The problems with Australia's hospitals – and how they can be fixed

Australia’s public hospitals – and those responsible for funding them – face a number of pressing challenges. In a time of growing populations, they must guarantee access, ensure quality, minimise the chances of anything going wrong, and do it all within the available budget.

Costs are going up, as is demand, putting pressure on Commonwealth and state budgets.

But the solution is not necessarily more of the same, or more funding. Public hospitals are already changing the way they do things, but they need to change more.

The entry squeeze

As the population grows, and as rates of chronic diseases (such as heart disease and diabetes) rise, demand for hospital services increases. Between 2009-10 and 2013-14, hospital admissions increased at twice the rate of population growth (an average of 3.3% each year compared to 1.6% population growth).

In the public sector, tight budget control and poor planning mean there is a gap between the services required and the services available. The consequences are long waiting times for elective procedures and ever-longer waiting queues for treatment in emergency departments.

In extreme cases, ambulances are redirected away from the hospital of choice, or ambulance staff have to care for patients in the hospital emergency department before they can be accepted for treatment by hospital staff.

The solution is not necessarily more hospital beds. A better answer might be to use existing beds better through better prevention, better discharge planning and improved efficiency.

Using beds more efficiently

In 2013-14, around 6% of all hospital admissions were for 22 conditions that were considered “potentially preventable”. These admissions comprised 8% of all “bed days”(the 24-hour period a patient spends in a hospital bed).

There is considerable variation across the country. The admission rates for these potentially preventable conditions is three times higher in some parts of the country. In the Sydney suburb of Blacktown, for instance, there were more than 30 hospital admissions per 100,000 people for diabetes-related lower limb amputations in 2012-13, compared with fewer than ten in North Sydney.

Reducing these rates in higher prevalence areas to approximate the rates in “benchmark” areas would save thousands of bed days a year.

Admission rates for potentially preventable conditions are three times higher in some parts of the country. Suwatchai Pluemruetai/Shutterstock

Another way to ensure beds are being used efficiently is to ensure that patients only undergo procedures with proven effectiveness. There is evidence that some hospitals are admitting patients for operations that have little evidence of benefit, such as knee arthroscopy for osteoarthritis.

Not all beds are occupied by people who still need the care that hospitals are staffed and equipped to provide. Almost 2% of all hospital beds are occupied by “maintenance care” patients. Many of them may be waiting to have home care arranged or are waiting for a bed in residential aged care.

Although many of these bed days are in small rural hospitals – where a bed occupied for “maintenance care” may not preclude another patient being admitted to hospital – an acute hospital bed is rarely a good long-term location for any person.

Average length of stay is a key measure of how beds are used in hospitals, and duration of stays has changed dramatically over the last 30 years, more than halving over that period.

Two separate trends have driven the change. First, the proportion of patients who are able to be treated in one day has increased significantly: more than half of all patients are now “same day”.

Second, the length of stay of patients who stay overnight has declined, though not as dramatically as the overall pattern.

Advances in treatment technologies, improved efficiencies in hospitals and better home care support could allow more patients to be treated in existing hospital beds.

Quality of care

The states have moved ahead in fits and starts with improving quality of care.

All states have had their quality scandals. The latest is the avoidable deaths of seven babies in Victoria’s Bacchus Marsh Hospital.

All states are in the process of improving their quality-management processes. This means providing more information to hospitals to allow them to compare where they stand, analyse critical incidents and provide better education and support.

Some comparative information is also available publicly – for example, comparing hospitals nationwide on hospital-acquired infections. States are also making more information available about comparative quality performance, such as surgical site infections. Many hospitals in the United States are now making their own quality performance data publicly available.

But there is much room for improvement. More than one in every ten patients admitted to hospital has a “hospital-acquired diagnosis” – an additional health problem, such as an infection, that they didn’t have when first admitted. These additional diagnoses may result in significant risk or harm to a patient (such as an additional operation to remove an object left in the patient after the initial surgery) and add significantly to costs.

Reducing avoidable harm in hospitals remains a major challenge for boards, management and clinicians.

The 2014 budget cliff

Despite an explicit promise to maintain pre-existing arrangements for hospital funding, the 2014 Commonwealth budget cut more than A$1.5 billion a year from state hospital funding from July 1 2017.

So far the states’ response to this has mostly been a combination of hope and wishful thinking. Although there is scope to improve hospital efficiency, the funding gap created by the Commonwealth change is bigger (and differently distributed) than what could be made up in potential savings.

States initially argued for increased taxes, particularly an increase in the GST or the Medicare levy, to bridge the funding gap. This path has now been closed off.

States then knocked on the Commonwealth’s door with their begging bowls in hand, hoping a Turnbull government might be more munificent than an Abbott one. This door appears to be still ajar.

July 2017 is just over a year away, so action on this front needs to occur soon to allow hospitals and states to plan their responses to the budget cliff.

Innovation is necessary

The challenges facing hospitals and states are great. Meeting them will require sophisticated strategies and innovation. More of the same won’t cut it.

Those wedded to the old ways may resist change, but change is what we need to ensure the hospital system meets the care needs of the population into the future.

This article is part of our series Hospitals in Australia. Click on the links below to read the other instalments: