Australia’s population is in the midst of considerable demographic change, with a proportional rise in older age groups. Medical successes can now save the lives of those who would have died from illnesses such as heart attacks and cancer. In doing so, the ranks of those with an ongoing and complex health problem have swollen.
Meeting the needs of these people will require a change in the way we deliver health service. Australia’s current health services are provided episodically, when someone gets sick; we need to move towards a system of continuing care, involving a mix of hospital and community support.
Acknowledging the financial benefits of keeping people healthy, several large Australian private health insurers are trialling schemes to provide additional services, such as telephone-based coaching, to encourage healthy lifestyle choices for members at risk of chronic diseases.
But so far their efforts have been limited and haphazard. While the United States system of managed care has been criticised in the past as being too prescriptive, it offers some important lessons for Australian insurers.
Australia’s fragmented system
All health-care providers – public and private – are increasingly investing in ways to better care for people with chronic conditions. We know that good primary care helps patients keep their illnesses under control. But when conditions go unmanaged, and the patient’s health deteriorates, they’re more likely to require costly hospital care.
However, Australia has a split health care system, where the Commonwealth manages primary care and the states manage hospitals. This funding system rewards cost-shifting from the Commonwealth to the states and back; the exact opposite of much-needed service shifting on behalf of the patient. It also stops investment following value.
Although hospital is the best place to be if your long-standing condition deteriorates, admission can be highly disruptive for both patients and carers. Picture this scenario: a patient with chronic lung disease with sudden severe breathlessness ends up in the emergency department. Two weeks and tens of thousands of dollars later he returns home.
This hospital visit might have been prevented with a call to his community-based general practitioner, who has been managing the patient’s bronchitis, and a follow-up consultation. It would also reduce the demands of hospitalisation on the individual, his family and the health system.
Lessons from the United States
The US has made progress in contemporary managed care. Kaiser Permanente (KP) is a health insurance and comprehensive care provider agency which has 9.3 million members (about seven million in California) and uses a system of medical centres, primary care facilities, preventive services and community-based practices.
You or your employer pays your premium and KP matches the type of care to your need. KP measures the outcomes of what their service provides and, in general, these are superior to those achieved in the expensive, unmanaged systems that co-exist elsewhere in the US.
An evaluation in 2002 by Richard Feachem and colleagues suggested that KP’s costs per patient per year were less than in the British National Health Service (NHS). This paper led to trans-Atlantic fury.
In an accompanying editorial in the BMJ, the editor, Richard Smith, explained:
The authors think that Kaiser may perform better because primary and secondary care are better integrated and the whole system better managed; because it has hospital stays a third the length of those in the NHS and much better information technology; or because of competition.
With comprehensive managed care such as at KP, the payer (the insurance company) has an interest in ensuring that you achieve the best outcome from medical or surgical care. The insurer is also keen that you, as the patient, stay well. To that end, preventive message about immunisation, exercise and diet, easy access to personal preventive services and quit-smoking classes are part of the insurer’s service to their members.
No-one other than the insurer pays for the health care of their members. Having one single payer means they’re interested in prevention and in the effectiveness of all forms of care they provide, and not just cure.
What does this mean for Australia?
Earlier models of managed care in the US were roundly criticised and disliked by the medical profession in Australia because they limited clinical freedom, requiring doctors to check with insurers before embarking on expensive diagnoses and treatments.
A third party was seen as intruding on the doctor-patient relationship. Resistance to early managed care programs was typified by the comment of one doctor who said: “Before I can treat my patient I have to call his or her insurer on 1800-Mother-may-I? to get permission!” Things have moved a long way.
It’s important to note that Australia does have an alternative system of care for patients with chronic conditions, similar to KP, and we should look at it carefully. It’s called the Department of Veterans Affairs and it works remarkably well.
Veterans Affairs uses an inclusive data system for its patients that covers their treatment in different hospitals by different doctors. It can tell how patients get on and broadly what happens to them. It uses tailored programs for patients with different ailments. It supports good, quality, managed care.
So far in Australia, the participation of the private health insurers in managed care is limited and haphazard; they have a very long journey ahead of them to achieve the successes of the American industry. But fledgling efforts deserve more than knee-jerk criticism based on perceptions formed decades ago about what managed care can offer.
Stephen Leeder does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.