Productivity and effectiveness, not just more resources, are the key levers for improving the Australian public hospital system. The relative performance of private and public hospitals provides further evidence that public hospitals are the major underperforming component of the Australian system.
According to the Productivity Commission, the private hospital sector provides more effective healthcare than the public sector, with 12% lower realised to expected mortalities. Private hospitals have also been more effective at raising productivity across a range of indicators such as higher nurse utilisation, more efficient mix of registered to enrolled nurses and increases in hospital bed throughput and utilisation.
Applying private sector management techniques (from hospitals and other industries) to the public system can result in similar improvements and lift the quality of the public hospital sector. Key improvement suggestions include:
- Establish best practice quality and safety culture to reduce the occurrence of adverse events and waste
- Revitalise hospital leadership, appoint CEOs, boards and administrations with appropriate incentives and rewards
- Improve productivity by benchmarking to private and public sector best practice
- Review timeliness and reliability of implementation of medical research into clinical practice to improve effectiveness
- Improve the collection, transparency, communication and timeliness of hospital KPIs
Access to hospitals, quality of care, management and expenditure on Australia's public hospitals has long been the subject of public examination . More recently, interest in the level of productivity and effectiveness of public hospitals has been heightened as a result of the growing demands placed on the healthcare system. Pacific Strategy Partners' recent work in the Australian Private Hospital market highlighted the productivity improvements which have been achieved by the 'for profit' private hospital providers. Achieving similar improvements in public hospital productivity and efficiency will enable the limited resources to be spread further and ultimately have a greater impact on improving the wellbeing of the Australian community . Given that resources will always be finite, productivity and effectiveness are as much a moral imperative as inequitable health outcomes deliverable by the health system.
Drivers of Hospital Performance
There are four high level drivers of health outcomes (Exhibit 1). Given that resources are constrained by the growth in the rest of the economy the greatest impact on health outcomes is likely to be driven by productivity and effectiveness. This has been the pattern of economic development through the agricultural and industrial revolutions – we do not have more food just because there is more farmland.
We compared the productivity and effectiveness improvements achieved by the private 'for profit' system against the performance of the public system through the evaluation of a set of productivity and effectiveness KPIs. Consideration of the productivity and effectiveness of hospitals in isolation is, however, of limited value. It is imperative to take into account the goal of healthcare, which is ultimately the outcome of the care provided. Hospital-standardised mortality ratios are used as an indicator of the achievement of the goal of healthcare (the relative quality of the public and private hospital system) . This shows that improvements in productivity and effectiveness have not impacted the quality of care provided.