A Productivity Commission report has been released as the first part of a two-stage inquiry into whether “the efficiency and effectiveness of human services could be improved by introducing greater competition, contestability and informed user choice”.
The report identifies six priority areas where it says reform could offer the greatest improvements in individual wellbeing and community welfare: social housing; public hospitals; end-of-life services; public dental services; services in remote Indigenous communities; and government-commissioned family and community services.
The next stage of the inquiry will make recommendations related to these areas, with a final report due in October 2017. The table below shows the other areas that were considered for such reforms but were not prioritised (perhaps because such reforms are already underway).
In keeping with a determined end-of-year search for grounds for optimism, Croakey has identified three reasons to be cheerful about the report.
1. Even the Productivity Commission is cautious
While some media reports are suggesting the report has found these six areas are “ripe for privatisation”, many of the Commission’s recommendations are qualified, acknowledging uncertainty and concerns about potential adverse impacts.
Observations such as these are sprinkled throughout the report: “The introduction of greater competition, contestability and user choice may not always be the best approach to reform.”
For example, the report notes that the recent experience with vocational education and training FEE-HELP scheme was an example of what can happen when governments fail to discharge their stewardship role well (for more information on this, see bottom of the post).
The report also acknowledges concerns about the introduction of greater competition and contestability into human services, including the potential for reduced quality of services, with providers becoming more focused on contract management rather than on ‘what works’ for those in need of support. The Commission also heard that not-for-profit, community-based organisations are better-placed to provide human services because they are closer to the communities they serve and, because they are mission-driven, rather than profit-driven, will reinvest any surplus back into services to support less profitable areas. The report said these concerns were legitimate but argued they could be minimised or avoided.
However, many of the recommendations do acknowledge the potential for adverse consequences. For example, reforms to end of life care would:
require careful design to ensure that the interests of patients and their families are well served. To the extent that this involves changes to the way end-of-life care services are commissioned, the benefits associated with collaboration between services would need to be recognised and arrangements put in place to ensure continuity of care between providers.
Special measures for consumer protection may be needed given the vulnerability of users of end-of-life care services, the limited capacity of many users to exercise choice and the potential magnitude of harm should a service provider act without due care. More extensive data collection and improved monitoring and benchmarking of provider performance would also be required.”
Cautions also accompany the recommendations around public dental services:
Some participants observed that governments have found that public dental services are more costly when provided by the private sector. For example, a submission from Dr Martin Dooland noted that private sector provision was, on average, 30 per cent more costly than public provision for a course of general dental care for adults.
Participants attributed the cost difference primarily to private clinics providing more services per patient. Other factors could also be at play, such as cross-sector differences in service quality, economies of scale, and the way costs are measured. The Commission will explore these issues in greater depth in the next stage of the inquiry.”
The report also noted the fragmentation and duplication of service delivery, lack of coordination, waste of resources and sub-optimal outcomes for clients in a remote community in Central Australia, where about 400 people receive 28 human services. This “is totally counter to the improved outcomes sought by this inquiry and yet this was the result of government policy to introduce greater competition and contestability into service delivery”, the report notes.
In remote Indigenous communities, the report says many services are already contestable, “but approaches to contestability are poorly designed and are not effective at meeting intended outcomes. Redesign of these arrangements is needed which, coupled with better coordination between governments, could improve outcomes including the efficiency of service provision”.
The report makes it clear that failures in government accountability are a key concern, especially for remote Indigenous communities:
Regardless of the service model chosen, more stable policy settings and clearer lines of responsibility, could increase governments’ accountability for improving the wellbeing of Indigenous Australians living in remote communities.”
The report says most family and community services are commissioned by governments through processes that already entail some degree of contestability, but that commissioning processes are often flawed and not effective at delivering outcomes for users.
It says: “The scope for improving the effectiveness of family and community services largely relates to the way they are commissioned by governments, rather than increasing the use of contestable processes.”
2. Spotlighting inequities and poor service
While the Commission’s terms of reference do not prioritise efforts to address inequities, the report makes it clear that services are often failing to cater for those most in need.
People with multiple needs – such as those in need of housing, drug and alcohol, mental health and disability services – “can face particularly high barriers to access” and these barriers “are often made even higher by difficulties navigating a complicated system of service delivery”.
The report observes that the current housing system produces some inequitable outcomes. People with the same income and characteristics, such as location and capacity to work, can receive “vastly different rates of assistance, depending on whether they are able to access social housing or rent in the private market”.
As well, the report says the quality of social housing services has deteriorated due to funding pressures and demographic changes, with prospective tenants facing long waits for housing. In NSW, expected waiting times in 2013 were up to 10 years (and about a year for high-priority applicants). About 20 per cent of social housing managed by governments is not in an acceptable condition.
The report says there is scope to improve the quality of many family and community services, make access to services more equitable, increase the efficiency of both the services and the system as a whole, and to achieve a better balance between accountability and responsiveness.
In particular, people outside metropolitan areas, culturally and linguistically diverse groups, Indigenous Australians and people with complex needs can face significant barriers to accessing family and community services that meet their needs.
The report states:
Prescriptive contract terms that focus on managing funding flows (the inputs and outputs of services) rather than achieving outcomes for service users leave little scope for innovation or flexible approaches to service delivery.
Governments seldom take advantage of providers’ experience and expertise in program delivery when designing systems of service provision. Instead, programs are designed by government agencies that are often remote from the realities of ‘what works’.
Often what looks good on paper does not translate to the real world, and contracts specify approaches to service delivery that are inconsistent with achieving high quality services, equity or efficiency.”
If nothing else, this report underscores the need to improve access to and the quality of health and social services, particularly for those most vulnerable.
In highlighting the significant trend towards non-government provision in many human services since the mid 1990s, the report (perhaps unintentionally) raises questions about the impacts of this trend upon those most in need of services (between 2012 and 2015, non-government providers accounted for an estimated 30 per cent of service provision in selected human services).
Given the concerns raised in this report, as the Commission moves into the second stage of its inquiry, perhaps it should be subjecting all of its recommendations to a health equity impact assessment?
3. Redundancy time for the Productivity Commission?
The Commission is, of course, limited by its terms of reference – which put its staff in an invidious position of making recommendations through a very narrow and often unhelpful lens.
How awkward it must be to have to make such major recommendations without consideration of the wider determinants of health and wellbeing, which are so profoundly important for planning and delivering services.
Imagine, for example, having to make recommendations for social housing without considering wider policy determinants such as policies that promote negative gearing or that fail to provide people with sufficient income to afford housing?
Imagine having to make recommendations for the future of health and social services without considering factors such as growing social and economic inequalities?
Or having to redesign health and social services without even a nod to the huge elephant in the room – the need for sustainability and planetary health paradigms to be central to future policy and service development?
The report thus has the positive impact, perhaps inadvertently, of highlighting the limited usefulness of its narrow terms of reference and limited scoping of problems and solutions.
Consider this statement, for example:
The most common planned (elective) surgical procedures in Australian public hospitals include cataract surgery, removal of skin cancers and knee replacements.
Overall, public hospitals account for about one-third of elective surgical admissions but almost 50 per cent for patients in the most disadvantaged quintile, based on their place of residence.
This suggests that greater choice in public hospital services could disproportionately benefit disadvantaged groups that up until now have had fewer choices than other Australians.”
This level of analysis – with a breath-taking lack of acknowledgement of structural inequities that have served to undermine the universality of our health system – does not inspire confidence in the report’s recommendations.
Coincidentally, the report was launched at the same time as a joint international meeting of One Health and the International Association for Ecology and Health was getting underway in Melbourne – follow #OHEH2016 and @WePublicHealth and read this statement about the need for transformative, rather than reductionist, approaches to identifying and addressing health and social problems.
Maybe it’s time to ditch the Productivity Commission in favour of a “Sustainability and Equity Commission”, or some such… (Don’t hold your breath).
• Submissions to the Productivity Commission inquiry can be read here.
Response to Productivity Commission report from ACOSS
ACOSS cautioned against proceeding with attempts to improve competition and contestability in human services without a broader analysis of current barriers to improving access and service quality for people, regardless of their means or location, including the adequacy of available funding.
“We have said from the beginning of this process that the Government’s terms of reference pose the wrong questions, in the wrong order. The Productivity Commission has been asked to consider which sectors should be priorities for competition reform and how should this be done. The right first question should instead be, how can we improve access to quality, affordable services which improve people’s lives?” said Dr Cassandra Goldie, ACOSS CEO.
“Asking this question first would lead to a very different set of priorities for investment and reform. They would sharpen the focus on better outcomes for people and the chronic inadequacy of funding for basic human services in areas of acute need – for example in social housing and dental health where waiting lists are extraordinarily long and scarce resources rationed extremely tightly.”
“The PC cites little evidence to support its contention that competition could improve outcomes for service users in the areas identified: palliative care, social housing, public dental, Indigenous services, the commissioning of family and community services and public hospitals. We must learn from the experience to date in applying competitive processes to human services, with salutary lessons to be learned from the VET, employment and aged care sectors.”
“It must be remembered that the current inquiry takes place against a backdrop of major cuts to the funding of human services, including the long term erosion of funding to social housing (social housing forms just 4.5% of our housing stock, compared to 18% in the UK for example), $1.5 billion in cuts to community and Aboriginal services in the 2014-15 Budget, in addition to deep cuts to health and education funding with impacts to be felt over the coming decades. To ignore this reality is to distract from the real drivers of poor health, social exclusion, homelessness and financial stress.”
“Rather than highlighting the erosion of government investment in social housing over the last 30 years and the adverse impacts on people’s lives, the PC’s report instead highlights the desirability of improving choice for social housing tenants in their place of residence. While this is desirable, it seems far removed from the current reality of 200,000 households on current social housing waiting lists around the country.”
“Similarly, while more than one in three people delay or avoid going to the dentist because they cannot afford it, and waiting lists range from 9 months to 3 years, choice of dentist is likely to be further from people’s minds than their ability to access any dentist before their condition becomes acute.”
“Of course, funding is not the only answer and determining appropriate funding levels is complex. For this reason, we welcome the PC’s proposals for reforms of the commissioning of family and community services which recommend starting with mapping of need and service gaps. ACOSS has long recommended a comprehensive analysis of service needs and availability as a basis for calculating a new, evidence-based funding formula for community services. We also welcome the PC’s support for greater involvement by service providers in the design of outcome and performance frameworks but urge that this should extend further to include participation by service users who are most directly affected.
“There are a number of other positive proposals in the family and community services section which align with ACOSS policies, including longer term government contracts with service providers, more time for organisations to develop funding proposals to enable more collaborative approaches and less prescriptive contractual terms. However, we believe that these reforms can advanced outside of a competition reform process.”
“ACOSS is concerned that, despite high levels of engagement by community sector organisations outlining a range of concerns about the direction of the PC’s original report, there has been no change to the identified priority areas or directions for reform.”
“Finally, while ACOSS welcomes the recognition by the Commission that more stable policy settings are required to support the delivery of services in Aboriginal and Torres Strait Islander communities, we are astounded that the PC Report fails to acknowledge the unique role of Aboriginal and Torres Strait Islander organisations in the design, management and delivery of services in their own communities.”
Response to Productivity Commission report from Consumers Health Forum
Consumers would welcome more competition among health and hospital services where there is a real choice, but often little choice is available, the Consumers Health Forum, says.
CHF believes that more openness about the performance of hospitals and health services would be good for users and taxpayers, said the CEO of the Consumers Health Forum, Leanne Wells, said.
“As the report states, informed user choice puts users at the heart of services and recognises that in general the service user is best placed to decide what services meet their needs.
“However in the Australian setting, choosing public hospitals, end-of-life services and public dental care is in reality often limited by the few or non-existent choices of service available.
“The report says that introducing greater competition and contestability and informed user choice can improve the effectiveness of human services.
“While there may be a choice of comparable public hospital services available in the big capital cities, that is not the case elsewhere and the scarcity of choice is even more so when it comes to public dental and end-of-life care.
“Resourcing for these areas is limited and the immediate contestability issue they face is contesting for funds from scarce Government resources. We agree that more publicly available information about performance will help consumers make informed choices.
“While contestable approaches for local hospitals and the primary health networks are a positive move, they will be of limited value if there is not a realistic level of funding to make these services viable.
“It would be backward step if the outcome was that private sector took over lucrative areas while other services languished.
“Already we see the emergence of two-tiered health care where those with subsidised private health insurance are able to access services sooner while the majority of taxpayers may have to wait,” Ms Wells said.
Response to Productivity Commission report from AHHA
“Affordability and equity should not be forgotten in the rush to the ‘three Cs’ of competition, contestability and choice in human services”, Australian Healthcare and Hospitals Association Chief Executive Alison Verhoeven said today.
“The Commission has named public hospital services, public dental services and end-of-life care as three of its six areas best suited to reform.
While the three Cs have their place in these services, and may deliver improvements in the ‘E’s of efficiency, effectiveness, and even equality, it should not be at the expense of the fourth ‘E’ of Equity.
“In particular we should remember to ‘keep it real in rural settings’—the principles of competition, contestability, and choice do not work out in the bush in the same way as in urban centres. Indeed, sometimes there is effectively no choice at all.
“At the AHHA we support many of the principles put forward by the Productivity Commission, such as placing people at the heart of informed choices about health care that best meets their particular needs. But we have to remember that not everyone has the same access to knowledge or understanding of the choices available and nor do they have the same incomes and needs.
“And when the Commission cites examples of what has worked overseas in the delivery of human services, they should remember the unique population distribution we have in Australia, and the tyranny of distance.
“Also, unsurprisingly, businesses providing services will tend to focus on services that deliver the most profit in the quickest time. You can’t blame private enterprise for that. But in human services such as health care, short-term profit does not always lead to the best long-term outcome.
“For example, in dental services, expensive restorative treatment might be more profitable than low cost preventive services that will help prevent bigger problems down the track.”
Extract from report, on vocational education and training
(as referenced earlier in this post)