that about 30 per cent of patients in nursing homes would be more

app r opriately placed in other settings.

Th e Commission has been told of legislative difficulties in approving beds

for different purposes, but cannot see why governments should not take any

81

necessary action to approve some beds for multiple purposes to enable institutions to make the best use of available resources in accordance with genuine needs at the time.

The Commission has noted that the cost difference in treating patients in one

setting rather than another depends m ainly on the individual patient's level of dependency and that in some cases the difference in cost may be minimal. Nevertheless, attempts should be ma de to ensure that proper assessment is ma de of each patient's needs and that wherever possible he receives the t ype

of care most appropriate to those needs .

In the Commission's view, stated government policies of encouraging home or community based services such as home nursing , domiciliary care, and other community health services, have no t been supported by sufficient financial allocations.

Governments can also affect utilisation of services and constrain costs by supporting health education and promoting better health, with emphasis on prevention. This should include encouraging healthy ways of life, better nutritional practices, and a reduction in alcohol, tobacco and drug consumption.

As well as causing many deaths, road accidents often cause massive injury to

individuals, especially brain damage and loss of use of limbs. The worst accidents are usually caused by speed or involve alcohol. The cost of treatment required after alcohol-caused road accidents is not known, but the annual direct cost to the health sector from alcoholism in 1976 was put at $400 million (Diehm, Waddy and Gilling, 1978, 107) . A more recent estimate attributes 10 per cent of the nation's health bill to alcohol (Whitlock, 1980). Seat belt and breath test regulations are good examples of

legislation which have reduced the road toll and hence associated medical costs. While there are many non-legislative avenues available to governments which can be pursued in order to prevent acci dents and illness, the Commission recognises that there may be times when compulsory legislation is

necessary.

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Diagnos tic Services

Claims have been made that diagnostic services have been over-utilised with no evidence that patient treatment outcomes have improved. Clarke, Mason and

Leeder (1980 ) have stated that pressures causing this include:

'rapid technological change making many more tests available, clinical uncertainty, peer pressure, greater patient awareness and concern for diagnostic completeness. Cost factors do not appear to have influenced test ordering behaviour to any large extent, and those ordering investigations are

frequently ignorant of the cost of the tests which they are ordering, both to the patient and to the community.' (572)

The Roya l College of Pathologists of Australia, Victoria State Committee, is

concerned about achieving proper value for money ir1 pathology and stated that:

'Excess requesting of discretionary, as opposed to screening tests is an expensive exercise and most recent observers suggest that the root cause of this non-discriminatory attitude to test requesting can be traced to deficiencies in medical education.' (Submission 235)

The Doctors' Reform Society said:

' ... new techniques, even when spectacular, often produce only marginal gains over traditional methods of diagnosis and treatment, and the personal, social and economic costs can be disproportionately large. Formal evaluation is

therefore of great importance.' (Submission 254)

The Australian Association of Surgeons in its submission stated:

'There are cases of patients tested to the point of exhaustion for reasons entirely unknown to their principal medical attendant. There is little doubt that many of these diagnostic testing procedures represent an unwarranted invasion of privacy inflicted on the patient and many of them cause

unnecessary suffering and hardship. Their cost to the community is almost inestimable.' (Submission 230)

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The Commission realises that patients would want their doctors to explore all

available avenues in times of doubt. But the statements above must cause concern to patients, doctors, administrators and governments. This Commission supports those who believe there is a need for proper evaluation of diagnostic procedures and for the dissemination of relevant information to medical practitioners.

Funding Effects on Utilisation

Funding arrangements have a marked bearing on utilisation of both facilities and services. Studies overseas and in Australia demonstrate this.

Evidence before the Commission shows that the present all-inclusive hospital bed-day charge applying in public hospitals has caused private patients to seek treatment there rather than in private hospitals where, because the insurance benefits are unrealistically low, patients always have to make payments above their insurance cover.

This all-inclusive charge and the provision of free treatment for uninsured patients in public hospitals certainly provides no incentives for doctors, especially interns and residents, to become cost conscious when deciding on the use of diagnostic procedures. The Commission has kept this in mind in

its consideration of health insurance and charging arrangements, as well as in its support for the establishment of assessment panels and utilisation guidelines.

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I

7 MATTERS FOR SPECIAL CONSIDERATION

In considering its third Term of Reference, the Commission has regarded certain matters as requiring special consideration. These were singled out because of emphasis placed before the Commission to pay particular attention to them. These matters are:

Accreditation of hospitals Ambulance usage and costs Aboriginals The Aged

The Handicapped

The Commission considers these need special consideration, both as a means of

improving efficiency in hospitals and related services, and also because it has been told in evidence that if they are dealt with effectively there will be a consequential constraint of costs.

Accredi tation of Hospitals

There are 93 agreed standards covering 19 areas of a hospital's operations in the Accreditation Guide of the Australian Council on Hospital Standards. These standards form the core of the accreditation program and it is the

extent of compliance with them that determines whether a hospital receives accreditation.

Not all States participate in the accreditation program. Some health

authorities are sceptical of the benefits that a voluntary program could provide, especially in relation to impact on costs and efficiency.

Not all hospitals are in favour of the program as it now is. Suggestions for

improvement included improving the standards, extending the length of the

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survey, improving the quality of the surveyors, and ma king ac cred i tation compulsory by refusing government subsidies to ho spital s without accreditation.

A recent independent evaluation of the program found t hat i t compelled participating hospitals to carry ou t a full r ev i ew of their activiti es and procedures at least every three years . It acts as a catalys t for i ntroducing change, particularly those affecti ng quality of care .

The program was most effective when combined with motivated adm inistr ators

and do ctors in instituti ons with appropriat e m edical staff organi sation.

The Commission believes there is value in accreditation an d t hat the pr ogram

should be continued and remain voluntary as a me chanism for self- r eg ulat ion. Improvements should be made in surveyor selection, training and evaluation, continuing refinement of the standards an d of t he sur vey proc ess i ncluding the survey report. The program should be extended to other States.

Ambulance Usage and Costs

Ambulance services provide two main functions: first aid and emergency care and the transport of injured or ill people to and from hospital or between hospitals by road and by air. Each State service has evolved to suit i ts specific needs of population distribution and location of services .

The ambulance service is part of the health service provided by the St ate and

those bodies must be responsible for maintaining the service . In general terms, standards of staff and equipment are comparable and of accept ably high standard . Management and operation of the services vary from State to State as do costs and charges.

The charges levied on hospitals for the transfer of patients between

hospitals are high and have affected hospital costs since their introduction in 1976. The result has been a net gain to the States.

The Commission considers that ambulance services are generally adequate , safe

and efficient and that the present systems of providing these servi ces should

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be retaine d. The Commission believes these services are and should remain

the respons i bility of each State and can see no reason why there should be any specific funding from the Co mmonwealth for them.

Aboriginals

The poor health of Aboriginals, especially compared with non -Aboriginals, is

well documented. Recen t improvements have been made which cannot be divorced from the greater commitment, financial and moral, of the Commonwealth to the

goal of improving cond itions of Aboriginals with the Aboriginal people themselves directly involved. Measures should be taken to ensure further planned involvement of Aboriginals both as health workers and in the management of health services.

The Commiss ion recognises the effects which customs and tradition have on how

Aboriginals utilise health services. It agrees with the views of those States and Territories where there are many Aboriginals that special consideration needs to be given to the additional cost burden created for those States or Territories in any funding arrangements the Commonwealth

makes .

The Commission accepts proposals put to it that interpreters should be

attached to hospitals and that more education should be provided for the Aboriginal peop l e to enable them to take up skilled positions in the health services. Suitable representation on the boards of hospitals which cater for large numbers of Aboriginals may help to allay their present fear of

ho spitals and a closer link between Aboriginal patients and hospital

administrations appears desirable. Suitable l iaison officers serving Aboriginal people and local municipal councils also seem necessary.

The Aged

Those aged 65 and over make up more than 9 per cent of Australia's population and this proportion is growing. In one State where the aged comprise

8.6 per cent of the population, they occupy 30 per cent of acute hospital beds and 90 per cent of nursing home beds, use 70 per cent of community services, and consume 40 per cent of prescribed drugs. Estimates have this

87

group comprising be t ween 12 and 15 per cent of Australia's popu l ation by the end of the century. Some gr owt h in facil ities will be required to meet the anticipated increase in deman d i n the future .

Some s t udies ha ve shown that abou t 30 per cent of patients in nursing homes

could be accommodated elsewhe re if su fficient suppo r t ser vices are available. This Commission believes gr eat er emphasis should be placed on the provision of essential rehabilitation and support services otherwise there could be a need for a nursing home 'explosion' to cater for the increasi ng numbers of aged in the community.

The Commission is concerned that t here ar e elder l y patients in i ns t itutions

who would probably not have been placed there had they been properly assessed

before admission, or at least had access to adequate rehabilitation facilities. For this reason the Commiss i on believes go vernments should take action to establish special geriatric war ds and to pr ovide more rehabilitation and assessment facilities . Greater encouragement should also be given to training health professionals, especially doctors, in rehabilitation and geriatric medic i ne .

The Handicapped

Those with continuing disability, either phy sical or mental , ar e regarded as handicapped. There are varying degrees of disability depending on severi ty, age, occupation, family and social circumstances. Some forms of handicap are more responsive to rehabilitation than others.

The Commission's attention has been drawn to anomalies in eligibility an d

benefit provisions. Funding arrangements reinforce the institutional bias of State provision of facilities and services for the handicapped and are alleged to cause unnecessary and inappropriate use of costly facilities.

The Commission believes greater use should be made of less costly services,

especially community-based services. Liaison between hospitals and community-based services should be emphasised . There is ·a need also fo r

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better liaison between the various departments and authorities involved in the provision of services to the handicapped. The availability, supply and maintenance of services, aids, equipment and appliances necessary for the welfare of the disabled should be improved.

In short, assessment, re-assessment and rehabilitation need to be given much higher priority than at present, especially in institutions providing either short-term or long-term care.

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8 CONSTRAINING COSTS

Constraint of costs is dependent on houses being put in order. The ultimate

responsibility for cost constraint rests with government .

The re are certain fundamentals, particularly relating to hospitals, which hav e been dealt with in the Report and supplementary papers and which must be corr ected:

health authorities and hospital managements in general have not taken enough trouble to promote cost constraint - they must take more action; financial efficiency has taken second place to spending in many hospitals - this situation must be altered;

the present system of funding encourages and promotes expenditure with little consideration of need - need must always be the main consideration; in most hospitals there is no meaningful cost information to enable

management to take action to control the hospital's finances; the system

merely shows a breakdown of expenditure over very broad headings - this can no longer be tolerated if hospitals are to be run in a businesslike manner and costs are to be constrained.

A us t ralia's increasing and ageing population will mean automatic increases in overall health expenditure unless action is taken to constrain costs. There

are two major ways of doing this:

providing incentives and disincentives for hospitals, doctors and patients to use fewer and less costly services; regulating and controlling budgets, facilities (especially beds and technology) and manpower.

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Greater emphasis and encouragement should be given to health professionals and administrators to make voluntary efforts to constrain costs by reviewing their methods and by choosing the less costly facilities and treatment when adequate alternatives of high quality are available.

More attention should be given to health education in all its aspects with

emphasis placed on healthy ways of life and preventative measures. This will involve education authorities, health professionals and the media. Linkage with economic incentives and disincentives could make this approach more effective.

The most effective method of constraining costs involves the regulation and

control of facilities and services and of how they are used. In particular, the number and type of beds available must be continually reviewed against need, always with reduction in mind. Staff costs make up more than 70 per cent of operating costs of hospitals, so the less beds needed, the

less staff required. Emphasis should, therefore, be on less costly alternatives to institutional facilities. Rationing of facilities and services may be required.

The Commission recognises that transferring costs from one sector to another

does not necessarily produce cost constraint. Reducing costs in one area may cause costs in another area and even increase total overall expenditure. Cost constraint measures should be undertaken after consideration of the full effects and likely consequences of such measures.

At the conclusion of this Inquiry, after visits to hospitals and other health

institutions throughout Australia, the Commissioners acknowledge the dedication to the care of the ill of those who work in Australia's health industry. However, it seems appropriate to the Commission, with acknowledgement to Victor Fuchs, to say:

Convinced of the worthiness of all their endeavours, people, organisations and governments have, over the past few years, been primarily concerned with justifying high costs rather than considering whether the resources syphoned into the hospital field might not be better used in other directions, including other of health care.

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We have the honour to present this, our Report, in three Volumes, in

accordance with our Letters Patent.

Dated this twenty-ninth day of December 1980.

J.H. Jamison

J.S. Yeatman

C.W.L. de Boos

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---

___..J.

ACKNOWLEDGEMENT

The Commissioners thank all those who contributed to the Inquiry: those who

made written submissions, those who gave evidence at hearings, the government

bodies, Commonwealth, State, Territory and overseas, professional bodies and other organisations, public, commercial and foreign, which provided assistance and information requested.

The Commissioners also record their appreciation of the considerable effort by Commission staff in enabling the deadline of 31 December 1980 to be met.

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APPENDIX A - COMMONWEALTH LETTERS PATENT

COMMONWE ALTH OF AUSTRALIA

ELIZABE TH THE SECOND, by the Grace of God, Queen of Australia and Her other

Realms and Territories, Head of the Commonwealth:

TO

GREETING :

JAMES HARDIE JAMISON, O.B.E.

JOHN SAMUEL YEATMAN,

CHARLES WILL IAM LANE de BOOS

WHEREAS the Commonwealth, the States and the Northern Territory are

conce rned at escalating expenditure on r ecognized hospitals (including hospitals conducted by the Repatriation Commission) and on associated and related institutions and services:

AND WHEREAS it is the desire of the Commonwealth, the States and the

Northern Territory that the high quality of the care provided by such hospitals, institutions and services be maintained:

AND WHEREAS the Commonwealth, the States and the Northern Territory have

agreed that it is desirable that there be a Commission of Inquiry to make inquiries in relation to these matters:

NOW THEREFORE We do, by these OUr Letters Patent issued in Our name by Our

Governor-General of the Commonwealth of Australia on the advice of the Federal Executive Council and in pursuance of the Constitution of the

Commonwealth of Australia, the Royal Commissions Act 1902 and other enabling

powers, appoint you to be Commissioners to make inquiry, for the purpose of the exercise and performance of the powers and functions of the Parliament and Gov ernment of the Common wealth (including powers and functions in

relation to the Terri tories) eit her alone or in conjunction with the States, into the following matters, namely -

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(1) factors behind the costs and escalation of costs of hospitals and associated or related institutions and services; (2) effectiveness of machinery for determining objectives, policy and resource allocation in hospitals and associated or related

institutions and services; (3) ways in which the efficiency of the hospital and associated or related health systems and services might be improved; and (4) ways in which cost increases in hospital and associated or related

services can be constrained:

AND WE direct you to make such recommendations arising out of your inquiries

into the above matters as you think appropriate:

AND, without restricting the scope of your inquiry, We further direct you,

for the purposes of your inquiry recommendations, to give particular attention to the following matters: (a) the budgetary process for, and cost accountability of, hospitals; (b) the effectiveness of existing organisational structures, and the

relationships between central health authorities (Commonwealth, State and Territory), hospital boards and managements, and medi cal and other staff, including any constraints adversely affecting efficiency in hospital management; (c) staff utilisation and training, purchasing policy, management

methods and advisory services; (d) methods of payment and conditions of service for medical and other practitioners using hospital facilities and other associated or

related services, including charging practitioners for use of hospital facilities and resources, and the effect of these matters on the level of services provided;

(e) the effect of current financing methods (including health insurance) on hospital utilisation including the provision of medical services in hospitals; (f) the relationship between community based health and related

services and hospitals; (g) the value of accreditation of hospitals; (h) existing and possible Commonwealth/State arrangements for meeting operating costs of hospitals and associated or related services ; and (i) any other matters of significant importance to (1) to (4) above:

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A ND , without restricting the nature of your recommendations, We further direct you, in making your recommendations, to have regard to the scope for rationalisation of facilities, services and resources of all types (i nc luding those provided by the Department of Veterans' Affairs, private hos pitals, medical practitioners and other health-care practitioners) and to

any barriers to the achievement of such rationalisation:

AND W e appoint you the said JAMES HARDIE JAMISON to be the Chairman of the

said Commissioners:

AN D We direct that, for the purpose of taking evidence, two Commissioners

sha l l be sufficient to constitute a quorum and may proceed with the inquiry under these Letters Patent:

AND we declare that you are authorized to conduct your inquiry into the

matters mentioned in paragraphs (1) to (4) in combination with any inquiry into the same matters that you are directed or authorised to make by any Commission issued, or in pursuance of any order or appointment made, by any of Our Governors of Our States:

AND We further declare that, for the purpose of conducting your inquiry, you

are authorized to have regard to any evidence received by, and any matters submitted to, the Commissioners appointed, by Letters Patent issued in Our name by Our Governor-General of the Commonwealth of Australia on 29 August

1979, to inquire into and report upon certain matters relating to the costs of hospitals and associated or related institutions and services as if that evidence had been received by you, or those matters had been submitted to you , as the case may be, for the purposes of your inquiry:

AND We require you as expeditiously as possible to make your inquiry and

(j) not later than 30 June 1980, to furnish to our Governor-General of the Commonwealth of Australia an interim report of the results of your inquiry; and (k) not later than 31 December 1980 or such later date as We may be

pleased to fix, to furnish to Our Governor-General of the Commonwealth of Australia a report of the results of your inquiry and your recommendations.

99

WITNESS His Excellency Sir Zelman Cowen, Knight of the Order of Australia ,

Knight Grand Cross of the Most Distinguished Order of Saint Michael and Saint George, Knight of the Most Venerable Order of the Hospital of Saint John of Jerusalem, one of Her Majesty's Counsel learned in the law, Governor-General of the Commonwealth of Australia and Commander-in-Chief of the Defence Force.

Dated this sixth day of March 1980

Zelman Cowen Governor-General

By His Excellency's Command,

Malcolm Fraser

Prime Minister

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APPENDIX B - TASMANIAN LETTERS PATENT

COMMISSION

ELIZABETH THE SECOND by the Grace of God, Queen of Australia and Her Ot her

Realms and Territories, Head of the Commonwealth.

TO Our trusty and well beloved JAMES HARDIE JAMISON, O.B.E.,

DOCTOR JOHN SAMUEL YEATMAN and CHARLES WILLIAM LANE de BOOS.

GREETING:

WHEREAS we have deemed it expedient to cause inquiry to be made into several

matters hereafter mentioned: Now know ye that we reposing great trust and confidence in your fidelity discretion and integrity have authorised and appointed you the said JAMES HARDIE JAMISON, O.B.E., DOCTOR JOHN SAMUEL YEATMAN and CHARLES WILLIAM LANE de BOOS to inquire into and report upon the

following matters that is to say :-

(1) Factors behind the costs and escalation of costs of Hospitals and associated or related institutions and services; (2) effectiveness of machinery for determining objectives, policy and resource allocation in Hospitals and associated or related

institutions and services; (3) ways in which the efficiency of the Hospitals and associated or related health systems and services might be improved ; and (4) ways in which cost increases in Hospitals and associated or related

services can be constrained.

AND WE direct you to make such recommendations ar1s1ng out of your inquiries

into the above matters as you think appropriate:

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AND, without restricting the scope of your inquiry, We further direct you,

for the purposes of your inquiry and recommendations, to give particular attention to the following matters: (a) the budgetary process for, and cost accountability of, Hospitals; (b) the effectiveness of existing organisational structures, and the

relationships between central health authorities (Commonwealth, State and Territory), hospital boards and managements and medical and other staff, including any constraints adversely affecting

efficiency in hospital management; (c) staff utilisation and training, purchasing policy, management methods and advisory services; (d) methods of payment and conditions of service for medical and other

practitioners using hospital facilities and other associated or related services, including charging practitioners for use of hospital facilities and resources, and the effect of these matters on the level of services provided;

(e) the effect of current financing methods (including health insurance) on hospital utilisation including the provision of medical services in hospitals; (f) the relationship between community based health and related

services and hospitals; (g) the value of accreditation of hospitals; (h) existing and possible Commonwealth/State arrangements for meeting operating costs of hospitals and associated or related services; and (i) any other matters of significant importance to (1) to (4) abo ve :

AND, without restricting the nature of your recommendations, We further

direct you, in making your recommendations, to have regard to the scope for rationalisation of facilities, services and resources of all types (including those provided by the Department of Veterans' Affairs, private hospitals, medical practitioners and other health-care practitioners) and to any barriers to the achievement of such rationalisation;

AND We appoint you the said JAMES HARDIE JAMISON, O.B.E., to be the Chairman

of the said Commissioners.

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AND We direct that, for the purpose of taking evidence, two Commissioners

shall be sufficient to constitute a quorum and may proceed with the inquiry under these Letters Patent;

AND We declare that you are authorised to conduct your inquiry into the

matters mentioned in paragraphs (1) to (4) under these Our Letters Patent in combination with any inquiry into the same matters that you are directed or authorised to make by any commission issued, or in pursuance of any order or appointment made, by any of Our Governors of Our States or Our

Governor-General of the Commonwealth of Australia:

AND We further declare that, fo r the purpose of conducting your inquiry, you

are authorized to have regard to any evidence received by, and any matters sub mitted to, the Commissioners appointed, by Letters Patent issued in Our name by Ou r Governor of the State of Tasmania on 2nd October 1979, to

inquire into and report upon certain matters relating to the costs of hospitals and associated or related institutions and services as if that evidence had been received by you, or those matters had been submitted to you, as the case may be, for the purposes of your inquiry:

AND Our further will and pleasure is that you shall reduce into writing

under your hand wh at you shall discover in the premises and do and shall as expeditiously as possible report and certify to Us in Our Executive Council in Tasmania in writing under your hand your proceedings by force of. these presents together with what you shall find touching or concerning the

premises upon such inquiry aforesaid:

AND We further will and command and by these presents ordain that our

Commission shall continue in full force and effect and that you Our said

Commissioners shall and may from time to time proceed in the execution

hereof and of any matter or thing herein contained although the same be not continued from time to time by adjournment:

AND We do hereby command all and singular Our loving subjects whomsoever

within Our said State of Tasmania that they be assistant to you in the execution of these presents.

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In testimony whereof We have caused these Our Letters to be made patent and the public seal of Our said State of Tasmania and its Dependencies to be hereunto affixed.

WITNESS Our trusty and well beloved His Excellency The Honourable Sir

Stanley Charles Burbury, Knight Commander of the Ro yal Victorian Order , Knight Commander of the Most Excellent Order of the British Empire, Gover no r in and over the State of Tasmania and its Dependencies in the Co mmonwe al t h of Australia at Hobart in our said State this thirtieth day of Apr il One

thousand nine hundred and eighty.

Stanley Charles Burbury Governor

By His Excellency's Command ,

D. A. Lowe Premier

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APPENDIX C - QUEENSLAND LETTERS PATENT

ELIZABETH THE SECOND, by the Grace of God, Queen of Australia and Her other

Realms and Territories, Head of the Commonwealth.

TO Our Trusty and Well-beloved JAMES HARDIE JAMISON, O.B.E.,

JOHN SAMUEL YEATMAN and CHARLES WILLIAM LANE de BOOS.

GREETING:

KNOW YE THAT WE DO by these presents issued in Our name by Our Deputy

Governor, for and on behalf of Our Governor in and over Our State of Queensland acting by and with the advice of Our Executive Council of Our State of Queensland in pursuance of "The Commissions of Inquiry Acts, 1950 to 1954", and all other powers him thereunto enabling, appoint you to be

Commissioners to inquire into and report upon the following matters:-

(1) Factors behind the costs and escalation of costs of hospitals and associated or related institutions and services; (2) effectiveness of machinery for determining objectives , policy and resource allocation in hospitals and associated or related

institutions and services; (3) ways in which the efficiency of the hospital and associated or related health systems and services might be improved; and (4) ways in which cost increases in hospital and associated or related

services can be constrained.

AND WE DIRECT YOU to make such recommendations arising out of your inquiries

into the above matters as you think appropriate:

AND, without restricting the scope of your inquiry, We further direct you,

for the purposes of your inquiry and recommendations, to give particular attention t- the following matters:

W5

(a) the budgetary process for, and cost accountability of, Hospitals; (b) the effectiveness of existing organisational structures, and the relationships between central health authorities (Commonwealth, State and Territory), hospital boards and managements and medical

and other staff, including any constraints adversely affecting efficiency in hospital management; (c) staff utilisation and training, purchasing policy, management methods and advisory services; (d) methods of payment and conditions of service for medical and other

practitioners using hospital facilities and other associated or related services, including charging practitioners for use of hospital facilities and resources, and the effect of these matters on the level of services provided;

(e) the effect of current financing methods (including health insurance) on hospital utilisation including the provision of medical services in hospitals; (f) the relationship between community based health and related

services and hospitals; (g) the value of accreditation of hospitals; (h) existing and possible Commonwealth/State arrangements for meeting operating costs of hospitals and associated or related services; and (i) any other matters of significant importance to (1) to (4) above:

AND, without restricting the nature of your recommendations, We further

direct you, in making your recommendations, to have regard to the scope for rationalisation of facilities, services and resources of all types (including those provided by private hospitals, medical practitioners and other health-care practitioners) and to any barriers to the achievement of such rationalisation:

AND WE APPOINT YOU the said JAMES HARDIE JAMISON to be the Chairman of the

said Commissioners.

AND WE DIRECT that, for the purpose of taking evidence, two Commissioners

shall be sufficient to constitute a quorum and may proceed with the inquiry under this Commission:

106

AND WE DECLARE that you are authorized to conduct your inquiry into the

matters mentioned in paragraphs (1) to (4) in combination with any inquiry into the same matters that you are directed or authorized to make by any Commission issued or in pursuance of any order or appointment made by Our Governor-General of the Commonwealth of Australia:

AND WE FURTHER DECLARE that for the purpose of conducting your inquiry you

are authorized to have regard to any evidence received by, and any matters submitted to, the Commissioners appointed by the presents issued in Our name by Our Deputy Governor for and on behalf of Our Governor in and over Our

State of Queensland on the 15th day of November, 1979, to inquire into and report upon certain matters relating to the costs of hospitals and associated or related institutions and services as if that evidence had been received by you or those matters had been submitted to you, as the case may be, for the purposes of your inquiry:

AND WE REQUIRE YOU as expeditiously as possible to make your inquiry and -

(j ) not later than 30th June, 1980, to furnish to Our Governor in Council of Our State of Queensland an interim report of the results of your inquiry; and (k) not later than 31st December, 1980, or such later date as We may be

pleased to fix, to furnish to Our Governor in Council of Our State of Queensland a report of the results of your inquiry and your recommendations.

IN TESTIMONY WHEREOF, We have caused the Public Seal of Our said State to be

hereunto affixed.

C.G. Wanstall

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WITNESS Our Trusty and Well-beloved The Honourable Sir Charles Gray

Wanstall, Chief Justice of the State of Queensland, Deputy for and on behalf of His Excellency Commodore Sir James Maxwell Ramsay, Knight Commander of the Most Distinguished Order of Saint Michael and Saint George, Commander of Our Most Excellent Order of the British Empire, upon whom has been conferred

the Decoration of the Distinguished Service Cross, and Commodore in Our Royal Australian Navy (Retired), Governor in and over the State of Queensland and its Dependencies in the Commonwealth of Australia, at Government House, Brisbane, this seventeenth day of April, in the year of Our Lord one thousand nine hundred and eighty, and in the twenty-ninth year of Our Reign.

By Command

Joh. Bjelke-Petersen

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WESTERN AUSTRALIA)

To Wit )

Wallace Kyle Governor

APPENDIX D - WESTERN AUSTRALIAN COMMISSION

ROYAL COMMISSION

By His Excellency Air Chief Marshal Sir

Wallace Kyle, Knight Grand Cross of the Most Honourable Order of the Bath, Knight

Commander of the Royal Victorian Order,

Commander of the Most Excellent Order of

the British Empire, Companion of the Distinguished Service Order, Distinguished Flying Cross, Knight of Grace of the Most Venerable Order of the

Hospital of St. John of Jerusalem, Governor in and over the State of Western Australia and its Dependencies in the Commonwealth of Australia.

TO JAMES HARDIE JAMISON, O.B. E.,

JOHN SAMUEL YEATMAN and

CHARLES WILLIAM LANE de BOOS:

WHEREAS the Commonwealth, the States and the Northern Territory are

concerned at escalating expenditure on recognized hospitals(including hospitals conducted by the Repatriation Commission) and on associated and related institutions and services; AND WHEREAS it is the desire of the Commonwealth, the States and the Northern Territory that the high quality of

the care provided by such hospitals, institutions and services be maintained; AND WHEREAS the Commonwealth, the States and the Northern Territory have agreed that it is desirable that there be a Commission of Inquiry to make inquiries in relation to these matters: NOW THEREFORE I,

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the Governor, acting with the advice and consent on the Executive Council , hereby appoint you James Hardie Jamison O.B.E.; John Samuel Yeatman; and Charles William Lane de Boos to be a Royal Commission, and you the said James Hardie Jamison O.B.E. to be its Chairman, to inquire into and report upon the following matters, namely -

(1) factors behind the costs and escalation of costs of hospitals and associated or related institutions and services; (2) effectiveness of machinery for determining objectives, policy and resource allocation in hospitals and associated or related

institutions and services; (3) ways in which the efficiency of the hospital and associated or related health systems and services might be improved; and (4) ways in which cost increases in hospital and associated or related

services can be constrained,

and to make such recommendations in respect of the above matters as you think appropriate; AND, without restricting the scope of your inquiry, you are hereby directed, for the purposes of your inquiry and recommendations, to give particular attention to the following matters, namely -

(a) the budgetary process for, and cost accountability of, hospitals; (b) the effectiveness of existing organisational structures, and the relationships between central health authorities (Commonwealth, State and Territory), hospital boards and managements, and medical

and other staff, including any constraints adversely affecting efficiency in hospital management; (c) staff utilisation and training, purchasing policy, management methods and advisory services; (d) methods of payment and conditions of service for medical and other

practitioners using hospital facilities and other associated or related services, including charging practitioners for use of hospital facilities and resources, and the effect of these matters on the level of services provided;

(e) the effect of current financing methods (including health insurance) on hospital utilisation including the provision of medical services in hospitals;

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(f) the relationship between community based health and related services and hospitals; (g) the value of accreditation of hospitals; (h) existing and possible Commonwealth/State arrangements for meeting

operating costs of hospitals and associated or related services; and (i) any other matters of significant importance to paragraphs (1) to (4) above;

AND, without restricting the nature of your recommendations, you are hereby

directed, in making your recommendations, to have regard to the scope for rationalisation of facilities, services and resources of all types (including those provided by the Department of Veterans' Affairs, private hospitals, medical practitioners and other health-care practitioners) and to

any barriers to the achievement of such rationalisation; AND it is hereby

declared that, by virtue of this Commission, you may in the execution hereof do all such acts, matters and things and exercise all such powers as a Royal

Commission or the Chairman or members of a Royal Commission may lawfully do and exercise, whether under or pursuant to the Royal Commission Act, 1968,

or otherwise; AND it is hereby further declared that you are authorised to conduct your inquiry under this Commission into the matters mentioned in paragraphs (1) to (4) above in combination with any inquiry into the same or related matters that you are directed or authorised to make by any

Commission or Commissions issued, or in pursuance of any order or appointment made, elsewhere in the Commonwealth.

GIVEN under my hand and the Public Seal of the said State, at Perth, this

16th day of April, Nineteen hundred and eighty.

By His Excellency's Command,

Charles Court Premier

GOD SAVE THE QUEEN Ill

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APF£NDIX E - ORGANISATIONS OR F£RSONS FROM WHOM 284 PUBLIC SUBMISSIONS WERE RECEIVED

Hospitals Associations:

Community Hospitals' Association, Australian Council on Hospital Standards, Hospitals' Association of New South Wales, South Australian H ospitals' Association, National Council of Hospitals, Victorian Hospitals' Asso ciation Ltd., Australian Catholic Health Care Association, Australian

Hos pital Association, Australian Hospital Association, Western Australia br anch, Private Geriatric Hospitals' Association of Victoria, National Standing Committee of Private Hospitals, Forbes-Jemalong Aged Peoples' As so ciation

Associations and Professional Bodies:

Australian Association of Surgeons, Royal Australasian College of Phy sicians, Royal College of Pathologists of Australia, Royal College of Pathologists of Australia (New South Wales State Committee), Royal College of Pathologists of Australia (Victorian State Committee), Society of

Pathologists in Private Practice, Royal Australasian College of Radiologists, National Association of Medical Specialists, Australian College of Paediatrics, Australian Psychological Society, Royal Australian College of General Practitioners, Royal Australian College of Medical Administrators,

Medical Superintendents' Association of New South Wales and Australian Capital Territory, Australian Medical Association, New South Wales Branch, Australian Medical Association, Australian Association of Physical and Rehabilitation Medicine, Australian Council of Salaried Medical Officer

Organisations, Department of Veterans' Affairs Repatriation General Hospital, specialists' advisory committee, Fremantle Hospital Clinical Association, Chairmen of the Medical Staffs of Sydney Teaching Hospitals, Doctors' Reform Society, Victorian Geriatrics' Medical Officers Association, Dandenong X-Ray

Centre, Victorian Cytology (Gynaecological) Service, Institute of Medical and

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Veterinary Science, Association of Medical Superintendents of Victorian Hospitals, Australian Geriatrics Society, Liaison Psychiatry Section, Ro yal Prince Alfred Hospital, Medical Staff, St. Vincents Hospital

Nursing Associations:

Royal Australian Nursing Federation, Australian Council of Community Nursing, Association of Directors of Nursing, Institute of Nursing Administrators of New South Wales and Australian Capital Territory, District Hospital Glen Innes, nursing staff, Tasmanian Hospital Matrons' Association, Australian Visiting Nurses Association

Paramedical Associations:

Australian Association of Occupational Therapists, New South Wales Association of Occupational Therapists, Victorian Association of Occupational Therapists, Australian Association of Social Workers, Victorian State branch, West Gippsland Social Workers' Group, Australian Council of Social Service,

Society of Hospital Pharmacists of Australia, Society of Hospital Pharmacists of Australia, Western Australia Branch Committee, Pharmacy Guild of Australia, Victorian Ambulance Services' Association, Victorian Ambulance Superintendents' Council, Australasian College of Physical Scientists in Medicine, Australian Drug and Medical Information Group, Para Domiciliary Care Service, Pharmaceutical Association of Australia, Victorian Medical Records Association, Australian Association of Dietitians, Australian Optometrical Association, Australian Council for Rehabilitation for Disabled, Victorian Council on the Ageing, New South Wales Council on the Ageing, Carers Group

Technical and Administrative Associations:

Australian College of Health Service Administrators, Australian College of Health Service Administrators, New South Wales State branch, Association of Cleaning Contractors of Australia, Hospital Administrative Officers ' Association of Victoria, Melbourne Hospitals Biomedical Engineering Ad visory Group, National Association of Testing Authorities, Institute of Internal Auditors, Melbourne Charter

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Unions:

Hospital Employees' Federation of Australia, Hospital Employees' Federation of Australia - Tasmanian Branch No. l, Health and Research Employees' Association of Australia, Branch Office, Public Medical Officers' Assoc iation of New South Wale s

Consumer Organisations:

Health Care Consumers' Association of the Australian Capital Territory, Citizens' Commission on Human Rights, Association of Relatives and Friends of the Mentally Ill, Association for the Welfare of Children in Hospital, Bonalbo and District Development Association, Nimbin Health and Welfare

Council, Disabilities Unlimited - Transport for the Disabled, Community Health Working Group, Rydalmere Hospital Parents and Friends' Association, Local Community Services Association, Australian Federation of Consumer Organisations Inc., Australian Consumers' Association, New South Wales,

Parents Centres Australia

Educational Institutions:

University of Melbourne, Faculty of Dental Science, University of New South Wales, School of Health Administration, Australian Postgraduate Federation in Medicine, Victorian Medical Postgraduate Foundation, National Resea rch Institute of Gerontology and Geriatric Medicine, University of

Melbourne, Victorian Academy for General Practice Ltd., Baker Medical Res earch Institute, Association of University Clinical Professors of

Australia, Foundation for Australian Resources.

Public and Recognised Hospitals and Institutions - New South Wales:

Royal Alexandra Hospital for Children, Camperdown, Royal Newcastle Hospital, Sydney Hospital, Camden District Hospital, Gosford District Hospital, Dubbo Base Hospital, Sutherland Hospital, Caringbah, St. Vincent's Hospital, Royal North Shore Hospital, Casino & District Memorial Hospital,

Mater Misericordiae Hospital, Parramatta Hospitals/Westmead Centre, Royal Prince Alfred Hospital, Royal Hospital for Women (Benevolent Society of New

115

South Wales), Albury Bas e Hospital , Kurri-Kurri Hospital, Walcha District Hospital, Cessnock Hospi t al, Prince Hen ry, Prince of Wales, Eastern Suburbs hospitals, Muswe l lbr ook Distr i ct Hospital, Ho r nsby & Ku-ring-gai Hospital, Royal Ryde Homes, Royal Ryde Hospi t al, M ullumbimby & District War Memorial Hospital, Ba ngalow District Wa r Memorial Hospital, Byron District Hospital, Sydney Home Nursing Service, Lewisham Hospital, Clinical Epidemiology Evaluation Unit, Royal Nort h Sho re Hospi t al

Publ ic and Recognised Hospitals and Institutions - Victoria:

Western General Hospital, Royal Women's Hospital, Queen Victoria Medical Centre, Royal Me l bourne Hospital, St. Vincent's Hospital, Royal Victorian Eye and Ear Hospital , Bendi go Home and Hospital for the Aged, St . George's Hospital, Frankston Comm uni t y Hospital, Ballarat Base Hospital, Yooralla Society of Victoria, Caulfield Hospital, Geelong Hospital, Prince Henry's Hospital, Wangar atta District Base Hospital, Sandringham & District Memorial Ho s pital, Austin Hospit al, Alfred Hospital, Hamilton Base Hospital, Bendigo

and Northern Dis t rict Base Hospi t al , Yea and Di strict Memorial Hospital, Bundora Geriatri c Compl ex, After Car e Hospital, Manvantara, Eastern Suburbs Geriatric Centre Society, Royal Dental Hospital of Melbourne, Bethlehem Public Hospital , Wimme ra Base Hospital, Ro yal Talbot General Rehabilitation Hospital, Royal Children's Hospital

Public and Recognised Hospitals an d Institutions - South Australia:

Royal Adelaide Hospital, Cummins and District Memorial Hospital Inc., Queen Elizabeth Ho spi t al , Woodville, Blackwood and District Community Hospital Inc., Queen Vi ctoria Hospital , Port Lincoln Hospital Incorporated

Public and Recogn i sed Hospitals and Institutions - Tasmania:

Beaconsfield Dis t r ict Hospital, Toosey Memorial Hospital, Launceston General Hospital, Roya l Hob art Hospital, Ulverstone District Hospital, New Nor folk Public Hospital , Scottsdale Public Hospital Board

116

Public and Recognised Hospitals and Institutions - Western Australia:

Royal Perth (Rehabilitation) Hospital

Public and Recognised Hospitals and Institutions - Australian Capital Territory:

Royal Canberra Hospital

Private Hospitals:

Hospital Corporation of Australia, New South Wales, St. Lukes Hospital, New South Wales, Home Care Nursing Service, Victoria, Mt. Carmel Hospital

Pty. Ltd., New South Wales

Nursing Homes:

Pyramid Retirement Centre, Committee

Health Centres:

Western Region Health Centre Ltd., Footscray, Victoria, Royal Southern Memorial Hospital, Community Care Centre, Victoria, Kensington Community Health Centre, South Australia, Heidelberg Community Health and Welfare Centre, West Heidelberg, Victoria, Maloondah Social Health Centre, Ringwood

East, Victoria, Central Australian Aboriginal Congress Inc., Northern Territory

Other Institutions:

Epilepsy Foundation of Victoria

Commonwealth Departments and Authorities:

Department of Health, Department of Veterans' Affairs, Department of Housing and Construction, Department of Defence, National Library of

Australia, National Advisory Council for the Handicapped

117

State and Territory Departments and Authorities:

Capital Territory Health Commission, Department of Health, Queensland, Health Commission of New South Wales, Health Commission of New South Wales North Coast Region, and Southern Metropolitan Region, Department of Health Services, Tasmania, Department of Health Services, Child Health Services, Tasmania, Department of Health and Medical Services, Western Australia, Department of Health, Northern Territory, Nurses' Education Board of New South Wales, South Australian Health Commission, Hospitals Computer Service, Victoria, Community Services for the Intellectually Handicapped, Health Commission of Victoria, Mental Health Services Commission, Tasmania.

Commonwealth Parliamentarians:

Han. Douglas Everingham, M.H.R., Han. Ian Wilson, M.H.R.

Manufacturers:

Australian Pharmaceutical Manufacturers' Association, Douglas Bean Pty. Ltd .

Equipment Suppliers:

Civil & Civic Pty. Ltd., Travenol Laboratories Pty . Ltd.

Service Suppliers:

Australian Institute of Launderers and Linen Suppliers, Crothall Hospital Services Organisation, Institute of Launderers and Linen Suppliers, Textile Care and Rental Association of South Australia, Textile Care and Rental Association of Tasmania, Textile Care and Rental Association of

Victoria

Consultants:

Arthur Andersen & Co., Community Systems Foundation, Kirton & Whiting Planning and Development Consultants, Tracey Brunstrom and Hammond Pty . Ltd.

118

H ealth Insurers:

Hospitals Contribution Fund of Australia, Insurance Brokers' Council of Aus tralia/Insurance Council of Australia, Medibank, Voluntary Health

Insurance Association of Australia

Individuals:

M r . C.R. Pratt, Western Australia; Beverley Raphael, New South Wales; Er ica Bates, New South Wales ; Professor S.M.L. Nade, Western Australia;

D r . A.E. Polack, Tasmania; Or. J. Barrie Morley, Victor ia; Professor L. F. Opit, Victoria; Mr. Peter Abelson, New South Wales; Professor J. D. Martin, Western Australia; Professor R.J. Walsh , Victoria; Professors Pitney and Mitchell, New South Wales; Professor T. Mo rgan, New South Wales;

Professor M.S.T. Hobbs and Mr. P. Schapper, Western Australia; Professor John Beveridge, New South Wales; Dr. P. M . Tatchell, Australian Capital

Ter ritory; Professor G.C. Schofield, Victoria; Or . L. M . Robert s, New South

Wal es; Dr. M.A. Neaverson, New South Wales; Or. S. Gillis, New South Wales;

Dr . C.G. MacFarlane, Victoria; Professor R.R . Andrew, Victoria;

Dr . Vincent Youngman, Queensland; Or. C. R. T. Hughes, South Australia;

Dr. J.A . Kirkland, South Australia; Dr. N. Scrimgeour, South Australia;

D r . A.D . Ross, Tasmania; Dr. P. O. Hughes , Australian Capital Territory; Dr. D.S.C. Brown, South Australia; Dr . E.H . Morgan, New South Wales; Dr . Donald McDonald, New South Wales; Dr. W . Woods and Or. D.P. Ewing , New South Wales; Elva Redington, New South Wales; Mr . L. E. Crawford, New South

Wales; Rev . E. Hockley, New South Wales; Mr. L.M. Kenney, New South Wales;

Ann Brennan, New South Wales; Mr . B.C. Hann, Victoria; Mr . R. Jones, Western

Australia; Mr. J. Dolan, Australian Capital Territory; Mr. T. Kennedy, Western Australia; Mr. A.S. McKenzie, New South Wales; Mr. D.O. Smith and Mr. D. Morris, New South Wales; Mr. C. Norton, Victoria; Beverly Arran, New

South Wales; James Charles, Victoria; Mary Ell, Victoria; Robert W. Ball, Vic t oria; Allan D. Hughes, Victoria ; Dr . I.A . G. Brand, Victoria;

Dr . J.G. Golledge, Brisbane; Mr. G.P. Garrity, Australian Capital Territory;

Dr . N.A. Elvin, Australian Capital Territory; Dr. I. Jaumees, Queensland;

Dr . T.J. Wood and Professor Sir Edward Hughes, Victoria; Graham v. Watts,

Victoria; Dr A.F. Knyvett, Australian Capital Territory.

Confi dential: Nineteen received.

119

APPENDIX F - COMMISSION HEARINGS

The public hearings opened in Sydney on 6 March 1980 on procedural

matters and closed with a procedural hearing on 17 December 1980. The Commission sat in public and confidential hearings in all eight capital cities for 30 days:

Sydney 10 1/2 days

Melbourne 7 days

Canberra 2 days

Brisbane 2 1/2 days

Darwin 1 1/2 days

Hobart 2 days

Adelaide 2 days

Perth 2 1/2 days

Total witness sessions: 213 public 195

confidential 18

Total number of witnesses: 509 public 477

confidential 32

Total number of exhibits: 154 public 141

confidential 13

121

AP PE N DI X G EX HIBITS ENTERED IN THE RE CORD AT

PUBLIC HEARINGS

1 Schedule of public submissions received to 6 M arch 1980.

2 Schedule of additional submissions received to 15 April 1980.

3 Surgi cal procedures for Queensland, England and Wales and the USA, 1973; Queensland Surgical rates in statistical divisions, 1973-75.

4 Procedure rates public and private hospitals, Queensland (1977), New South Wales (1978).

5 Radiological manpower in Australia, 1977- 78.

6 Comparison of hospital costs, Royal North Shore, Royal Ryde Rehabilitation, Coorabel, Weemala.

7 Memorandum , Benevolent Society of NSW to Acting Regional Director of Health, Southern Metropolitan Region, Kogarah, 29 March 1980.

8 Hospital management analysis comparison report for December 1979, Bankstown, Blacktown, Hornsby, Liverpool and Ryde.

9 Analysis of Sydney Home Nursing Service client population characteristics, April 1980.

10 IMVS Pathology Costs, regular report made by Royal Adelaide Hospital ,

January - February 1980.

ll Memor andum, Mater Misericordiae Hospital, No r th Sydney, to Regional Director , Northern Metropolitan Region, Chatswood, Cost Containment -M ater Hospital Management Program, 19 July 1979.

123

12 Memorandum, Mater Misericordiae Hospital, North Sydney, to Acting Regional Director, Northern Metropolitan Region, Chatswood, Fisher histomatic tissue processor, 8 April 1980.

13 Chart, Financial comparisons, Dubbo Base and other hospitals, six months

to December 1979.

14 Paper, Modern technology in private hospitals, address to conference on CAT fever or rationalisation of highly specialised technology in

hospitals, 21 March 1980.

15 Paper, approved hospital beds, Australia, 30 June 1979.

16 Organisation chart, Austin Hospital.

17 Submission by senior clinician, a member of Committee of Management, Geelong Hospital.

18 Letter 18 May 1980, and attachment, recognised 2nd and 3rd schedule hospitals, from Secretary, Health and Research Employees' Association of Australia.

19 Letter, 2 May 1980, from Manager, Wimmera Base Hospital, average daily bed costs.

20 Nursing Hostels Supplement (1976) to the Report on the Chronically Ill

(1975), report prepared by Victorian Branch, Australian Association of Social Workers.

21 Added submission, Home Care Nursing Service, May 1980.

22 Statement by Messrs D.R. Wilson & J.D. Mason, Victorian Ambulance

Services' Association, 15 May 1980.

23 An Act to facilitate and effect the amalgamation of the Yooralla Hospital School for Crippled Children and the Victorian Society for Crippled Children Adults, and to establish the Yooralla Society of

124

Victoria, a Company limited by guarantee, as their successor in law, to amend the Hospitals and Charities Act 1958 and for other purposes, 1977.

24 Sixth annual report and statement of accounts, 1978-79, Bundoora

Geriatric Complex, and additional information.

25 Minutes of a meeting of the Board of Directors, Victorian Hospitals'

Association Ltd, 24 April 1980.

26 Document, patient care assessment, Royal Australian Nursing Association,

Federal office.

27 Document, nursing division monthly incident controls.

28 Document, report on a survey of nursing staff requirements for Royal

Hobart Hospital.

29 Statement, VHIAA submission to the Commission of Inquiry into the

Efficiency and Administration of Hospitals, errata.

30 Letter, 8 April 1980, from Federal Minister for Health to Mr Derek Shaw,

President, Health Benefits Council of Victoria, concerning community voting.

31 Draft document, Health insurance plan, March 1980.

32 Document, Number of hospitals employing dietitians, June 1979, Voluntary

Health Insurance Association of Australia.

33 Documents provided by the Council of the Royal Australasian College of

Radiologists, requested by the Commission, 15 April 1980.

34 Documents showing the fall in membership of health insurance funds,

Voluntary Health Insurance Association of Australia.

35 Letter reporting the net operating bed-day cost for 1974/75 - 1978/79,

the Prince Henry, the Prince of Wales and Eastern Suburbs group of hospitals.

125

36 Letter, Australian Hospitals' Association containing corrections to typographicRl errors in transcript of the public hearings held on 21 April 1980.

37 Document, Royal Australasian College of Radiologists, rebuttals and

points of major disagreement (concerning radiologists) of statements made in submissions by Doctors' Reform Society, HCF, and Commonwealth

Department of Health.

38 Statement, receipts and disbursements, QATB Committees' general fund, 1

July 1978 to 30 June 1979.

39 Document, Organisation and role of the Queensland Ambulance Transport

Brigade.

40 Private Hospitals and Nursin9 Homes Association of Australia, Queensland

submission for correction of anomalies in fees.

41 Document, Submission by John G. Provan, Medical Superintendent,

Rockhampton.

42 Report, Royal Brisbane Hospital, April 1980, Utilisation characteristics of patients who attended the Royal Brisbane Hospital Casualty Department .

43 Document, Hospital beds and ratio for 1000 population at June 1979.

44 Document, Northern Territory Department of Health, staff establishment analysis.

45 StJohn Council for the Northern Territory Inc., Constitution.

46 Deed of agreement, St John Council and the Northern Territory of Australia.

47 Annual reports, StJohn Council for the Northern Ter ritory I nc . , StJohn

Ambulance Association, NT Centre, St John Ambulance Brigade , NT District

Inc. and financial statements for 1979.

126

48 Brief prepared for His Excellency the Governor-General of Australia, official opening St John's Ambulance, Northern Territory headquarters, 4 May 1980.

49 Ambulance officer training and structure document, St John Council for

the Northern Territory.

50 Precis, conditions of full-time service in St John Ambulance Service, No rthern Territory .

51 Recruit brochure, volunteer personnel, StJohn Ambulance, Northern

Territory.

52 Subscription scheme brochure, St John Ambulance Brigade, Northern

Territory.

53 Scale of ambulance transport charges, l January 1980, St John Council

for the Northern Territory.

54 Schedule comparing capital city ambulance service fees and

subscriptions, 13 May 1980.

55 Draft estimates, 1980/81, StJohn Council for the NT, Inc.

56 Hospital Management Boards Act 1980, Northern Territory.

57 Northern Territory Chief Minister's policy speech, 1980.

58 Document, Health care costs and Medibank.

59 Transcript, Australian Health Ministers' Conference, Hobart, 16 June

1977.

60 Submission, Appendix 3, New Norfolk Hospital Board.

61 Objectives, Royal Prince Alfred Hospital.

127

62 Additions to submission, Royal Hobart Hospital.

63 Notes for Commission, St John's Hospital.

64 Amended estimation of revenue and expenditure, St Vincent's Hospital,

Launceston .

65 Annual ser vice subsidies, extensive care subsidy, comparison between a New South Wales nursing home and a Queensland nursing home.

66 Elaboration on evidence by Dr S. Gillis, Sydney, 22 April 1980.

67 Northern Territory Department of Health staff establishment analysis for the fortnight ending 4 June 1980.

68 Darwin Hospital Services review, November 1979.

69 Guidelines for medical imagi ng, report of the Royal Prince Alfred

Hospital Medical Imaging Committee, December 1979.

70 Newspaper cuttings from the Western Magazine .

71 List, Health Commission staff, Orana Region.

72 Memorandum anrl Articles of Association, Pharmaceutical Society of Australia.

73 Document, The Pharmaceutical Society of Australia.

74 Six booklets: Pharmaceutical Society of Australia , Continuing Education: Introductory Pharmacokinetics, Vol. 1, No. 1; Hypertension, the disease and its therapy, Vol. 1, No. 2 1979; Bleeding and clotting disorders and their therapy, Vol. 1, No. 3; Heart Fcilure, Vol. 1, No. 4; Coronary Heart Disease, Vol. 1, No. 5; Some aspects of clinical chemistry, Vol . 1, No. 6.

128

75 Pharmaceutical Society of Australia, fourth annual offshore refresher course for pharmacists, 1980, Hawaii, Diseases and drug therapy; Pharmacy management; Professional pharmacy practice.

76 Memorandum, First Assistant Director-General, Insurance, Hospitals and

Nu rsing Homes Division, Department of Health, Canberra, on ACT standing

Committee on Hospital Cost-sharing arrangements, 21 May 1980.

77 Submission to Senate Standing Committee on Finance and Government Operations from Capital Territory Health Commission, May 1980.

78 Pa pers, South Australian Hospitals' Association, Medibank Mark 1 to Mark

6, Medibank, miscellaneous changes.

79 Com monwealth Department of Health, South Australian Division - hospitals approved under the Health Insurance Act.

80 Map and statistics, South Australian Hospitals' Association, 1919 -1979.

81 Document and statistics, Australian Association of Physical arid Rehabilitation Medicine .

82 Paper, Rehabilitation of the Stroke Patient and their potential for

Recovery , by Dr Suzette Blight.

83 Document, cost of performing automated tests at IMVS, Adelaide, vs

regional laboratories; Summary report, costing of pathology tests at the Institute of Medical and Veterinary Science, Adelaide, W.O. Scott Pty Ltd; Pathology services in South Australia, report to the Minister of Health by the Committee of Enquiry into the Provision of Pathology

Services in South Australia; Submission by IMVS to Committee of Enqu i ry into Pathology Services in South Australia, Pt I, January 1980; Appendices to Pt I.

84 St Vincent's Hospital, Melbourne, Bulletin of Graduate Activities, 9

June 1980.

129

85 St Vincent's Hospital Melbourne, Pilot study in surgical audit, evaluation of criteria auditing and a comparison with other systems, by Brian T. Collopy, FRACS, FRCS.

86 The impact of manpower changes on vocational training, selected papers

delivered at annual forum of Australian Postgraduate Federation in Medicine, 29 April 1978.

87 Opening statement, Board of Management, Cummins and District Memorial Hospital Inc.

88 Miscellaneous memoranda on stores, Flinders Medical Centre, South

Australia.

89 Documents, Royal Adelaide Hospital, IMVS pathology costs; theatre utilisation.

90 Personal health care policy, a discussion paper, a contribution to the

personal and public health care objectives of the West Australian and Commonwealth Governments, West Australian Branch of the Australian

Medical Association, January 1976.

91 Statement to the Commission by Professor M.S.T. Hobbs.

92 Bridgetown District Hospital, 1978/79 expenditure.

93 Introductory statement to Commission by WA Branch, Society of Hospital Pharmacists of Australia.

94 Letter, General Superintendent, Royal Alexandra Hospital for Children,

Sydney, 23 June 1980, providing information on Adjusted Daily averages.

95 Memorandum and attachment, Health Commission of NSW, Revised policy for the coordination of computing activities'.

96 Letter, Under-Secretary, Department of Health, Brisbane, 17 June 1980 ,

community based services and psychiatric hospitals.

130

97 Letter, Under Secretary, Department of Health, Brisbane, 17 June 1980,

chief office staffing, 1968-69 and 1978-79.

98 Document, the question of property valuations and rental factors in

relation to nursing homes.

99 Add ress, Kevin F. Lee, to Private Geriatric Hospitals' Association, 23

March 1980 .

100 Copy of submission by Dr D. Panelli and Dr J. O'Donovan to the Pharmaceutical Benefits Advisory Committee about the withdrawal of intravenous amino acids (aminofusin L 10%) from the list of Pharmaceutical Benefits available to patients in private hospitals.

101 Appendix A, Overview of training fellowships for community service, presented by Dr G. Walpole, Medical Director, Victorian Academy for General Practice Ltd.

102 Submission of the Australian Post Graduate Federation in Medicine.

103 Document, Queen Victoria Hospital project, final report of the task

fo rce, and Submission to the South Australian Health Commission from the

Queen Victoria Hospital.

104 St John's Hospital, Hobart, accounts for year ended 30 June 1979.

105 Financial report, Radiology Department, with addendum, Ballarat Base

Hospital.

106 Australian hospital outpatient survey conducted through the Society of Hospital Pharmacists of Australia for Allen and Hanburys, March - July 1979 .

107 Letter, Deputy Director-General of Health, Canberra, and copy of article

Cost and quality control of laboratory services: The New Yor k City Medicaid centralised laboratory proposal.

131

108 Corrections and clarifications relating to the transcript of the public hearing, Canberra, 21 May 1980.

109 Letter, Administrator, Wyndham and Kununurra District Hospitals, detailing daily occupied bed costs for year ended 30 June 1979.

110 Additional information in relation to evidence from Executive Director, Australian Council on Hospital Standards.

111 Memorandum, Northern Metropolitan Region, Health Commission of NSW to CEO, Royal Ryde Rehabilitation Hospital.

112 Article, The Bulletin magazine, 22 April 1980, pp 60-79, and replies published in The Bulletin, 13 May 1980, pp 14-15.

113 Revised submission by Nurses' Education Board of NSW.

114 Address to Commission and paper, Designing a Better Place to Die, by Joan Kron, and Table 2, Basic characteristics of a hospice program.

115 Effect of changes in conditions and allowances on labour costs in Victorian hospitals, some preliminary evidence.

116 List of submissions received to 30 June 1980.

117 Letter and sets of tables provided by Dr s. Gillis, relating to measuring hospital output.

118 Supplement to the Australian College of Paediatrics submission to the Commission.

119 Letter, Richard Jones, containing information requested by Commissioner de Boos, 27 June 1980, Perth.

120 Hospital quality control, a users' manual, Community Systems Foundation.

132

121 Document, Commonwealth Department of Health, Specific purpose payments

from the Commonwealth to the States for health 1974-75 to 1979-80.

122 Study on Public utilisation of Emergency Department, Sir Charles

Gairdner Hospital.

123 Letter, 30 June 1980 and budget papers, Bunbury Regional Hospital.

124 Letter of rebuttal, Toosey Memorial Hospital, 27 June 1980.

125 Letter, Toosey Memorial Hospital, containing further information on factors behind the costs and escalation of costs of hospitals and associated or related institutions and services.

126 Letter and three attachments, 25 June 1980, St Frances Xavier Cabrini

Hospital, referring to medical manpower.

127 Clarification and explanations to comments made about the Port Lincoln

Hospital, South Australia - provided by the Chief Executive

128 A document - "Royal Adelaide Hospital Redevelopment Project - Draft

Philosophy and Objectives" - provided by the Acting Administrator.

129 A letter detailing links between Repatriation General Hospital, Daw Park

and the Flinders Medical Centre, Bedford Park, plus a copy of the 1979 Annual Report of the Department of Medicine, Flinders Medical School.

130 Amended data of Pathology tests and Laboratory manpower statistics

provided by Administrator, Queen Elizabeth Hospital, Woodville, South Australia.

131 A letter and attachments in regard to nursing manpower availability in

Tasmania and the cost of training a nurse over a three year period in the hospital system, provided by the Tasmanian Hospital Matrons' Association.

133

132 A letter and 6 annexures, as described below, provided by the General Superintendent Mater Misericordiae Hospital, North Sydney Annexure A: 'Coordination of Hospital Services' Annexure B: 'Coordination of Services Royal

North Shore Hospital'

Annexure C: 'Comparative performances in Pathology (July 1977)' Mater/Hornsby Annexure D: 'Casualty Costs at the Mater (1979) Annexure E: 'Relative Costs - a first approach' Annexure F: 'Some Fundamental Aspects of Hospital

practice.

133 A letter and results of a Statistical and Financial Survey of Hospitals as at 30 June 1980 provided by the Chairman, Community Hospitals Association Melbourne.

134 A letter and copy of a judgement handed down in the Industrial Appeals Court, Melbourne on Thursday 4 September 1980, provided by the Director of the School of Pharmacy, Faculty of Medicine, University of Tasmania.

135 A statement headed 'Community Health Services and Aboriginal Health' provided by the Department of Health and Medical Services, Western Australia.

136 A paper entitled 'Regionalisation of Health Services in Victoria' provided by the Director, Planning and Research, Health Commission of Victoria.

137 A paper entitled 'Defining Hospital Roles' provided by the Royal Australian College of Medical Administrators.

138 A report entitled 'Evaluation and Assessment of the First Two years of Operation of the Royal Melbourne Hospital Surgical Unit at the St Andrew's Hospital' provided by the Executive Directors of the Royal Melbourne Hospital and the St Andrew's Hospital.

139 Relevant Acts and guarantee agreements concerning loans made to the St Vincent's and StJohn's Private Hospitals provided by the Director-General of Health Services, Tasmania.

134

140 Two letters by the Health Commission of New South Wales,

received on 25 August 1980 and 3 November 1980 respectively, in regard to staff performing administrative and service functions in the New South Wales Health Commission's antecedent bodies in the financial year 1968/69.

141 List of additional submissions received and released for public

inspection since 30 June 1980.

135

APPENDIX H

COMMISSION STAFF

Secretary M r F.C. Boyle Mr R.B . Maher May - Dec 1980 Mr J.B. Kelly Sep - Nov 1979 (Acting)

Nov 1979 - Apr 1980

Director of Research M r J. B. Kelly Sep 1979 - Dec 1980

Senior Advisers

M r R. S. Andrews Sep 1979 - Dec 1980 Dr A. Mant Jan - Dec 1980

M r C. Payne Jan - Dec 1980 Mr S.A . O. Shires Oct 1979 - Dec 1980

Advisers M r C. A. Bennett Jan - Dec 1980 Ms A.M. Schmiede Jan - Dec 1980

Research

Mr W.J. Hickson Jan - Dec 1980

Miss J . Baird Mr I. W. Scott

Mr A. Turner

Sep 1979 - Dec 1980 Miss B.M. Deed Jan - Dec 1980

Jan - Dec 1980 Jan - Dec 1980 Mr K.G. Tarlo Feb - Jun 1980

Editorial Mr R.J. Curtis Oct - Dec 1980

Personal Assistant to the Chairman Mr M.V. Goodwin Nov 1979- Dec 1980

Administrative Officer Mr B.L . Parker Sep 1979 - Dec 1980

Administrative Mr P. Beers Miss K. French Mr S. Wilson

Dec 1979 - Dec 1980 Oct - Dec 1980 Jan - Jun 1980

Stenographic Staff Miss A.E. Cahill Oct 1979 - Dec 1980 Miss M. Fleming Sep 1979 - Dec 1980 M rs E. King Sep - Dec 1980

Mr B. Care Mr J. Kelly

Sep 1979 - Dec 1980 Aug - Dec 1980

Miss J. Daley Dec 1979 - Jun 1980

Miss R. Kidis Jul - Dec 1980

Miss K. O'Reilly Sep 1979 - Jul 1980

137

APPENDI X I

VI SITS TO HOSPITALS AND INSTITUTIONS

During the course of the Inquiry Commissioners and Commission staff visited these hospitals and institutions in all the States and Territories:

New South Wales

Albur y Base Hospital, Albury Mercy Hospital, Albury Private Hospital,

Armidale and New England Hospital, Bankstown Hospital, Barranga Private Hospital, Cof fs Harbour, Baulkham Hills Private Hospital, Berowra Health Centre, Bindawalla Subs idiary Hospital, Wellington, Blacktown District Hospital, Camden District Hospital, Campbelltown Hospital, Canterbury

Hospital, Chatswood District Community Hospital, Coffs Harbour and District Hospital, Coonabarabran District Hospital, Cowra District Hospital, Cudal War Memorial Hospital, Darrigo Hospital, Dubbo Base Hospital, Dudley Private Hospi tal, Orange.

Cape Hawke Memorial Hospital, Gilgandra District Hospital, Gladesville

Hospital , Gosford District Hospital, Goulburn Base Hospital, Gunnedah District Hospital, Gwen Warmington Lodge, Yass, Hastings District Hospital , Port Macquarie, Hillview Community Health Centre, Hornsby and Ku-Ring-Gai Hospital, Lidcombe Hospital, Macksville and District Hospital, Manning River

District Hospital, Taree, Manly District Hospital, Mater Misericordiae Hospital, Crows Nest, Medicheck, Sydney, Molong District Hospital, Mosman and District Community Hospital, Mount St. Margaret Hospital, National Institute of Health, Sydney, Newcastle Mater Misericordiae Hospital, Orange Base

Hospital, Port Kemb la District Hospital, Port Macquarie Private Hospital, Prince Henry Hospital, Prince of Wales Hospital, Queanbeyan District Hosp ital, Rachel Foster Hospital, Redfern, Repatriation General Hospital ,

139

Concord, Royal Alexandra Hospital for Children, Camperdown, Royal Newcastle Hospital, Royal North Shore Hospital, St. Leonards, Royal Prince Alfred Hospital, Camperdown, Royal South Sydney Hospital, Zetland, Ryde Hospital .

St. George Hospital, Kogarah, St. John of God Hospital, Goulburn, St. Luke's Hospital, Potts Point, St. Vincent's Hospital, Darlinghurst, Sydne y Hospital, Tamara Private Hospital, Tamworth, Tamworth Base Hospital, University of Sydney, Department of Community Medicine, Wallsend District Hospital, War Veteran's Home, Yass, Weerona Nursing Home, Cowra, Wellington District Hospital, Westmead Hospital, Wollongong Hospital, Yass District Hospital.

Victoria

Alfred Hospital, Prahran, Austin Hospital, Heidelberg, Ballarat Base Hospital, Coburg Community Health Centre, Deer Park Community Health Centre, East Bentleigh Community Health Centre, Epworth Private Hospital, Mayday Hills Hospital, Mont Park Mental Hospital, Mount Royal Hospital, Preston & Northcote Community Hospital, Queen Elizabeth Geriatric Centre, Repatriation General Hospital, Heidelberg, Richmond Community Health Centre, Royal Children's Hospital, Parkville, Royal Melbourne Hospital, Parkville, Royal Park Psychiatric Hospital, Royal Women's Hospital, Carlton.

St. John of God Private Hospital, Ballarat, The Melbourne Clinic, Wangaratta District Base Hospital, West Heidelberg Community Centre, Western General Hospital, Western Region Health Centre, Wodonga District Hospital, Yooralla Society of Victoria.

Western Australia

Albany Regional Hospital, Australian Inland Mission hospitals, Halls Creek and Fitzroy Crossing, Beverley District Hospital and Frail Aged Lodge, Broome District Hospital, Sunbury Regional Hospital, Busselton District

Hospital, Dampier District Hospital, Derby Leprosarium, Numbala Nunga Nursing , Home, Derby, Derby Regional Hospital, Esperance District Hospital,

140

Jerramungup Nursing Post, Kununurra District Hospital, Marble Bar District H ospital, Newman District Hospital.

Osborne Park Hospital, Port Hedland Regional Hospital, Ravensthorpe H ospital, Repatriation General Hospital, Hollywood, Roebourne District Hospital, Royal Perth Hospital, Sir Charles Gairdner Hospital, St. John of G od Ho spital, Perth, Wanneroo Hospital, Warren District Hospital , Wickam

District Hospital, Wyndham District Hospital.

Q ueensland

Cloncurry General Hospital, Good Shepherd Hospice, Townsville, Holy Spirit Hospital, Inala Community Health Centre, Brisbane, Mackay Base H ospital, Mackay Community Health Centre, Mater Misericordiae Hospital, Brisbane, Mater Misericordiae Hospital, Mackay, Mater Misericordiae Hospital,

Townsv ille, Moreton Bay Nursing Home, Mount Isa Base Hospital, Pioneer Valley

Private Hospital, Princess Alexandra Hospital, Repatriation General Hospital, Greenslopes, Rockhampton Base Hospital, Royal Brisbane Hospital Complex, Townsville Community Health Centre, Townsville General Hospital, Villa Vincent Home.

South Australia

Adelaide Children's Hospital, Flinders Medical Centre, Keith & District Hospital, Lyell McEwin Hospital, Millicent & District Hospital, Modbury Hospital, Mount Gambier Hospital, Mount Gambier and Districts Extended Care Ser vice, Penola War Memorial Hospital, Queen Victoria Hospital, Repatriation

General Hospital, Daw Park, Royal Adelaide Hospital, Institute of Medical and Vete rinary Science.

Tasmania

Launceston General Hospital, Nazareth House, North Eastern Soldiers' Memorial Hospital, North Western General Hospital, Royal Derwent Hospital,

141

Royal Hobart Hos pital , Spencer Home for the Aged , St . Helen 's District Hospital, St . John's Hospital, St . Vincent's Hospital , W est Coast District Hospital .

Australian Capital Territory

Calvary Hospital, Jindalee Nursing Home, John James Private Hospital , Kambah Health Centre, Royal Canberra Hospital, Woden Valley Hospital.

Northern Territory

Alice Springs Baby Health Centre, Alice Springs Community Health Centre , Alice Springs General Hospital, Casuarina Hospital, Darwin General Hospital , Katherine Community Health Centre, Katherine General Hospital, Tennant Creek General Hospital.

142

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Education and Welfare, No. 79-3256. 1980

Badgley, R.F. and Smith, R.D., User Charges for Health Services The Ontario Council of Health, Ontario. 1979

Bennett, C., Wallace, R. , Alternative Forms of Care for the Aged and Handicapped. National Institute of Labour Studies, 1980

Blandford, J.M., Professional and Management Efficiency Paper presented to National Symposium on Health Care and Cost Control, South Australian Post Graduate Medical Education Association. 1979

Catchlove, B. R., Wilson, R.MacL., Spring, S., and Hall, J., Routine investigations in elective surgical patients Medical Journal of Australia, 2: 107-110. 1979

Clarke, R.M., Mason, B., Leeder, S.R., Cost and effectiveness of clinical investigation: the state of the art Australian and New Zealand Journal of Medicine, 10: 572-580. 1980

Cochrane, A.L., Effectiveness and Efficiency- Some Random Reflections on the National Health Service Nuffield, London. 1972

Cox, K.R., Who owns the problem of health care costs?

Medical Journal of Australia, 727-730. 1977

143

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