Shiny new, big hospitals are – to the future healthcare needs of Australia – what coal-fired power stations have become for our energy sector.

Like the energy sector, healthcare paradigms are changing rapidly. Unlike the energy sector, we haven’t even started to argue about why we aren’t planning and designing for a drastically changed future in healthcare we all know is coming.

In healthcare, a paradigm change is potentially even more drastic. It involves a rapid shift in our current structural set up to meet the demands of acute illness, to one which will be able to cost-effectively manage a lot more chronic illness. The former was managed reasonably well through fee for service funding for our primary care sector (GPs) and a reasonably strong program of hospital development to meet growing population needs in certain regions.

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Why, if we know that the change in healthcare is upon us and that no amount of giant new shiny and digitally enabled hospitals will help us in the management of the impending chronic care tsunami, are our politicians still using the building of new hospitals as their key plank of future healthcare policy?

In the future, we will likely need fewer hospitals overall, and likely ones set up to be smaller, more local, and more agile. In the future, we will need a connected primary and allied healthcare system to manage chronic health. Someone with Alzheimers, diabetes or Parkinsons, isn’t going to benefit much from what hospitals do best. But if we don’t manage chronic care downstream in the healthcare system, where these conditions can be effectively managed by GPs and a cohort of connected allied health and community health professionals, we will need bigger hospitals.

To manage the end of life stage seriously ill. And that is the healthcare system fiscal suicide. And both state and Federal governments know it. There are plenty of highly authoritative and even government-sponsored reports which are warning us of the need for more change. The productivity commission has been banging on about such change for years, as has the Australian Institution for Health and Welfare.

Where’s the transformation?

So why so little change? Why are we obsessed with building big new hospitals, and not trying to crack the difficult problem of networking our primary care assets in a manner that will make downstream management of chronic care a lot more effective. Why don’t we look at the examples overseas, in some US HMOs and some smaller Scandinavian countries, where effective vertical and connected management of a healthcare ecosystem has resulted in quite a rapid reduction in the need for bigger hospitals. In some cases there has actually been a net reduction in hospitals.

The reason these ‘experiments’ (not sure you could call Denmark an experiment but…) have worked is that in each case the whole ecosystem is managed by one entity, and that entity is focussed on health outcomes of patients, not just treatment, as our system is based on. The reason they are focussed on outcomes is simple. It’s exponentially more cost effective. In its rawest form, if you can keep a lot more people out of hospital, by better management of their health in the community, you will save your system a lot of money. And if you can get them out of hospital much quicker, again, because of your community and primary care network effectiveness, the same again.

This has always been the case for healthcare. Hospitals are our major cost. But as we move to having to manage chronically ill older populations on mass versus managing acute illness the costs of keeping this structure in place will spiral quickly out of control.

Someone needs to put a stake in the ground. But how, and when?

But who will lead?

Who can lead and then manage such an enormous and high potential for catastrophe change to our current healthcare system platform?

It’s very hard to identify where that leadership might come from at present given the stance each of the major political parties have taken on health in this election, and what looks like a clear misunderstanding from both parties on the opportunities of digital health transformation.

The issues in changing the system are extremely complex. They involve a lot of structural change for both government and industry and a lot of change in the flow of money and jobs, so it’s not surprising we haven’t made much progress yet.

A big issue is that we’ve built a system that is finally finding it’s mojo in building big, digital and capable hospitals around the country. The problem is that this whole state by state infrastructure is hitting its straps on capability right at the wrong time – when we need to think about less, smaller agile hospitals that are better connected to our primary care sector.

How do you start dismantling state health departments whose whole existence now relies in large part on their hospital building capability?

If your main job is building big hospitals and they are getting bigger and bigger, more expensive, more complex, and need more and more specialists to keep building them,  how do you wind that back to something a little more pragmatic to meet the future needs of the system?

Who directs that?

Ultimately it has to be the upstream source of funds to build the hospitals doesn’t it? The federal government. The very ones who last week were championing more big hospitals as a key plank of our healthcare future.

In general terms, our funding of healthcare has the federal government funding the primary healthcare system, mainly through the MBS, and states funding tertiary care, or hospitals, through agreed Federal funding rules. In the end all the money is coming from the commonwealth. The federal government will have to face up to reality sooner or later and evolve this set up somehow.

The only policy that emerged in this recent election that shows any hint of moving to this issue is the promise by Labor to establish an independent healthcare reform commission that would oversee ‘big structural reforms in health’. Didn’t hear about it? It sunk pretty quickly after it’s announcement just over two months ago such was the enthusiasm from key stakeholders and the public.

But at least we see the faintest of nods to the bigger picture.

There are a lot more difficult issues with these changes too.

First up, GPs, who are at the hub of an effective network to manage chronic care, aren’t paid for outcomes they are paid for seeing someone. They are entirely freaked out by shifting from a fee for service payment model, which is simple and transparent, to a model which is much more grey scale in how they would be paid. They want to do it, but after 30 years of a stable system, who can blame them for wanting to resist such a change. So far, pilots of mixed funding for chronic care have failed spectacularly for being way too complex. There is a lot of work to do.

Stethoscope, X-Ray, healthcare

Next, the big hospital vendors and builders naturally would not be happy with any change to the current trajectory of our hospital-centric system. Many of these vendors are giant global companies that build and integrate highly sophisticated electronic medical record (EMR), patient administration system (PAS) and other inter and extra hospital administration and communication systems. They are all billion-dollar ventures.

To build a big new hospital you can pay more than one billion just for a new EMR and PAS that talk to each other. And we have a lot of hospitals with these systems already which are on long term contracts. The good news is that as the world changes, these global vendors tend to adapt. They won’t be entirely surprised or disrupted if Australia shifts its emphasis on different types of installations in the next decade. But for now, these organisations are in deep and complex relationships with each state government in building and managing these systems.

Finally, there is a fair bit of debate about how our national digital health strategy, once again directly mainly federally (although with good hooks into each state) isn’t pointed in a manner that might most effectively accommodate a shift from tertiary to primary care connectivity. If our future is enabling our general practice sector to network effectively with allied and community health to longitudinally manage patients, rather than point and shoot when a patient visits them for something that has gone wrong, then our digital health strategy is potentially overweighted to systems which don’t address this challenge. The My Health Record (MHR) might be the most obvious example of misdirection.

It is an old world centralised honey pot database that will likely never be agile enough to manage GPs and their allied and community peers on the run with a patient over time. Much more likely a solution for this problem will be distributed health databases talking to each other and directly to the patient via them mobile, using open APIs and new enabling distributed resources such as the newly emerging standard for web sharing of health data, Fast Healthcare Information Resource (FHIR — pronounce ‘fire’). If our national agency for developing and implementing digital health strategy remains focussed on something like the MHR and tries to keep pushing it because it’s cost so much to implement and has some political cache now, we are going to go slow. Much better would be a direct focus on the problem we are moving to in healthcare and building a standards and governance environment for industry and the primary care sector to implement far more powerful distributed and connected technologies.

Everyone sees this problem, from the Federal Secretary of the Department of Health to our various State-based Health secretaries and eHealth CEOs and directors to our peak clinical bodies, such as the president of the RACGP.

The questions is who is brave enough to get us started on this journey and how. Without causing so much angst that they are closed down by the various interests and lobby groups that are firmly established in our current paradigm of delivering health.

Who breaks first bread on this problem? And when?

Jeremy Knibbs is the founder and publisher of Medical Republic. He is also a shareholder of Which-50 Media

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