SHOULD WE REWARD ‘EFFICIENT ACTIVITY’ WHILE NOT MEASURING OUTCOMES AND CONSIDERING OTHER ASPECTS OF HEALTH CARE?

I have always been a case-mix sceptic, and while my views on it have, like my ageing brain, softened with time I remain worried about aspects of it.  Let me share my concerns with you.

First, though, I congratulate the recently-appointed Independent Hospital Pricing Authority (http://www.ihpa.gov.au/internet/ihpa/publishing.nsf/Content/draft-pricing-framework) on their pricing framework discussion paper entitled Activity based funding for Australian public hospitals: Towards a pricing framework. It is superbly written (I found only half a dozen typos and generally good grammar in the summary, both of which are exceptional in public health documents these days) and much more importantly it shows openness, seeking responses to clear and important consultative questions in the development of its argument.  Admittedly one might expect something pretty good from a group with such lavish resources: three consultant groups are identified on the cover and the budget from the Commonwealth is non-trivial. 

The problems that the national efficient price addresses are real and deserve attention. 

There is a complex background, both direct and indirect, to current deliberations.

Variations in medical and surgical service frequency from one place in Australia to another comparable locality, together with variations in procedure rates between private and public systems, have attracted criticism. This has stemmed especially, but not exclusively from outstanding health economists such as Geoff Richardson, for decades, but eliciting ineffectual ho-hum responses. 

Add to these variations in practice (400 hysterectomies per annum here versus 200 there for as many women of the same age and social class that make no epidemiological sense and reflect the preferences of providers of these services) to other fluctuations, say in regard to cardiac interventions between the public (low) and private (high) systems, and you have another cause for worry.  What on earth is going on?

These variations are the background to another, more formidable, problem namely the variations in cost that occur in the treatment of comparable conditions among hospitals.  These are also wild.

No one should be surprised therefore that the National Health and Hospital Reform Commission looked to activity-based funding (ABF) as an attempt to address this latter variability. 

ABF seeks to standardise payment for comparable services and only to pay as much as the service, efficiently rendered, costs.  In passing, it is hard to see how it could do much for the variations on procedure rate between public and private systems, or from one locality to another, but never mind.

The goal is to determine a set of efficient prices for providing health services that could be applied nation-wide.  Give or take, the Commonwealth would like to pay the same efficient price to hospitals in Melbourne, Adelaide, Perth, Brisbane and Sydney for hernias, deliveries, and by-pass procedures.   

Does that efficient price take account of what happens to the patient?  Not directly, but then we have been indifferent for ever to what comes out of the health system so you can hardly pick on ABF.  Archie Cochrane, the twinkle-eyed epidemiologist who promoted the randomised controlled trial and whose memory is perpetuated in the Cochrane Reviews of evidence-based medicine, spoke of an encounter with a man working at a crematorium.  Somewhat surprisingly the man expressed strong satisfaction with his job.  “So much goes in,” he said, and then with glee, “but so little comes out!”  Cochrane thought of suggesting he find employment in the British NHS.

We don’t, and have never had, generally measured health outcomes from mainstream clinical services.  Several specialties have done so, including orthopaedic surgery (they can tell you what happens to patients with different hip prostheses) and special medical services like renal dialysis and transplantation but system-wide we don’t know for sure.  ABF is a step - no more - in that direction.

But - not everything hospitals do can be reduced to activities that could be costed using the ABF model.  The document acknowledges that, but when fundamentalism gathers momentum find a bunker - and there are ABFundamentalists on the prowl. One recently proclaimed that teaching could be subject to ABF - an efficient price could be struck for teaching based on number of students and time spent with them.  Quality?  Outcome? Inspiration? Pass rate?  Passion?

Fortunately the Commonwealth recognises the distinctive need of rural hospitals that serve nursing home functions. Where services are different in style to those in larger centres they have spoken, but in hushed terms and with few specifics, about ‘block grants’ for these additional services.  The multimillion dollar investment of public health services in research and education may be supported through block grants as well, though Details-Lite is the name of the guessing game here, too.

Much more needs to be heard from the Commonwealth about these mystical cargo vessels called ‘block grants’.  Fundamentalists have a reputation for ignoring facts that do not fit with their ideology and it is conceivable that concerns about outcomes on the one hand, and R&D capability and workforce development on the other, could be brushed aside in a stampede of glazed-eye enthusiasm.  Where that leaves regional and rural hospitals, together with larger hospitals committed to research, innovation and workforce development is anyone’s guess.

My personal interest as an academic is selfishly invested in R&D. But I have a deeper concern and it is this: what is ABF going to do, if anything, to promote the humanity of what we are aiming to do for the Australian community through our provision of health services?  I believe that if we give over health care to systems of reimbursement that are determined on the basis of technical process - activity - we will damage not only health care but the values of our society. 


By all means let’s apply ABF where it fits, reserving a goodly portion of public financial support for rurality, regionality, R&D, and rewards for superior outcomes.