The Emergency Health Care Crisis

1
The Emergency Health Care Crisis
Policy Discussion Group Meeting, October 25th 2007

• Should the Government intervene or not?
• Uwe Dulleck

2
(No Transcript)
3
Emergency Health Care Crisis

• Planning the optimal capacity of a the emergency
  services department in hospitals is a Problem of
  optimal control.
• A very simple model Consider a hospital that has
  10000 people living in the area it services. Let
  p be the probability that each patient needs an
  emergency treatment. Each bed (incl. nurses,
  doctors, machinery etc.) costs AUD 5000 per night
  to provide. If somebody is not treated in
  emergency services s/he loses 2 QUALYs (QUality
  Adjusted Life Years) worth AUD 50000. What should
  the capacity of the emergency service be?

4
Emergency Health Care Crisis
Total costs / benefits
cost
benefit
of beds in emergency service
Optimal capacity
5
Emergency Health Care Crisis

• This implies
• Sometimes there will be cases like the one
  reported by the news.
• But, the opportunity cost to increase the
  capacity may outweigh the benefits.
• Hence, one case doesnt prove that government
  intervention is needed.

6
Emergency Health Care Crisis

• BUT are capacities really optimal?
• The incentives for hospitals are such that they
  tend to have a too small emergency capacity (the
  model above implies too, that an optimal capacity
  should be idle at most of the times if hospitals
  are only paid for used capacities, there may be
  underprovision).
• Funding hospitals according to DRG
  (Diagnosis-related groups) may cause such
  problems.

7
Emergency Health Care Crisis

• In Australia hospitals are funded under the
  casemix system (which is a DRG system)
• This systems funds hospitals through a fixed
  grant to cover overhead (capacity) cost and a
  variable grant that covers costs of each case
  treated. Additional fixed cost for increasing
  capacity are not fully reimbursed by the system.
  
• Hence there may exist an incentive to not
  increase capacities as those costs are not fully
  covered.

Source Stephen J Duckett, MJA 1998 169S17-S21
8
Emergency Health Care Crisis

• Even if the capacity is correct the wrong
  incentives may prevail.
• Private patients may be more profitable for
  hospitals, to keep those with an hospital, the
  capacities maybe wrongly used. (Credence Goods
  theory predicts that scarce resources lead to
  dedication of resources to the most profitable
  use i.e. underprovision may result)
• Educated patients may receive treatment first
  because a) they will be able to complain later
  (use the law, press) b) observe a undertreatment
  (catch the system).
• Not the most needing patients are served.

9
The Emergency Health Care Crisis

• The Government should not intervene!
• Markus Schaffner

10
WHAT IS A CRISIS?

• A crisis (plural crises, or crisis) may occur on
  a personal or societal level. It may be a
  traumatic or stressful change in a person's life,
  or an unstable and dangerous social situation, in
  political, social, economic, military affairs, or
  a large-scale environmental event, especially one
  involving an impending abrupt change. More
  loosely, it is a term meaning 'a testing time' or
  'emergency event'.
• Source Wikipedia

11
THERE IS NO CRISIS

• 'There is no Australian healthcare crisis.
  Australia enjoys very good health by
  international standards. Australia has a very
  good health system. Australians like Medicare.
  Medicare has some problems and they need fixing.
  But ... THERE IS NO CRISIS!
• Peter Sainsbury, President of the Public Health
  Association of Australia.
• May 2003 edition of Hospital Healthcare.

12
WHY THEN CALL IT A CRISIS?

• now is a "particularly good opportunity for the
  Coalition and Labor to show us where they are
  going to go -- what plans they have in store.
  That's really what we need to see, and analyse.
• Rosanna Capolingua, Australian Medical
  Association
• The Australian, October 20, 2007
• election (a vote to select the winner of a
  position or political office) "the results of the
  election will be announced tonight

13
Casemix System / Incentives

• per diagnosis based pay schema
• optimal use of capacity
• Internationally recognised
• Corrected for under capacity, upcoding, teaching
  hospitals, rural areas,
• Annually reviewed to avoid learning of the game
• Institutionalised control and complain facilities

14
The state of the Australian Health Care System

• Mortality Rate
• GRIM report, The Australian Institute of Health
  and Welfare (AIHW) 2005

15
Do they die earlier?

• Mortality Rate International

16
Do they pay to much?
17
Do they complain more?

• No of complaints to the Health Care Commissions
  or the Ombudsman
• Source Annual reports

18
CONCLUSION

• Casemix allows reasonable allocation of resources
• AU health care system is in good shape
• Pre election interest group noise
• No (additional) government intervention necessary

19
Government should intervene

• Andrew McClelland

20
Governments Role

• One of the most important responsibilities of the
  government is to ensure that the nation has an
  operating health system
• As the elected organisational body of the
  country/state, the government is the only real
  body capable of managing the entirety of the
  health system

21
Governments Role

• It is a commonly accepted premise that the public
  expects the government to provide a certain level
  of health care
• In Australia, the hospital system is generally
  managed at the state level (through funds
  received from the Federal level)
• This causes both a political conflict of interest
  and makes it difficult for any government to
  fully regulate the health sector

22

• The states are in an inherently difficult
  position. While they run the nation's hospital
  system, the Federal Government controls most of
  the funding. Not only that, it is Federal
  Government policy on Medicare which is now seen
  as driving up hospital costs. Bulk-billing by
  general practitioners has fallen. If that trend
  continues because of federal Medicare policy, the
  burden on the public hospital systems, for which
  the states are responsible, will increase.
• http//www.smh.com.au/articles/2003/08/31/10622684
  67648.html?fromstoryrhs

23
The public-private trade-off

• The private sector wants to direct as much of
  their funding towards the more profitable areas
  of health care, as the private sector has the
  conflict of interest that it has to both provide
  a high standard of health care while targeting
  profitability
• There therefore needs to be some level of
  regulation to ensure that the national health
  interests are obtained
• Free rider problem, if the private sector chooses
  not to provide a high level of emergency health
  care services, the public sector has no other
  option than to pick up the slack

24
Targeted funding

• Hospitals currently get this CASEMIX funding
• There is almost no incentive for private
  hospitals to dedicate resources to emergency
  procedures.
• From their point of view it is optimal to fill as
  many beds as possible with high profit patients

25
Lack of Staffing

• Lack of qualified staff hence the large of
  proportion of overseas trained staff
• Unfavourable conditions nurses strike

26
What Government Should Do To Improve the Situation

• Government has a number of options available
• Firstly, it is in a position to ensure that
  funding is directed to areas where it is most
  needed
• Secondly, it can ensure that there is adequate
  personnel available
• Thirdly, it can ensure that there is enough
  hospitals and other emergency health resources
  available
• Finally, the government can regulate the private
  sector

27
Government Targeted Funding

• There should be adequate funding for the public
  system available. This can be funded through the
  national Medicare Levy, which similarly to the
  national income tax can be tiered depending on a
  persons income and other characteristics.
• Government can target the components of the
  public health sector which need this the most.

28
Government Targeted Funding

• Government can also provide funds to the private
  health sector, with conditions imposed that
  require them to fulfil certain requirements.
• Or, could increase the payment size for emergency
  procedures.

29
Staffing issues

• Government can create policy to ensure that more
  medical personnel are trained.
• They can also continue to import more staff from
  overseas.
• Can also increase the requirements of staff in
  regard to the required amount of time they spend
  in the emergency rooms
• However, this will likely encounter opposition
  from the medical union
• And, is at the cost of other specialities

30
Hospitals and Other Health Resources

• From a capacity viewpoint, the government can
  again allocate funds accordingly.