how smarter health care can cut costs and help Australians with chronic conditions

Australia has a health problem. Our health system works well for acute conditions that require short-term treatment such as fractures, pneumonia and appendicitis.

But almost 40% of us have at least one long-term (chronic) physical health condition, such as diabetes, arthritis, a respiratory condition, or kidney disease.

Chronic health conditions need to be managed over time. However, this can be difficult in a health system where payments to health professionals are built around “patient activity”, such as surgeries and consultations. There are few dollars for initiatives that keep people out of hospital or help them to manage their own care.

The result is a high cost — more than A$38 billion per year spent on care for people with chronic health conditions — and too much time spent in hospital.

Our health system can do better. A recent report from the Productivity Commission, of which I am one of the commissioners, looked at innovations in health care for chronic conditions around Australia. We found many examples of innovative programs in local communities.

17 innovations

The Productivity Commission presented case studies of 17 initiatives that have delivered, or are on track to deliver, sustainable outcomes for people living with chronic health conditions and the health system.

Some of these focused on helping people manage their own health. For example, Nellie is an automated SMS-based persona that sends patients text message reminders about medication, exercise or testing.

Others focused on innovative work practices. For example, on the Sunshine Coast, general practitioners with special interests assist specialists by dealing with less complex episodes of care at hospital outpatient clinics. This helps reduce waiting times.

In Perth, peer workers provide support for people with social needs, such as housing, who are at risk of unplanned presentations to emergency departments. For example, the peer workers might offer emotional support and help to navigate community services.

Meanwhile, certain innovations involved the use of health data. For example, Primary Sense software helps GPs on the Gold Coast better identify people who are at risk of hospitalisation from a chronic health condition in the next 12 months. This helps GPs proactively provide preventative care.

Health data can also improve system coordination and design. Lumos, in New South Wales, uses anonymised data to help GPs better understand their client population, and to identify gaps in health care.

Read more: More Australians can stay healthier and out of hospital – here's how

Innovations that have been evaluated often show significant benefits. For example, Monash Watch, run by Monash Health in Melbourne, is a simple telephone-based outreach service for people likely to have three or more unplanned hospital admissions in a year.

When it started, Monash Watch aimed to reduce days spent in acute hospital care for these people by 10%. In practice, it’s reducing bed days by about 20%-25% compared to care as usual.

Benefits for everyone

The report shows our health system can deliver better care for people with chronic conditions. In many cases we need funding reform, but this doesn’t have to be large in dollar terms.

For example, HealthLinks, a program in Victoria, allows hospitals to use existing funds for chronic care innovation. An algorithm identifies people at high risk of multiple unplanned hospitalisations in one year. If the hospital chooses to, it can use the expected funds it would receive from that patient being in hospital for alternative community-based care.

Monash Watch is one of the innovations funded under HealthLinks, while other hospitals have used HealthLinks to fund alternative approaches to chronic health care. But despite underpinning a range of programs, the total funds involved in HealthLinks are small, around A$40 million in 2016-17, or roughly one-quarter of 1% of Victoria’s annual expenditure on public hospitals.

Improving care to help people with chronic conditions maintain their health and avoid hospitalisation benefits everyone.

It benefits the individual. I have yet to meet someone who wanted to spend more time in hospital rather than out in the community.

It benefits the community by freeing up hospital beds and shortening waiting times for care.

And it benefits taxpayers, by reducing the need for new hospitals as the population both grows and ages.

So, how can more Australians benefit from these and other health innovations? Our report highlights three key factors.

Support, evaluation and communication

First, our health system needs to better support innovation. Currently, innovations are usually led by a few inspired people. But they face barriers in terms of funding, time and information about what works. They need a “license to innovate” — to try new approaches based on the best available evidence.

If we establish this figurative “license to innovate”, then some failure is inevitable. So second, we need a health system that evaluates innovations, working out which are the best and which were simply a good idea at the time.

Finally, when successful innovations are identified, this must be communicated so they can be scaled up. Sometimes this will involve local adjustments, to allow for population or geographical differences that can affect service delivery. But the key is information — identifying success and letting people know about it.

Creating a culture of innovation and sharing best practice throughout our health system will benefit the growing number of Australians living with chronic health conditions.

Read more: Balancing the health budget: chronic disease investment pays big dividends