Efficiency and Sustainability

We face large increases in demand for and expenditure on health care. Australians will need to decide as a society who is best placed to fund this growth, and in which areas of health and aged care.

National Health and Hospitals Reform Commission Fact Sheet

Determining the right level of expenditure
Our current arrangements
Better incentives
Priority areas for investment
More information

We face large increases in demand for and expenditure on health care. Australians will need to decide as a society who is best placed to fund this growth, and in which areas of health and aged care.

Determining the right level of expenditure

In Australia, expenditure on health and residential aged care as a percentage of GDP is projected to rise from 9.3 per cent in 2002-03 to 12.4 per cent of GDP by 2032-33.

The scope of people’s universal entitlement to health care funded by public monies should be debated over time to ensure that it is realistic, affordable and fair and will deliver the best health outcomes.

Health care priorities should be decided with consideration of the clinical, economic and community perspectives.

Our current arrangements

The current overall balance of taxation, private health insurance and out of pocket contributions is appropriate and should be maintained over the next decade.

The current scope and structure of safety net arrangements should be reviewed to cover a broader range of health costs in a simple and integrated way that continues to protect people from unaffordable out-of-pocket costs.

Better incentives

Incentives for improved outcomes and efficiency should be strengthened in health care funding arrangements. This should involve a mix of: activity-based funding; payments for care of people over a period of time; and reward payments for good performance and timeliness of care.

A fit-for-purpose approach to funding models should be applied. This may involve changing the scope of payments available to include more than the existing fee-for-service model currently used.

Funding arrangements may need to be implemented to encourage service provision in under serviced locations and populations.

Priority areas for investment

To support system changes and enhance efficiencies, priority areas for new capital investments should include: establishment of Comprehensive Primary Health Care Centres; expansion of sub-acute services; investments to support expansion of clinical education across service settings; e-health including person-controlled electronic health records and data systems; targeted investments in hospitals to support reshaping of roles; and to enable capital to be raised through both government and private sectors.

More information

This is a summary of some of the major recommendations of the National Health and Hospitals Reform Commission. Full recommendations can be found in A Healthier Future For All Australians – Final Report of the National Health and Hospitals Reform Commission – June 2009