"The groundwork of all happiness is health." - Leigh Hunt

Yes, health spending is rising, but latest research shows we're getting more for it.

Government spending on health is rising so rapidly that a decade ago the then health minister, Peter Dutton, called it “uncontrolled“And”Unsustainable

Health expenditure is predicted to grow by 44% in real terms over the ten years to 2021-22. Real GDP grew by 26% over this era, so we're spending an increasing amount on health as a proportion of GDP.

Until recently, we had little idea whether this extra spending was value for money – whether it was making Australians healthier, and whether every dollar was making Australians healthier over time. Is.

In other words, we underestimate the productivity of the health care system. Bureau of Statistics It does not measure In National Accounts

As with defence, we only know what we spend on health, without necessarily knowing what we actually get for that cash, and whether we're convalescing value for money. Or not.

Health productivity has been a mystery until now.

Piecemeal efforts to raised manage the productivity of health care services have defined their results because the variety of medical or hospital services or pharmaceutical supplies provided for every dollar spent. These efforts have only marginally increased productivity.

But the issue with these estimates is that they don't measure the outcomes that matter, that are the upper health-related quality of life and longer lifespans that result from health treatments.

Now, for the primary time, the Productivity Commission has attempted to measure what actually matters. And what has include it Shocking.

The commission found that between 2011-12 and 2017-18, at a time when market sector productivity growth for the economy as a complete grew by 0.7 per cent each year, productivity within the healthcare sector increased 3% per annum.

The areas the commission was capable of review were those treating cancer, heart problems and “blood, endocrine and kidney disease”.

The commission says its findings indicate:

[…] In the parts of the health care sector that we studied the additional expenditure is 'price it' – it has provided net advantages to society.

But finding a median growth rate of about 3% per yr masks significant differences in productivity growth as a consequence of disease.

For cancer treatments, productivity growth has been around 9% per yr, which is way higher than economy-wide productivity growth. But for heart problems treatments, productivity has shrunk by about 4 percent per yr.

Cancer treatments work higher.

The huge improvement in cancer treatment productivity is just not surprising. From a five-year survival rate of 52 percent within the early Nineteen Nineties, cancer survival rates have continued to enhance. 70% In 2014-2018.

This is a big enough improvement to offset the relatively high growth of 36% in actual cancer costs over the study period.

More surprising is the reduction in cardiovascular therapy productivity.

This is partly as a consequence of an excellent deal of reduction in premature mortality from heart problems. 21% Health care costs over the study period have been brought on by other things, amongst them the decline in smoking.

Other heart attacks could be difficult to treat.

At the identical time, our successes in stopping heart disease in recent many years are making it tougher to treat those that do develop it.

Fewer heart attacks and strokes may mean that the remaining hospitalized cases are more complex and dearer to treat, reducing the apparent productivity of treatment.

It can also be possible that there are data errors within the production estimates. And it is feasible that some cardiovascular treatments are low cost and others will not be, reducing the general productivity of the treatment mix.

The Commission rightly calls for more research and higher data.

Tough decisions ahead

The Commission has examined only one-third of health treatments.

The remaining two-thirds include major illnesses resembling mental illness, dementia, infectious diseases and musculoskeletal disorders.

The commission has done some work. Mental illness. It determined that outcomes would improve if resources were shifted from hospital treatment to community-based palliative care and improved areas resembling inadequate income, employment, housing, social support and justice services.

As the Commission does more work, it can need to evaluate the productivity of interventions that prevent diseases in addition to interventions that treat them.

Production commission

The commission's findings are excellent news for the health system as they indicate that it's becoming more productive than previously estimated.

But productivity differences between different sectors show room for further improvement.

Some improvements would require taking resources away from underperforming treatments and giving them to emerging, more cost effective treatments. This is not going to be popular with these existing treatment providers.

But that is what we want to further improve health outcomes without large increases in health spending as a proportion of GDP.

It won't be easy, but that's where the commission's work is headed.