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An Independent Queensland Regional & Rural 

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(Cairns... Far North Queensland)


Thank you for visiting my on-line office.

I appreciate your interest in the issues that effect not only Queenslanders, but all Australians.

Please let me hear from you about your views on the issues that matter to your Family, your Community and your State.


Selwyn Johnston



One person, with the support of the community, can make a difference



Australia's health care investment

Health care is a substantial component of Australia's economic activity. Health care employs around 7% of the total workforce and accounts for around 8.4% of Gross Domestic Product (GDP). This means annual health care expenditure can be averaged as more than $2,500 for every person. It is vital that we use these funds efficiently if we are to get good value for our expenditure.

The price of health

Spending on health has been stable over this decade, primarily due to the impact of Medicare and the large funding role played by governments. Because the public sector is the largest funder and provider of health care, it effectively controls how and at what level health care prices are set.

Between 1989-90 and 1997-98 the average rate of inflation was 2.3% per annum, compared to an average inflation rate of 2.2% per annum for health related price rises. Without the strong role of government in funding health care this result would not have been achieved. By contrast there were significant increases in prices that individual households faced when purchasing private health services and health insurance. These grew by 7.1% per year. This is three times the rate of inflation over that period.

Is Medicare efficient?

The Health Insurance Commission's administrative costs are low. There's no advertising and no premiums to collect. Bulk billing substantially reduces the costs of processing claims compared with the costs of processing individual patient claims. Service patterns for practitioners and patients can be easily monitored to detect fraud, over-servicing or inappropriate patterns of services.

Universal access to public hospitals without charges or means testing reduces hospital administration costs. The budget caps that apply to public hospital funding are said to encourage efficiency.

Such funding constraints do not apply as strongly to funding of private medical services or private hospitals.

Governments are also able to impose other funding arrangements in public hospitals, which encourage efficiencies, for example, case-mix arrangements. Doing this is much more difficult in the private sector.

The overlaps and uncertainties in responsibilities at both levels of (State/Federal) Government, between the public and private sectors and among different providers, for example GP’s and specialists, does lead to duplication and waste. It also leads to exercises more concerned with moving the cost of providing services to other payers than with the most efficient way to provide services.

What about the private sector?

Exact comparisons between public and private hospitals are difficult to make. Public hospitals generally treat more complex cases. The consensus seems to be that there is little difference between them in terms of efficiency.

In recent years average length of stay has fallen substantially both in public and private hospitals, despite the increasing complexity of cases.

Occupancy rates in private hospitals are lower than in public hospitals. While this allows quicker access for elective services, it also raises costs.

As a proportion of total funds, the administrative costs of private health funds are proportionately about four times those of the Health Insurance Commission in regard to Medicare.

Utilisation patterns

By international standards Australians make high use of doctors and hospitals (OECD, report). These are two of the most costly elements of a health system. Could we get a more efficient system if we relied more on community based services and used doctors only for what they are uniquely qualified to do?

Substantial expenditure goes to alleviate health problems that are readily preventable (AIHW, 1998).

Inappropriate prescribing or over-use of pharmaceutical’s is a major source of inefficiency. Not only is the direct expenditure wasteful, drug misadventures are estimated to account for a substantial proportion of hospital admissions, readmissions and nursing home admissions (Wilson et al, MJA, 163).

Are new directions in Australia likely to be more efficient?

International experts have concluded those health systems using public funds to finance public service provision are more efficient than those which use public funds to subsidise private services. Australia has a mixed system. Through its subsidies to private health insurance the Federal Government is moving more towards public funding of private services, the less efficient arrangement.

Efficiency and effectiveness

Australia is very successful at maintaining health care costs, has as an extensive, well-developed and easily accessible health care system and a skilled health workforce. It achieves better health outcomes than many comparable countries. The Australian health care system may not be perfect, but it's proven that it serves the nation well. Central to this effort is Medicare and continued high levels of government involvement in health care funding and delivery. Australians recognise this by their continued high level of support for Medicare.

Health results for our investment

Apart from some specific population groups, such as the Aboriginal population, Australia has high levels of population health, long life expectancy and low infant mortality. Life expectancies for Aboriginal and Torres Strait Islander peoples are around 20 years less than the average for Australians overall.

However, it is not the same for all Australians. Social inequalities contribute to variable health outcomes. Twenty-nine per cent of people with below average income report fair or poor health compared with 10% of those with above average income. People living in rural and remote Australia have worse health than their urban and metropolitan counterparts (AIHW 1998).

Health facilities and the health workforce are not uniformly distributed across Australia. Although around 90% of the population see a private doctor at least once in every year, there are still big differences in the average number of such services received depending on location. People in rural and remote Australia generally use such services less frequently.

Overall measures of access do not exist, but waiting lists for elective surgery give some indication of access to hospital care. In 1995-96 the median waiting time was 8 days for category one elective surgery (admission within 30 days desirable) and 36 days for less urgent categories. The clearance time (the theoretical time to reduce waiting lists to zero if there were no new patients) was 2.5 months in 1995-96 (AIHW 1998). A recent report found that 28% of people with below average income waited four months or more to receive non emergency elective surgery, compared with 3% of those with above average incomes (Ragg 1999).


  1. AIHW (Australian Institute of Health and Welfare) Health Expenditure Bulletin number 15), AIHW 1999
  2. Elola, J. Health Care System Reforms in Western European Countries: the Relevance of health Care Organisation, International Journal of Health Services, 20 (2), 239-251.
  3. OECD The reform of health care systems: a review of seventeen OECD countries, Social Policy Studies No 5 Paris OECD, AIHW, Australia's Health, 1996 Canberra AGPS 1997.
  4. Wilson R M, Runciman W B, Giberd R W et al (1995) The Quality in Australian Health Care Study, Medical Journal of Australia 163, pp 452-453.
  5. AIHW (Australian Institute of Health and Welfare) Australia's Health, AIHW 1998
  6. International Health: how Australia compares, AIHW 1998.
  7. Ragg M, Wait Watching, Sydney Morning Herald, 14 August 1999


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Written and Authorised by Selwyn Johnston, Cairns FNQ 4870