PUBH1382 Australian Health Care System and

Introduction to Mental Health - 2015

Content and assessment requirements for this week

Learning objective for this week

Supplementary information

Assessment requirements

Tasks
1. Using the 10 learning objectives as a guide, you should read and takes notes from
the relevant two chapters of the text
a. Chapter 2: The Public Hospital System
b. Chapter 3: The private sector and health insurance
2. Answer the Learning objective in Part A
3. Read the supplementary material in this file and answer the question in Part B
4. Watch the video and answer the question in Part C
5. Study your notes and test yourself with the true/false quiz does not count toward
your final grade
6. Complete the timed, open book online Multiple Choice Test which is based on all of
the learning objectives counts toward your final grade

Learning objectives

Week 3
The Public Hospital System
1. Describe the public hospital system in terms of
a. Number (beds per 1000 citizens)
b. Geographical distribution
2. Describe the public hospital system in terms of:
a. Types of patients
b. Measure of hospital workload (i.e., separations)
c. Acute, continuing and emergency care
3. What is the role of public hospitals?
a. Current free medical and surgical care
b. Choice of doctor, multidisciplinary care and patient-centred care
4. Explain the role of public hospitals in terms of:
a. Ensuring quality care
i. Role of accreditation
ii. Role of technology
iii. Universal indicators such as average length of stay
iv. Challenge of access block
b. Health professional education and research
c. Contribution to community well-being
5. Explain how public hospitals are funded (including case-mix) and describe current
innovations in health reforms (including Local Hospital Networks LHNs)
Private sector and Health Insurance
6. Outline the various source of funds from public and private health funding schemes
7. Explain how private health insurance operates in Australia in terms of its relationship
with Medicare
8. Explain private health insurance and the transformation of Medibank
9. Explain the role of private health insurance and the decline and subsequent rescue
of private health insurance
10. How may private health insurance be involved in the future challenge of managed
care.

The Public Hospital System

Australia's Health Care System is a mixed system of private and public health care. Health
care in Australia is rapidly evolving and currently there is much debate and discussion on the
issues of how health care will be provided to meet changing demographics and population
needs in the future.
The Australian Healthcare system is well funded, well-resourced and provides free health
care for all Australian citizens. While it covers the whole Australian continent, there is
inequality in access (and some services) in terms of rural-remote locations [see chapters on
rural remote health and health provision for indigenous Australians].
1. Describe the public hospital system in terms of
a. Number (beds per 1000 citizens)
b. Geographical distribution

Australias health care system is based on universal coverage with equal access to all citizens.
In 2011, 756 public hospitals were in operation in Australia. In all these hospitals, 56,478
beds were available which equates to approximately 2.57 beds per 1000 of the population. If
private beds are included, then the ratio increases to 3.89 beds per 1000 of the population.

http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129543146

This ratio [of 3.89] compares favourably to the world average [2.9 beds per
1000] and is significantly better than both the UK and USA whose 2010 average
bed ratio was 3.0 per 1000 beds

http://data.worldbank.org/indicator/SH.MED.BEDS.ZS/countries/1W-AU-GB-US?
display=graph
Australia is a large continent with many remote communities. Public hospitals are
geographically dispersed with approximately 58% of public hospitals located in
regional areas.

http://www.aihw.gov.au/WorkA
rea/DownloadAsset.aspx?id=6442459022
In terms of equity, one of the critical measures is accessibility people can
obtain health care at the right place and right time irrespective of type of
hospital, indigenous status, remoteness of residence and socio-economic status.

From the following table it can be seen that Australias provision of hospital care
is equitable [with some challenges in terms of rural-remote locations].

http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129543146

2. Describe the public hospital system in terms of:

a. Types of patients
b. Measure of hospital workload (i.e., separations)
c. Acute, continuing and emergency care
There are two types of patients: inpatients and outpatients. Inpatients are
patients that are assigned a bed. This can be for same-day care or overnight
stays of one or more nights. Outpatients are those that are given care but are
not assigned a bed and are not admitted to the hospital. Outpatient services
include physical examination, consultation or treatment where the patient is not
admitted and the condition is non-urgent. Out-patients make up around half of
the patients [50.9%] presenting at a public hospitals and around two-thirds of
private hospital patients [68.7% of all presentations]
In Australia, hospital productivity is typically measured by episodes of care or
number of separations. An episode of care is a patients journey from admission
to discharge. A separation is a term used in hospitals for patients that have
ended their episode of care, and this is commonly how workload is measured. A
separation is due to one of four reasons: death, change of type of care being
received, transfer to another hospital and discharge to home or a care facility
such as an aged care facility. In 2011, there were 5.379 million hospital
separations with this number growing at around 3% per year. Australias
productivity is 162 patient separations per 1000 population per year which is
considerably higher than both UK and USA [both at 126 patients per 1000
citizens]. To reduce the increasing numbers of admissions and discharges,
Australia is focusing on preventative health care and health promotion [see next
module: Primary Health Care].

http://www.aihw.gov.au/WorkArea/Dow
nloadAsset.aspx?id=60129543146
Public hospitals were primarily established to provide acute/emergency care.
However, over time they have developed a continuum of care. Hence, there are
two types of care in public hospitals: acute/ emergency care and continuing care.
A. Acute/emergency care is where patients are admitted through the emergency
department and normally involve life threatening illnesses or ailments that
need to be seen quickly. There are five categories for emergency department
patients:

1)
2)
3)
4)

Immediately life threatening conditions that require resuscitation

Emergency conditions that need to be seen swiftly
Urgent conditions that need to be seen as quickly as possible
Semi-urgent conditions that can wait but still need to be seen as
quickly as possible, but not before the first three conditions
5) Non urgent conditions that can wait to be seen.
B. Continuing care is care - continued over longer periods of time
Around 25% of patients that are seen through the emergency room are then
admitted to a bed for further care or observation. Further, hospitals have been
forced to create a sub-acute care provision to accommodate patients that require
palliative care, inpatient rehabilitation services, respite services and geriatric
evaluation and management (GEM) services. These patients are not ready to be
discharged from their episode of care, however they need further non- acute
services.

https://www.mja.com.au/journal/2009/190/7/access-block-can-be-managed

Measure of performance: - triage targets

ht
tp://www.rrh.org.au/articles/subviewaust.asp?ArticleID=1318

Problems of quality failure to meet triage targets????

http://www.aihw.gov.au/haag10-11/hospital-performance-emergencydepartment-wait/

While resuscitation of critical patients is at 100%, all other triage areas are significantly
below the quality performance criteria why are there delays?

What is the role of public hospitals?

a. Current free medical and surgical care
b. Choice of doctor, multidisciplinary care and patient-centred care

The modern role of public hospitals has shifted from treating emergencies to the
active treatment of all types of patients. Through Medicare, patients receiving
acute care including surgery are not required to pay. This free service also
includes treatment by medications when the condition is severe but does not
require surgery. Currently, patients requiring on-going medical care comprise two
thirds [67%] of all patient separations and has inadvertently shifted hospital
focus from acute out-patient primary health care (such as prevention and
community based options) to primary care (treatment of chronic conditions).
Historically, medical treatments in hospitals were conducted one on one with a
patient by their medical practitioner - creating a therapeutic bond between
doctor and patient. With the introduction of Medicare, hospital care shifted to
multidisciplinary health care teams that included but not limited to medical
specialists, nurses with different specialities, physiotherapists, occupational
therapists, dieticians, speech pathologists, social workers and psychologists.
Traditionally, these multidisciplinary teams operated within their professional
disciplines and often provided fragmented care to the patient [profession-centred
health care]. These days, hospitals offer patient-centred care that is care that
suits individual patient/client needs and is respectful of their individual
differences (including culture, religion, age, gender), their values, specific needs
and treatment requirements. While patient-centred care is the ideal approach
and is strongly recommended, more often than not, public health care systems
remain organised and managed to benefit the health professionals rather than
the patients.

4. Explain the role of public hospitals in terms of:

a. Ensuring quality care
i. Role of accreditation
ii. Role of technology
iii. Universal indicators such as average length of stay
iv. Challenge of access block
b. Health professional education and research
c. Contribution to community well-being

Accreditation is an independent review process aimed at identifying the level

of congruence between practices within a hospital and defined quality
standards (Australian Council on Healthcare Standards, 2011
http://www.achs.org.au/about-us/what-we-do/what-is-accreditation/ )
Quality of care (including safety for staff and patients) in public hospitals is
maintained in many different ways. One of the main methods is accreditation
and is the way hospitals are held accountable for the care they provide.
Accreditation is completed by an independent assessor who inspects processes
{see below] to ensure that the set standards are met and are being upheld. This
ensures patient safety and wellbeing. There are independent professional
standards that doctors and the other health professionals must uphold to retain
their employment within a public hospital [see Australian Health Practitioner
Regulation Agency - http://www.ahpra.gov.au/ ].

http://www.ahpra.gov.au/
One of the major advances (and costs) in modern hospital care is medical
technology. As more research is put into medical technology, advances are made
to improve patient care. Medical technology includes medications, equipment,
medical devices and instruments that are used during patient care. These
advances in technology have shaped practice to improve outcomes for patients.
For example, surgeries that once required open incisions can now be done
arthroscopically (minimal wounds) or via lasers (no wound). The use of modern
technology means patients are receiving the best care available and the length
of stay in hospital can be reduced from multi day stays to same day care. Hence,
the average length of stay (the mean number of days an admitted inpatient will
remain in hospital) has been reduced to 4.6 days in 2005. This is partly due to
advances in improved medical training and introduction of medical technology.
Australian Public Hospitals are seeing more patients but for a shorter length of time -

http://www.hcup-us.ahrq.gov/reports/factsandfigures/facts_figures_2005.jsp
However, the efficiencies gained by same-day admissions and early discharge
have been masked by rapidly increasing demand from an ageing population and
the increase in chronic and complex conditions experienced by todays patients.
This increase in demand by patients with chronic conditions is not only increasing
health care costs but is placing extra demands on hospital services.
The term access block (also referred to as bed block) describes when a patient
presents at the emergency department and requires a bed, but there are none
available. This bed shortage is caused primarily by three factors:
1. Reduction in hospital funding
2. Increase in chronic illness in the Australian population
3. Increase in ageing population (with an increase in their care needs)
This access block causes challenges for hospital staff and resources with
estimates that this problem may increase mortality rates among emergency
patients by up to 30%. While a complete solution is complex, one finding is that
most of the older patients occupying acute public hospital beds are waiting to be
discharged to aged care facilities.

Problems of access block and it is increasing ..

If I cannot find the above web address, substitute this on

https://www.mja
.com.au/journal/2008/188/6/clinical-process-redesign-unplanned-arrivalshospitals?0=ip_login_no_cache%3Dc87dcf706011c97eea01facd7defaf63

Access block [or ramping] is defined as patients not readily being seen in
Emergency Departments and not being admitted to the hospital

This occurs because

more patients attending ED rather than attending their General Practitioner,

higher percentage of patients with chronic conditions that require a hospital bed,
fewer non- hospital places for patients to be transferred to [old age centres, rehabilitation, etc]

What can be done about this problem?

b. Health professional education and research

One of the major roles of public hospitals that is not appreciated by the general
Australian public is on-going research and provision of education/training for
future health care professionals. For instance, the Australian public hospital
system is responsible for the provision of placements for undergraduate students
studying medicine, nursing and the allied health professions (including
physiotherapists, occupational therapists, dieticians, social workers and
psychologists). Such placements come at a considerable cost to hospitals that
are already under financial strain. While funding of hospitals is primarily a StateTerritory Government responsibility, tertiary education of undergraduate health
professionals is a Commonwealth government obligation. Over the last decade,
cost-shifting has occurred whereby hospitals are now charging Universities
significant fees for health care placements. So far, the Commonwealth
Government has required Universities to absorb these extra costs. However, it
has begun to threaten the number of medical and health sciences students
Universities will be able to effectively place within the public hospital system.

c. Contribution to community well-being

Public hospitals make significant positive contributions to the local community.

1. Hospitals employ a large number of people from local communities and
employment is one of the main social determinants of positive health
2. Hospitals make a large economic contribution to local communities both
direct (salaries) and indirect (hospital employees spending money in the
local community
3. While hospitals are funded on performance/activity (see casemix funding),
many hospital services are not directly associated with income for
example, prevention of chronic illness and overall health promotion in the
local community
4. Hospitals attract people, with many young families and elderly people
looking for homes that are close to hospitals and health services.
5. When hospitals close down in small rural communities, this can have a
significant detrimental effect in terms of reduced local employment,
reduced money in local community, increase in behaviours that lead to
chronic illness, and, a domino effect with less local infrastructure/small
businesses resulting in less population
One innovation in the Australian Health Care system is the introduction of Local
Hospital Networks [see next section]. This has allowed all the hospitals in a local
region to be linked in terms of organizations and provision of services. Smaller
rural hospitals are linked with large regional hospitals and patients can be
admitted and transferred between hospitals depending upon their needs. For
instance, surgery can be performed at larger hospitals but patients can be sent
to their smaller regional hospital to recuperate.
Should hospitals in rural remote areas that are not economically viable be kept
open to maintain the quality of life for the local community and thus help
prevent an increase in both physical and mental health problems?

5. Explain how public hospitals are funded (including case-mix) and describe
current innovations in health reforms (including Local Hospital Networks
LHNs)
Australian citizens are entitled to receive free health care. Funding for public
hospital services comes from the Commonwealth Government (39%), StateTerritory Governments (54%) and from private health care services provided by
public hospitals (7%). The average cost per patient separation is increasing more
than one percent over inflation and is currently about $5,300 per patient
admission.
Funding for public hospital care is based on Australian Health Care Agreements
which are based on three principles:
1. Public hospital services must be free of charges
2. Access to public hospital services must be provided on clinical need and in a
timely manner
3. Access to these services must be equitable regardless of geographical
location
Funding of public hospital services is based on an activity-based casemix
scheme. Casemix funding is based on the estimated cost of providing care for
each separate medical condition. That is, hospitals are provided a (casemix)
budget allocation to cover the costs of treating a group of patients with similar
clinical conditions that require similar hospital services. The case mix funding
does not consider the outcome of patient separations but is designed to
encourage high quality efficient care (treating more patients in a shorter time)
A current innovative reform in the Australian healthcare system is the
development of Local Hospital Networks (LHNs). Up until recent times, each
hospital was autonomous and was funding separately and was required to
submit a budget and maintain its own staff and equipment. LHNs allowed
hospitals within defined geographically regions to organizationally unite. This
reform aimed to allow local communities to work with local hospital networks to
provide more local community responsive health care services. However, with
the increased centralization of decision making, clinicians at each hospital are
raising concerns that economic decisions are over-ridding good clinical patientcentred practice.

While there continues to be free medical and surgical care for acute, emergency patients in a
timely manner, the treatment for non-life threatening conditions [eg, hip replacements] comes
under elective surgery which continues to have significantly long waiting lists. This situation
has forced citizens to opt for private health insurance which allows both public and private
hospitals to treat these patients immediately.
To ensure efficiency and quality of care in public hospitals, the Government has established
A case-mix funding formula where all hospitals receive set amounts of money to
treat differing presenting problems, and

Accreditation procedures where hospitals must evaluate their procedures and

performance against measures of quality of care and safety of patients

Private sector and Health Insurance

The Australian Health Care System relies on multiple sources to provide funding. Ultimately,
these all rely on money paid by individuals who contribute these funds through the tax
system by paying doctors and other health care professionals directly, or by contributing to
private health insurance schemes. Additionally, funding for the Health Care System also
comes from special purpose funds such as state-based motor vehicle accident or workplace
injury compensation schemes, or through payments made for medical and hospital expenses
of former defence force personnel (usually known as veterans)

Outline the various source of funds from public and private health funding
schemes

There are many funding sources for the Australian Health Care System and there are different
proportions of funds from each source for the various health care systems. There are two
principle schemes: public scheme and private scheme
A. Public schemes administered by governments and use taxation as raise funds for
example, Medicare
B. Private schemes administered by government bodies or private organizations and
rely on individuals paying a premium or a contribution to cover expenses for
example, Work-cover (Employer contribution), Transport Accident Commission
(compulsory third party insurance), Dept of Veteran Affairs, and private health
insurance companies (payment of premiums by individuals)
Total health expenditure: 2010 2011
The majority of funding for Australian health care comes from the federal
government (43.6% or approximately $45billion a year), followed by state and
local government (26.3%), the individual (17.5%), private health insurers (7.6%)
and other institutions such as TAC, Work Cover, DVA, etc. (5%). See the following
pie chart

http://www.aihw.gov.au/australiashealth/2012/spending-on-health/
Public hospital funding

In public hospitals, Governments fund approximately 89% with private funding covering
around 10% of the costs. For private hospitals, the opposite is true with Government funding
[including Department of Veteran Affairs] covering approximately 10% of the costs

http://www.aihw.g
ov.au/haag11-12/hospitals-funding/
Private hospital funding
The private (enterprise) sector operates in parallel to the public hospital system.
Public hospitals are primarily focussed on acute, emergency cases, while private
hospitals focus on longer term specialist care and elective surgeries. Medicare
pays for all public hospital acute and emergency services and provides part
payments for the staff providing specialist long term care and elective surgeries
(in both public and private hospitals). The remaining costs are paid either directly
by the patient or via their private health insurance.

http://www.aihw.
gov.au/haag11-12/hospitals-funding/
What role do private hospitals focus on???

Role of Private Hospitals

http://youshouldknow.com.au/fa
cts/
Interestingly, 81% of all mental health treatments are managed by the private sector what
implication does this have for professionals [such as psychologists] working the mental
healthcare?

Explain how private health insurance operates in Australia in terms of its

relationship with Medicare

Health insurance in Australia is provided both by the Government (via Medicare

and other schemes [Work-cover, TAC and DVA) and by private health insurers
(Government-owned Medibank and other companies). Medicare is a universal
system, operated via the Government, based on taxable income and covers all
Australian citizens this means the risk of paying for health services is shared
equally by all citizens. Australians can choose to take out private health
insurance for those who do, the premiums are all the same and therefore the
cost of payments for services is again equally shared. The only variation on this
is called lifetime health cover, where health funds charge higher premiums for
people become members of health funds after the age of 30 years.
Medicare provides universal coverage for all essential health services within
Australia. Medicares objective is to provide access to health care free of charge
and minimise gap payments by providing safety nets for families that reach the
threshold of these out of pocket gap payments.
Private health insurance allows people who join these funds to obtain assistance
in paying for extra services (such as dental or chiropractic, depending on your
provider and choice of premium), private hospital charges including the 15% of
the schedule fee that is not covered by Medicare and some specified services
and procedures. The benefit of private health insurance is access to immediate
service (avoid public hospital waiting lists) and choice of doctor and hospital.
Note, there is a 30% government rebate for each private health insurance. If you
select to have your private health insurer cover extra services, your premium will
increase. The most expensive premium available (for hospital cover only) in
Australia in 2011 cost more than $4135 per year for family cover.

Explain private health insurance and the transformation of Medibank

Before the introduction of free, universal health coverage, around 80% of

Australians had private health insurance. In 1975, Medibank came into existence
and provided universal health insurance coverage for all Australians. Medibank
was funded through taxes and aimed at providing equity and consistency of
health care across the country. Medibank offered rebates on medical services
and eventually free treatment in public hospitals as a public patient.
Private health insurers existed to service those that wished to be treated as
private patients within public hospitals and provide more choice to these
patients. With the creation of Medibank, there was a decline in people up-taking
private health insurance. There was an immediate drop in private health
insurance to around 60% with some recovery with subsequent change of
goverments
With a change of government, many amendments to Medibank were introduced,
including the option to choose whether you had private health insurance instead
of having Medibank cover. If you did not have private health insurance, you
would be charged 2.5% of your annual income. By 1981, the health care system
returned to a state similar to the time before Medibank this change was
primarily aimed at reducing health care costs. Funding for hospitals was reduced
and patients were charged for inpatient and outpatient services. The only people
who benefited from Medibank were pensioners, health care card holders and
those that were of low enough income determined by means testing. There was
a slight upturn in the number of people who took up private health insurance
this number peaked at 70%.
In 1983, the ALP was re-elected and Medicare was introduced again, providing
universal and equitable health care coverage for all Australians. With the
introduction of Medicare, there was a steady decline in people taking up private
health insurance. By 2000,.the percentage of people with private health
insurance cover was down to 30%. The following time-line illustrates the
downturn of private health insurance over the decades associated with Medibank
and then Medicare

http://th
econversation.com/things-you-should-know-about-private-health-insurancerebates-15560

Explain the role of private health insurance and the decline and subsequent
rescue of private health insurance

Due to its popularity, Medicare became an integral part of political promise and
success for ALP during elections. At this time, significantly less than 50% of the
population had private health insurance.
In 1996, the Coalition government sought to shift costs from the public sector to
reduce the burden of debt and use private health insurance and private hospitals
to spread health care costs and to reduce the demand on the public hospital
system. This would in turn reduce the need for a rise in taxes. The way the
government encouraged the uptake of private health insurance was by offering a
30% rebate of each private health insurance premium. A Medicare levy of 1% of
individual annual income was also put in place. However, these measures were
not very effective in shifting costs to the private sector (a minimal increase in
private health insurance from 30% to 32%). This was primarily due to the reality
that only the rich could afford private health insurance and therefore only the
rich received the rebate. In 2000, a policy called the lifetime health cover policy
was introduced, increasing premium costs by 2% at the age of 30 and every year
after that until you take up private health insurance. This proved to be the
incentive needed to increase the general populations uptake of private health
insurance. A rise from 32.2% to 45.7% of the population having private health
insurance occurred and has been relatively stable at this rate ever since.

10 How may private health insurance be involved in the future challenge of

managed care.
Private hospitals and private health insurance are an integral part of the
Australian health care system (the mixed model of health care). However, are
there options to introduce innovations that will help reduce the escalating costs
of health care in the future?
There appears to be two possibilities: Managed care and managed competition
Managed care
The term managed care describes a health care system where all decisions are
made by a third party. Like an investment broker, these people would act to
impartially decide what level and type of care is needed for the people. The type
of care would also depend of the persons personal circumstances and could
potentially provide a solution for the burden and continual rise of costs in the
health care system. Currently, managed care is in place in the US.
Managed competition
The term managed competition was created as a variation on the managed
care approach. Managed competition would involve the creation of an
organisation that manages every aspect of health care for a certain number of
Australian citizens. The focus of these organisations would be a shift toward
health promotion and prevention, as opposed to treatment. The benefit for the
population (as well as the health care system) would be a population that stayed
healthy for longer period of their life span. Managed competition would involve
the use of primary care interventions to reduce the burden of chronic illness on
our population and better manage it outside of a hospital setting.
A managed competition scheme would be funded by the government and target
groups of people depending on their risk of illness. Hence, the government may
contribute more for people with a lower socioeconomic status, the elderly, or for
residents that live remotely and have limited access to health care.
These types of schemes could be managed and funded through private outlets,
reducing the burden on the public health care system and ensuring the balance
of the private and public mixed health care system is in place. Currently, there
are no solid intentions in parliament to put managed care or managed
competition in place. However, the current health care system does not provide
an equal balance of private and public health care, and reforms to restore this
balance are required to ensure health care stays equitable and universal for all
Australians.