Australia is getting good value for health dollar: report

Australia's healthcare system delivers some of the best value for money relative to its international counterparts, according to latest research from the Productivity Commission.

This is the first time that the quality of the country's health care has been considered in an assessment of productivity, according to the Commission. The report reveals that Australia’s healthcare productivity ranks third among 28 high-income countries once we account for behavioural and environmental risk factors and the age of our population.

Costs vs outcomes

"Previous research assessed the productivity of our healthcare system by looking at how much it costs to provide a service, such as a visit to hospital. This research looks at how much it costs us to treat a particular disease and the outcomes of treatment," Commissioner Catherine de Fontenay said.

"Looking at the outcomes our system creates for patients provides a much truer picture of its productivity. A healthcare system that gets people in and out of hospital quickly and cheaply isn't much good if those patients aren't getting better."

Quality-adjusted multifactor productivity grew by about 3% per year between 2011 and 2012 and 2017 and 2018 for the subset of diseases studied, which together account for around one-third of healthcare expenditure. This growth was driven mostly by improvements in quality rather than reductions in cost.

Key highlights Contrary to prevailing views, parts of the healthcare sector have experienced robust productivity growth. Quality-adjusted productivity grew by about 3% a year. Quality improvements, not cost reductions, were the key growth drivers. Australia’s healthcare productivity ranks third among 28 high-income countries once we account for behavioural and environmental risk factors and the age of our population. Productivity gains have not been universal. While we have made big quality gains from advances in saving lives, we have made fewer, if any, gains in improving quality of life. Quality-driven productivity improvements have done little to ease health care’s growing fiscal burden. Australia’s relatively good performance is not grounds for complacency. Reducing risk factors, such as obesity and alcohol consumption, would enable the healthcare sector to do more with less.

The importance of quick integration

“Productivity growth was particularly strong for the treatment of cancers, likely due to the introduction of new cancer therapies in the 2010s. This highlights the importance of quickly integrating new treatments as they emerge,” de Fontenay said.

While these quality-driven productivity improvements are welcome, Australia’s growing healthcare bill is still cause for concern.

“Healthcare spending already accounts for 10% of GDP and this is only going to increase as our population ages. Our challenge moving forward will be to provide services more cheaply and efficiently without compromising on quality.”

Reducing the risk factors

The report finds that reducing our sizeable risk factors, such as obesity and alcohol consumption, is one way of enabling our healthcare sector to do more with less.

"We have the fourth-highest rate of obesity in the world and the sixth-highest level of alcohol consumption. This worsens population health and creates more work for our healthcare sector," de Fontenay said.

Leveraging technology

The report also suggests better integrating digital technology as it emerges could help contain our healthcare spend without sacrificing on the quality of care.

"Digital records, new models of remote care and new technologies, such as AI, can make health care more efficient and less costly if integrated safely and effectively."

The Commission will be exploring the transformative potential of technology adoption in health care in a follow-up paper to be released in coming weeks.

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