Rudd’s hospital ‘reform’ cuts public funding

Vanguard April 2010 p. 1

Kevin Rudd warned us of his economic inclinations in the run up to the 2007 election. He is now demonstrating his “economic conservative” credentials with public hospital system reform.

Anyone even barely conscious knows the hospital system in Australia needs change. However the cure Rudd proposes will be worse than the current disease.

Hospitals will not be funded on the basis of the population they serve, but on the “activity” they pump through the doors. Funding will be at the so-called “efficient price for every public hospital service”, a case-mix system as used by Victorian public hospitals, cited as the most efficient in the country.

The policy makes clear there will not be one more cent to employ more doctors, more nurses nor more support staff. It also makes clear that hospital funding will be reduced as a portion of GDP, in other words, cut.

The policy document talks about developing a hospital system that helps “meet the government’s fiscal strategy … returning the budget to surplus by 2015-16 … to ensure real growth in spending is constrained to 2% once the economy returns to surplus …”

All the mumbo jumbo in accountant-speak serves to reassure big business that funding will be cut. The object of the policy is a more profitable economy, not a better society.

An “efficient price of every service” is a funding model notorious for underfunding and closures of smaller and regional hospitals. In this approach, training of doctors and nurses suffers. It is not a medical service, so not a funded activity. While Rudd says additional funds will be provided for training, who believes that such additional funding will not be squeezed when budget cut-backs are in the air?

Both have been growing problems in Victoria over time. “Activity-based” funding is based on the turnover of patients. It opens the way to attaching funding to patients for use at any hospital, public or private, and subsidises the transfer of resources from the public system to private operators.

Forget all the scaremongering; aging of the population, exploding costs of health services, high costs of drugs and equipment, and others are cited. Soon they’ll make aging a crime. The reality is the cost of funding hospitals has grown fairly steadily in 40 years, from 6.5% of GDP in the mid-1970s to their present level of over 8%. Medical equipment and pharmaceuticals costs have been growing all that time, but it’s hardly been a blow-out.

The government estimates that the portion of GDP funding health services will explode from a 2% increase over the last 40 years to more than 10% increase in the next 40 years. It’s unsupportable.

Workers, doctors, nurses and administrators have expressed their opposition. That groundswell will grow. The reality of funding cuts will be exposed.

At root of the crisis in government services is the increasing slice of Australia’s GDP going to big business. Economic rationalism has, since the mid-1970’s cut the portion of GDP going to the people in wages, salaries and government services from around 55%. Now it is below 43% and going down. The portion going to profits has climbed from 17% to around 28%. This hospital policy will cut further the portion going to the people. There’s plenty of money out there. Just have a look at bank profits.

If 55% of GDP was restored to people, there would be no public hospital crisis, no crisis in the schools, no problems with public transport. If profit was cut out altogether, all things are possible. Rudd’s hospital reform will be fought.