19/01/2022 - 10:01

Health check-up needed after billions spent

19/01/2022 - 10:01


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WA’s health budget has tripled during the past 15 years, but there are concerns about patient outcomes amid workforce, bureaucracy and governance pressures.

Health check-up needed after billions spent

WA’s health budget has tripled during the past 15 years, but there are concerns about patient outcomes amid workforce, bureaucracy and governance pressures.

It's unlikely any level of government spending could make coping with a pandemic easy for the healthcare system.

WA Health has about 111 ventilated intensive care beds, according to data from 2020.

But that can be scaled up in the event of a serious outbreak.

Up to 650 ventilated beds could be brought online, according to the auditor general’s 2020 review of the state government’s COVID-19 Ventilated Bed Capacity Framework (ICU surge) plan.

That’s a four-stage plan that scales-up in difficulty.

Early phases would include activating ventilators stored in the state’s Disaster Preparedness and Management Unit Warehouse, while middle stages include using beds in private hospitals.

The final stage of WA Health’s surge plan would be to use beds from the Perth Children’s Hospital, which Business News understands would include use by adults.

The surge plan is backed up by a pool of about 2,500 workers to provide added staff support.

By contrast, modelling for the state government’s COVID-19 reopening plan estimated about 400 people would need intensive care within a year of community transmission with an 80 per cent vaccination rate and other precautions, although that was undertaken before the Omicron variant entered Australia.

That suggests there is capacity available in hospitals in the event of an emergency, but it will rely on resources being shifted from other parts of the healthcare system and employees potentially used in areas where they lack expertise.

That could include cancellation of elective surgeries.

Another pressure source will be requirements to isolate medical staff, who are at high risk of contracting the virus.

Advocates for nurses and doctors have warned that there are already extreme pressures on the system, and they are concerned this will pile on further during an outbreak.

Last November, the state government promised to bring a further 250 beds online within a year, including 40 designed for intensive care, on top of previous commitments.

It follows a year of enormous pressure on the state government on its management of health care.

The focus was particularly on the Perth Children’s Hospital, after the death of seven-year-old Aishwarya Aswath in April, although record levels of ambulance ramping and huge demands on staff have also made headlines.

The Department of Health did not respond to a request for data on capacity utilisation in Perth’s major hospitals, but Business News understands it has been over 100 per cent in recent months at Perth Children’s Hospital.

Top heavy, tangled

With the total cost of services in WA Health now nearing $11 billion for the 2022 financial year, spending is almost triple that of the 12 months to June 2005.

The debate about ambulance ramping and pressure on the hospital system suggests patient outcomes have lagged the lift in spending.

Medical professionals who spoke to Business News want better funding for health but also have concerns about waste and bureaucracy.

Western Anaesthesiology specialist Andrew Miller said there was not enough focus on patient outcomes.

“There’s an industry that’s been built around the bureaucracy of health care,” Dr Miller, a former president of the Australian Medical Association in WA, said.

“There’s now thousands. We think it’s too many.”

The balance in the private sector was the other way, he said, with clinicians given more authority and responsibility.

Andrew Miller. Photo: Gabriel Oliveira

Similarly, Dr Miller said department heads in the public sector used to have responsibility for their budget and for patient outcomes.

“The decision-making power [now] rests in an ascendant management who use management consulting principles,” he said.

“It’s been an ongoing change, a diminution of the power of clinical staff.”

That lack of input from clinicians had real consequences, Dr Miller said.

For example, the emergency ward at Perth Children’s Hospital was designed in a way that required more staffing, he said.

At Fiona Stanley, valuable surgical equipment was bought that was not used, and a move to make the hospital paperless did not work.

Then there’s red tape around employment contracts.

Medical staff are usually employed on contracts, and are regularly required to reapply for roles, which Dr Miller said made the state less competitive in incentivising doctors to move here.

It was particularly frustrating when training modules were not accepted in different arms of the state’s health service, he said.

The private sector prioritised the needs of clinicians better and achieved very good outcomes, according to Dr Miller.

“It’s a very different ethos there,” he said.

“These systems are more efficient and have very good outcomes for lower cost.

“And they’re dealing with some very high-acuity procedures,” he said, which included complicated neurological and vascular surgeries.

One nurse spoken to by Business News highlighted the level of bureaucracy in the system, particularly what she claimed was burdensome paperwork.

“It does take time away from patients,” she said.

“I probably spend 40 per cent of my day doing [work] that shouldn’t have to be done.”

AMA WA division president Mark Duncan-Smith said the private system was more accountable with a thinner management structure.

“I got asked in a meeting once about government [operating] theatre utilisation,” he said.

“That is really a conceptual oxymoron, because there is very little efficiency.

“Go to the private sector and see how their theatres are run.”

Dr Duncan-Smith said there was also a cultural benefit in the private sector from being able to work with the same nursing team, compared to daily changes in the public system.

Further, hospitals operating on a fee-for-service model instead of salaries generally had higher productivity, he said, including some public hospitals.

But both the private and public system are important and needed to coexist because one can’t work without the other, according to Dr Duncan-Smith.

Data from the Ramsay Healthcare-operated Peel Health Campus and Joondalup Health Campus suggest non-government hospitals are performing strongly.

Peel treated 95.4 per cent of urgent elective surgery patients from the public waitlist within the recommended timeframe, compared with the public result of 85.8 per cent, according to its 2020 annual report.

It also beat the state average on semi-urgent and non-urgent elective surgeries.

Nonetheless, the state government moved in November 2020 to insource Peel back into the South Metropolitan Health Service and fund a $152 million expansion.

“Bringing the Peel Health Campus back into public hands as a state-run hospital will ensure a range of health care options are available in the Peel-Murray region,” a government spokesperson said.

“The procurement process for an adjoining private hospital at the campus is currently under way.”

A spokesperson for South Metropolitan Health Service told Business News Ramsay’s contract required it to perform as well as, or better, than public peers.

“Quality data for Peel Health Campus, as published in the annual report, indicates the hospital performs well and is comparable with public-run hospitals,” they said.

“The decision … honours the WA government’s election commitment to return privatised services to public hands where possible and economically beneficial to do so.”

A spokesperson for Ramsay said it was disappointed its contract was ending but planned to tender for the management of a private hospital to be co-located at the site.


Beyond calls for increased funding and more beds, Dr Duncan-Smith has called for state-wide electronic medical records and changes to governance in the health system.

The state’s major health service providers, such as the East Metropolitan Health Service, WA Country Health Service, and the Child and Adolescent Health Service, have complex governance arrangements.

Dr Duncan-Smith and the AMA said the system as it was now had flaws.

“The boards are ministerial picks, they’re not skill-based, [and] they’re only allowed to have strategy and policy consistent with the overall health department,” he said.

“And the chief executive is employed by the director general of health (not the board).

“What worse design of corporate governance could you imagine?”

In mid-February, the state government announced it would review this system.

There’s an argument that more power could be devolved from the central department.

In submissions to the government’s Sustainable Health Review, East Metropolitan Health Service said health service providers should be given single-source funding and the state should use a more mature purchasing model focused on value, not volume.

“There are a great number of things that the public sector does very well, and these services should continue to be purchased from the public sector,” the submission said.

“In some instances, the private sector has greater expertise, and these services should be purchased from there.

“The purchasing model needs to ensure that each service is procured from the most appropriate provider.”

Up and up

A 2004 Health Reform Committee report was the catalyst for a huge investment program in the state, establishing a blueprint for how the system could be sharpened to reduce pressure and lower spending growth.

Spending continued to grow reapidly, however, to be about $11 billion this financial year, triple the level of 2005.

After the McGowan government came to office, (then) health minister Roger Cook took aim at the ongoing spending growth in a mid-2017 statement to announce the Sustainable Health Review.

“The previous Liberal-National government mismanaged our state budget and oversaw health expenditure grow to an unsustainable 30 per cent of the entire state spend, and we now have to rein that in,” he said.

Despite that commitment, health spending remained at that level in the 2022 budget.

The lift in recurrent spending has boosted staff numbers (see graphic).

WA Health employed 41,148 full-time equivalent workers in September 2021, according to the Public Sector Commission, up 24.7 per cent from a decade prior.

The state had 13,000 FTE of nurses at the end of the financial year, up 25 per cent from 2012, the earliest data available.

But not all the cash flows to the frontline.

Data from the Productivity Commission shows WA had more healthcare professionals employed per 1,000 people than the national average in the 2019 financial year, the most recent period available.

The state also had the highest number of administrative and clerical staff in public health per capita, about 17.8 per cent above the national average.


The Barnett and McGowan governments maintained a commitment to spending on new and redeveloped hospitals, including Fiona Stanley Hospital, Perth Children’s Hospital and Midland Health Campus.

PCH is about 80 beds larger than Princess Margaret Hospital, while Midland had around 100 more beds than predecessor Swan Districts.

About $7 billion was spent by the Barnett government on hospitals, and this year’s budget forecasts about $1.2 billion of health investment through to 2025.

Despite this, the state has the lowest number of public hospital beds per 1,000 people of any state, at 2.2, and the lowest level of ICU beds (including private) per 100,000 residents, at six, according to the Australian Institute of Health and Welfare.

Both are about half the average in the developed world.

The Australian Medical Association estimates the state needs the equivalent of an additional hospital in new beds.

Dr Duncan-Smith said beds had been closed as new beds came online at new hospitals, and that the health budget had been in austerity mode in recent years.

He said the government should have acted 18 months ago to bring more beds online.

However, a spokesperson defended the government’s record, saying it would open a number of beds equivalent to a new hospital.

“The McGowan government has invested a record $3.2 billion in the health and mental health system, including a strong focus on increasing the capacity of our hospitals and easing pressure on our emergency departments,” the spokesperson said.

“We have committed to 530 more beds, which is the equivalent of an entire new major hospital and are recruiting staff for these beds.”

However, shadow health minister Libby Mettam said spending on health had not grown as rapidly as other parts of the budget since 2017.

She said state government plans to bring new beds online included reopening beds that were previously closed.

“We are playing a desperate game of catch up,” Ms Mettam said.

The 2004 Health Reform Committee report had called for the expansion of secondary hospitals, such as the construction of Midland to replace Swan Districts Hospital.

It also recommended building a major hospital in Murdoch (Fiona Stanley Hospital) to replace tertiary clinical services at Fremantle.

One particularly controversial recommendation was to amalgamate the Royal Perth Hospital and Sir Charles Gairdner Hospital to become a major northern metropolitan hospital and reduce duplication of services.

That became a major issue in the 2008 state election campaign.

Keeping Royal Perth open would add to ongoing costs, the report said, but a Liberal election pledge to expand the hospital was delayed indefinitely as mining revenue fell dramatically.

On the other side of the ledger, a 60-bed Murdoch medihotel promised by Labor before the 2017 state election was delayed from 2021 to 2023.


Health economist Rhonda Kerr said capital decisions in hospitals were often disconnected from technological opportunities and long-term operating cost impact.

Dr Kerr is director of economics, health services and planning at Guidelines and Economists Network International, and a research fellow at the University of Western Australia, specialising in capital efficiency in hospital building.

She said Australia didn’t have a mechanism to adopt new technology in hospitals on a national basis, or to allocate capital funding nationally.

“How frequently do you need to replace your phone, your computer,” Dr Kerr said.

“Why do we think, [with hospitals] we could do a set and forget?”

Capital items that are desirable are often not built because they are not in budget, and operating cost benefits were not modelled, she said.

But technology offered real opportunities to improve outcomes for patients, particularly artificial intelligence, surgical robots and telehealth, Dr Kerr said.

ASX-listed startup Artrya is an example of the potential of AI; it is using machine learning to speed up detection of heart disease, while the South Metropolitan Health Service recently approved a market-led proposal from Stryker Australia for joint-replacement robots.

Telehealth is also emerging.

In July, McKinsey & Co said telehealth was being used for up to 17 per cent of outpatient visits in the US, while locally, the East Metropolitan Health Service has a plan to target 15 per cent of outpatient visits to be conducted over phone or video.

That use of telehealth alleviates bed pressure and can reduce cost of delivery in the system. 


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