Condition Analysis / Health Policy Reform – An Urgent Priority

Health Policy Reform – An Urgent Priority

By AMN | 14th April 2023

AMN - Health Policy Reform – An Urgent Priority'

Medical practise is directed by whoever provides funding, whether it is the government, an insurance company, or the patient. Currently, in Australia, it is the Government who controls the entire medical system. The government (National Board, Medical Board, AHPRA) limits what can and cannot be done. As a result, the Australian government controls what doctors are permitted to do and permitted to say.


The Doctor – Patient relationship is a contract in law to which no third party is privy.


Since 1981 Australia's health system has significantly deteriorated into a 'third world' health system. Prior to 1981 Australia had one of the best health care systems in the world with no universal Medicare system. The costs, both for consultation and hospital treatment for the unemployed, pensioners and people with disabilities were paid for by the government. These were referred to as “public” patients.

Everyone else was expected to pay for their private medical insurance and as a result most people had private health insurance. They were known as the “private patients”. There was a large uptake due to the low cost of insurance. Also, medical expenses were tax deductible. The effect of this was that medical costs were kept down and naturally regulated by the free market and no government intervention was necessary. Medication was cheap, doctors were accessible, patients would be treated quickly and waiting lists were non-existent. Everyone had the same level of care available to them.

Back then the government provided the infrastructure and the doctors had control of patient treatments with very little government and bureaucratic interference. Doctors ran their surgeries, and doctors ran hospitals, both public and private ones. This was even the case in small bush nursing hospitals as well as larger hospitals such as larger regional hospitals. Doctors who ran the hospitals were not allowed to treat patients in the hospitals to avoid conflict of interest. The influence of both state and federal governments and corporations were kept to a minimum.

The doctors who worked in the hospitals would provide their services free of charge to public patients. These doctors were called honoraries. They were paid a small honorarium by the hospital. These doctors regarded it as an honour to do this and they were held in high esteem. While they received a modest fee from the hospital, they would make a living from charging their private patients. In those days doctors had a social conscience. In those days doctors and patients made the decisions and not government appointed bureaucrats.

In addition, general practitioners had free access to visit their patients in both private and public hospitals. This is an important distinction compared to today’s hospital system, as this meant that patients’ treatment was under supervision of an independent doctor and therefore the hospitals were forced to be accountable. Today both accountability and transparency is lacking in the regulators, medicine and health.

Specialisation, Bureaucracy & Medicare

The World's Best Medical System was systematically destroyed by the increased number of specialised doctors, increased bureaucracy, and the implementation of Medicare.

Starting in the early 1970’s, there was increased specialisation of doctors which resulted in GPs being excluded from public and private hospitals. It caused a large fee gap between a consultation or procedure performed by a specialist versus a General Practitioner even though GPs were doing exactly the same job. Many patients do not realise that the majority of medical conditions do not need specialist care. This made specialisation more lucrative than general practice and further drove up specialist doctors’ prices.

Unfortunately, this gradually excluded GPs from hospitals and also caused a separation of care between the community and the hospital. At the community hospitals GPs mainly performed surgery such as appendectomy and tonsillectomy and other common operations. Also, most of the babies were delivered by GPs. Complicated cases were referred to a larger hospital.

Eventually smaller hospitals, for example small bush nursing hospitals and small suburban community hospitals were shut down to the detriment of the community in both affordability and accessibility. When smaller hospitals were shut down all care was taken over by much larger hospitals which were now run by government or corporate bureaucrats. The proportion of bureaucrats working in the hospitals increased from 10 per cent to 50 percent or more. Prior to that the only bureaucrats were the payroll officer and the secretary.

Introduction of Medicare - The Piper Calls The Tune

The above process was accelerated by the introduction of Medicare which occurred in 1984. The government Medicare system created a monopoly insurance system to insure against doctors’ fees which compelled all doctors and patients to be part of it as there was no alternative allowed. Beyond the fact that this violated s. 51xxiiiA of the Australian Constitution which prohibits civil conscription, it also led to two problems:

  • The government was allowed to control doctors’ fees by setting the Medicare rebate and the conditions to which the Medicare rebate applied.
  • They were also able to control the conditions doctors could treat and the treatment they could use.

Common procedures which GPs once did now had their payments removed, or the payments were severely reduced, for example, the fee for performing and interpreting an ECG [Electrocardiogram, ECG] on someone with a suspected heart attack was reduced to $15. Additionally, the fee for suturing a laceration was reduced to $35 (which doesn’t cover the cost of equipment let alone time). Similar payments for treatment of fractures, cauterising nose bleeds, steroid injections into arthritic joints, removing corneal foreign bodies etc, have been severely reduced making it uneconomical for GPs to treat these conditions.

Today they are usually referred to the hospital. In contrast large payments were given to GPs to refer patients to have their toenails cut. For example, the doctors would receive a $15 rebate from the government for an ECG but a $250 to refer to a podiatrist to have their toenails cut. Similar large sums are paid to GPs to refer to psychologists for “counselling” which a GP could perform just as well, if not better, especially if the GP knows the patient very well. So, in essence, Medicare was used by the government to regulate doctors, medical practise, and treatment.

Hospital Funding

Hospital funding and management are now largely under the control of bureaucrats. In the hospital system the so-called ‘case mix’ funding was introduced in the early 1990s. This model worked as follows:

The hospital was paid a certain amount of money for each diagnosis and each treatment. E.g., If the patient had pneumonia, they would be allocated an amount. In the case of a hernia, they would be allocated another amount of money. It was common knowledge that hospitals were paid extra for each COVID 19 diagnosis especially if the patient was ventilated.

A certain sum of money was allotted for each diagnosis and course of treatment. The amount of money would be the same regardless of how long it took for the patient to get better. Some conditions became more financially attractive to treat than others. Through this method, the government now regulates how hospital medicine is practised. Doctors are now under pressure from bureaucrats to follow this model. They are essentially instructed on what to do, but they are not allowed to discuss it for fear they will be disciplined.

Nursing Homes

In the mid-1980s nursing homes were friendly places to work in and welcomed GPs seeing patients there. There were always nurses and staff on hand to assist the doctors when seeing patients. The GP was in control of the patients’ treatment and the nursing staff respected that. There was very good continuity of care and all significant patient management decisions were discussed with the treating doctor first. This all changed over the last 15 years, and it was due to the corporatisation of the nursing homes.

A business model was brought in as much the same way as what happened in the hospitals. The nursing homes would get paid according to the patients’ diagnosis or treatments. This led to the computerisation of the nursing homes to the extent that many of the care providers in the nursing homes spent most of their time entering data rather than tending to patients.

This was because before the nursing home would be paid the data had to be entered into the ‘system’. This led to a breakdown in communication between the doctor and the nursing staff and it would be impossible to find a carer who knew about the patient’s status and needs.

Residents of nursing homes were now called ‘consumers’ on nursing home forms. The goal of care at nursing homes was to ensure all the forms and documents were completed correctly by the doctor and sadly, patient care became secondary.

These events caused a system that was functioning effectively to break down under the weight of pointless red tape. This is reflective of the overall situation of Australia’s healthcare system.

Medical Boards – The Regulators of the Profession

Before 2009, state-based medical boards evaluated doctors according to the opinions of their colleagues. These boards have passed on authority to AHPRA, which now governs doctors in accordance with its political whims.

Prior to 2009, a board of 12 medical professionals peer reviewed doctors. It informed the state's minister of health, and the board was chosen by the industry and not bureaucrats. It was independent from the government and at the same time accountable to the state health minister.

Solutions and Next Steps.

Australia’s healthcare system is in need of drastic change. Our health care system is changing in historically unprecedented ways. This is not new. Australia faces a clear choice between two paths. One path is largely controlled by the government, where people get few choices, the other is controlled by patients and doctors, leading to more choices, lower costs and improved quality and access. Here are health care reform solutions that empower patients and health professionals.

  • Medicare must be relegated to a social safety net structure which protects the vulnerable: those with disabilities, the unemployed and elderly. Its universal application must be abolished.
  • Patients may choose which private insurance company they wish to cover their health care costs.
  • Medical Boards should be state based. A board should consist of 12 medical practitioners paid an honorarium. It reports to the state health minister.
  • Specialist colleges to come under the same umbrella.
  • Medical Boards as described above, but united, should regulate the TGA and ATAGI not the other way around.
  • No government interference is to be allowed into the Doctor Patient relationship unless criminal activity is suspected.
  • No corporate interference is to be allowed into the Doctor Patient relationship.
  • National programme to raise awareness on the health regulators and boards financial and conflicts of interests.

All Australians want a health care system that encourages innovation and competition to provide patients the best care at the most cost-effective cost. AMN welcomes the opportunity to work with policymakers to advance a brighter and transparent health care future.

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