Future Solutions in Australian Healthcare White Paper Launched

Hi guys! My name is Dr. Avnesh Ratnanesan. You can call me Dr. Avnesh or sir whichever you prefer. I’m just kidding.

I’m the CEO of Energesse and we’re a healthcare consultancy firm. We work with hospitals, biotech companies, healthcare organizations etc. to help improve on the strategies, the challenges and we try to introduce innovative solutions to solve those problems.

We work in Australia, at the UK, the US, and one of the things that I like to talk to you about today is a paper, a white paper called Future Solutions in Australian Healthcare which is a white paper that we’re officially launching right now.

This paper was developed in collaboration with 21 of Australia’s key thought leaders. We went all across the different sub-sectors of Australian healthcare to gain their opinions on what they see is the future of Australian healthcare between now and 2020.

Obviously, it’s a time where there’s a lot of questions, there’s a lot of controversy, and so what we try to do is really pick the brains of the best of the best in the industry.

What are we going to cover today? First, we’re going to just touch on the current state of Australian healthcare. You guys are all experts, you already know the answers and you’ve been sitting through a lot of the presentation, so I’ll cover that very quickly.

We’ll talk about some of the major challenges and the need for reform and then we’ll talk about the analysis. The analysis was pooled together from all these 21 leaders to coalesce in to what they see as some of the 6 major challenges in Australian healthcare.

From that analysis, they actually found a vicious cycle of activity that’s actually going on in the system. We’ll then talk about what that opportunities are to break that cycle. The opportunities for solutions and the conclusions that come out of that.

Most people in this country, apart from those participated haven’t actually seen this analyses. You’re the first to see it. The media will then are getting their hands on it today as well.

The first principle I think we need to understand is that healthcare is an ecosystem. What do we mean by an ecosystem? It means that it’s filled with many different providers and players that are interdependent and interlinked with each other. As if you didn’t already know that.

Here’s the thing that I want to share with you and I think Anne-Marie Boxall talked about it yesterday. It’s not just Medicare that’s part of the system, it’s much broader than that. If we look at who’s actually in the healthcare ecosystem, you’ve got Medicare, you’ve got the PBS, that’s Federal government.

Then you’ve got state governments and the hospitals. You’ve got non-profits providing a lot of care. Health insurance we’ve talked a lot about and is going to be playing a bigger role in this area. That’s about 8% of spend, the work cover, then you’ve got all the stuff that people do on their own.

You’ve got things like personal training, exercise, and nutrition which actually play a huge role on people’s health. More than we think. We know that consumer’s out of pocket spend in this country is approximately 20%. We spend a lot of money in this country on our health.

We’ve got age care, we’ve got research and academia. We’ve got our doctors and GP, 70,000 in this country in excess. Pharmacists, we got 6000 pharmacies in this country. Allied health workers, outside of nurses, we have 120,000 in this country.

Then we’ve got alternative health which is a four billion dollar industry in Australia. We’ve got the consumer medicines, we’ve got pharmaceutical industry which is the prescription pharmaceuticals and then we’ve got the private sector.

All of these affect the Australian population. When we talk about Medicare as the keepers of the system, it certainly plays an absolutely huge role, but the far more levers that we need to influence to really make a change.

The other thing about this system is that it’s interdependent, so if we make a change like allowing a greater penetration of health insurance into primary care, that affects a greater number of consumers coming through that affects increased consumption of medications and also allied health.

We’ve seen from Stephen Leeder’s talk yesterday that when you try to introduce prevention programs, the cost of allied health goes up in one of these trials. One of the things we have to remember in running a trial, we have to think about all the different consequences across the ecosystem.

Here are some of the thought leaders across the ecosystem that we interviewed. I’ll just touch on the few but they are within mainstream health but they’re also on the wellness side because you can clearly see that that’s a major trend that we’re getting into.

I’ll touch on a few people here. We’ve got Mr. George Savvides of Medibank, Professor Stephen Little who spoke yesterday. We’ve got Mark Fitzgibbon from NIB; two CEOs of Avery Health Services; Dr. Martin Cross, chairman of Medicines Australia; Dwayne Crombie from Bupa; as well, Mr. John Bronger from Pharmaceutical Guild; some of you may know Dr. Mal Washer who is a former Federal member of Parliament who is also the doctor in the house. He used to actually prescribe medications to other politicians because he was an official doctor there.

We really got a broad range of people we got. Michael Ackland, the CEO of General Electric and Johnson and Johnson re in there. Of course, we also got Michelle Bridges, who’s the expert wellness host of the Biggest Loser to give us a sense of how to change behaviors in healthcare. Her program is currently involved 800,000 people online as well which is more than a lot of hospitals.

What is the current state of Australian healthcare? When we look at Australian healthcare, what’s our goal? Where are we at the moment? I know we have a lot of discussion around the problems and the flaws and I can understand that because my background is a medical doctor. I used to work as a medical doctor in Australia, in Queensland in private and public. I’ve worked in the UK.

We can be quite negative, because the way our mindset is programmed is to always find the problem. As soon as the patient comes in to me, I immediately try to find the problem. We can be quite negative, but really there’s a lot of opportunities.

When you look at our healthcare system, if we look at one of the outcomes, quantity of life which is a life expectancy, we’re actually the 6th highest in the world compared to other countries. It’s pretty good. What do we pay for that kind of outcomes? Well, we’re currently compared to other developed nations on the OECD countries. We’re on mid table. About 9.1% of our GDP is spent on healthcare.

We tend to lose perspective. We think we’re spending too much, we’re spending too little. We’re kind of about the same as everybody else. The US is 17.1%, so they’re way out there, but compared to other countries, we’re doing all right.

When you look at our well-being scores in Australia as well to compared to other countries according to the Gallup Index, we also sit 6th. On the face of it, we’re actually living quite well and we’re quite a happy nation. Interesting. You wouldn’t pick that if you listen to the whole day and a half.

Where do we look at what the real problem is over the next 10, 20, 30 years? This is what everyone is talking about. It’s the health growth rate versus GDP. We currently spend 4% of our gross domestic product on healthcare. That’s protected to go up to 7% and that’s the big concern by 2050.

What are the real challenges? What are the real challenges that go on in this country? Despite all the good news, we do have a lot of epidemics, cardiovascular disease, obesity, sedentary lifestyles is just getting worse and worse. There are some stats, a US data, to say that the generation that’s coming out now may not live as long as their parents. It’s the first time that’s happened in modern economies and that’s a lot to do with some of these conditions.

When you look at where the costs are and we had some talks from the University of Monash yesterday on where the cost is actually coming from, we talk a lot about the aging population. The aging population hasn’t really kicked in yet in terms of cost.

The real cost are actually coming from the increasing medical complexity. Medicine is becoming more and more specialized that whatever condition you have, if you used to have one test 10 years ago, you probably have 10 tests now. If you didn’t see a specialist 10 years ago, you definitely see a specialist now.

The consumption of treatments and diagnostics and all those things will not change based on the way Western medicine is going. Don’t get confused with all the cost that’s coming from an aging population. Even the population did not age at all, our cost will be rising massively. That’s all here. Aging population is just here in terms of increasing cost. The rest is population growth. This is data from the Grattan Institute.

When we talk about access to care, then that’s also a problem in this country because there are inequities and we talked about a lot of that. Particularly in rural and remote areas, in aboriginal populations, the life expectancy is 10 years less than the rest of the country. That’s a significant gap. These are the areas where when we talk about a universal health system, we really could be doing better.

Our workforce is also a challenge at the moment. A lot of us know we have shortages in some areas, we would access in other areas, but not only that, are we really looking after our doctors and nurses? When you look at where a study done by Beyondblue showed that up close to 50% of doctors and medical students in that study were depressed.

That’s a huge number. You would not accept that in any workforce, in any corporate organization, if you have about close to 50% data depressed, completely unacceptable but that is the statistic that’s actually been proven and that study was only done last year, I think 2013.

When we took all the inputs from these 21 leaders and we combine them and our analyst in the UK combined all these inputs from different countries, here are some of the big challenges that you experience. Firstly, there’s a disparity between the funding that we provide and the goals that we’re currently asking for.

We want better health outcomes, but right now, our funding in our incentive structure is based on fee for service. With fee for service, you’re incentivizing people to see more patients but not necessarily asking for the best outcomes.

In a structure, in the current structure, obviously that’s okay but as things change and we get aging population in more chronic disease which we know is true, the types of consultations you have, a 7 minute consultation, a 10 minute consult don’t really work.

I think we’re starting to explore these different models but I just want to qualify this paper the same, this is a big picture paper. It’s all about ideas and strategies, not specific policies in … More work needs to be done there.

The other big challenge I talked about was the workforce and even specialization and utilizations. Everybody knows about fragmented system. I want to talk about that. There is an inertia within the healthcare system to improve. There are seasons why we don’t want to improve in the healthcare system.

One of the reasons is that consumers are generally disempowered. What do I mean by that? When you go to see a doctor, you don’t always get to choose which doctor you want to see. When you go to see a specialist, you don’t always get to choose which specialist you want to see.

When you don’t get to choose … Comparing with other industries, when you don’t get to choose, you actually feel disempowered and you have less incentive to make a complaint. It’s different if you’re going to a hairdresser or going to a particular store to buy something. If you don’t like something, you make a choice, you make a complaint, you go somewhere else, but in healthcare, it’s slightly different. That stops the overall system from actually improving. It’s just a comparative. No criticism here.

When these factors are combined together, what you tend to get is inefficiencies in some variations in service quality. You get some significant variations. Then we’ve got other forces that come into play which is the aging population and the complexity of medical advancements. You’ve got those modern lifestyles that I’ve talked about, the sedentary lifestyles, the increasing obesity.

These factors relate to a growth and demands for healthcare, what we’re starting to call unsustainable demands in healthcare. That’s that 4% going to 7% increase in cost.

What does that all lead to? When we have inefficiencies in a system and I talked about this like talking about a car. When you have an inefficient car or variable quality in a car, the outcomes produced do not much the needs of what you want. You then get a perception that you’re not getting good value for money.

Healthcare starts to be seen as a cost and not an investment. This is a cost, so we need to cut costs. Because we need to cut costs, every time the cost go out, we say, “This is unsustainable because it’s a cost and we need to break it down.”

What do we tend to do then? We then to cut budgets and we continue to drive the activity-based system. The activity-based system impacts on the workforce, so the workforce actually has to adjust. We actually have to pay higher salaries to fill certain positions. That creates greater inefficiencies. Your health outcomes don’t match your needs. You get sub-optimal value for money and you get more unsustainability.

The way we’re responding at the moment is actually not the right way because if you continue to respond in the way that you’re responding, you’re actually just going to make it worse. That’s what they call a vicious cycle.

There’s a lot more root causes to this when you look at the inputs into the vicious cycle. It was Albert Einstein that said, “Problems cannot be solved by the thinking that created them.” We need a different way of thinking about our current health system in order to change.

What are the solutions look like? When we asked in 21 thought leaders, there were some great consistency around what they saw were the solutions. Remember, these thought leaders are really … They’re visionaries. They’re in the industry for about 15, 20 years.

They’ve seen it evolved from many different areas. They’ve worked across different industries within healthcare, so they know multiple different perspectives. We didn’t just go for people who had one job for three years. Those people have been around for a long time.

What they saw as being the future is that firstly we need a vision for the health system. Right now, it’s all about costs being unsustainable, but what costs are sustainable? What’s our target as a nation? We don’t know. When you don’t know, you have multiple different moving parts all moving in different directions. There’s no clear directly being given.

When we look at our outcomes, we’re talking again about cost which is not very inspiring. How many of you are motivated by costs? How many of you would be motivated if you knew you’re helping people live longer and live better? Why don’t we set targets around that, around life expectancy, around quality of care then targets around costs?

If we give people that vision and we get organizations within the healthcare industry to align to that vision and we incentivize based on outcomes rather an activity, that’s part of the solution. I’m not saying it’s going to happen tomorrow, I’m just saying that’s the future direction.

We need to rebalance and repurpose our workforce. In some areas, we have access, in some areas we don’t. We know that nurses and allied health workers can do a lot more to fill certain gaps in remote areas, even doing procedures and nurses doing endoscopies, cystoscopies, in those sort of things; very possible, very much required in the rural areas and really to look after our workforce as well.

Caring for the carers is really important. When you are sitting in a healthcare system and you’re taking on people’s problems all the time, you end up having lots of problems too. We need to have even more attention on yourself as a health practitioner. That’s something we need to implement.

We need to look at integrating care. I won’t touch on this point because we’ve covered it in the last couple of days, but someone asked earlier. Let’s stop the protectionism. Let’s stop the silos. Let’s stop the vested interests. I agree with that. We need to stop that because that’s part of the reason we don’t have that innovation happening is because we tend to work within silos.

How do you do that? A great problem, why we have this protectionism is because we don’t trust each other. The silos don’t trust that if I give you part of my work that you will do that work properly. The foundation of that is trust. In order to change that equation, we need to instill trust. How do you do that?

Not many people in the healthcare know actually how to instill trust at an organizational or a system level. Stephen Covey, anyone heard of Stephen Covey? Yup, business author. This is Steven M.R. Covey wrote a book called the Speed of Trust. They actually have setup a process on how to introduce trust into organizations and then we got a program called Culture Care which is introducing trust into the culture of hospitals.

They’re doing that very successfully. They’ve introduced into half of the Fortune 100 companies and we’ve partnered with them to try and roll it out in Australia as well and this book is a great read. I strongly recommend it. There is a process that you can put in place to implement trust with your partners, organizations.

Then we talk about demands. How are we going to disrupt demand? We’re getting more and more people wanting care. How do we disrupt there? One of the big issues is there’s a lot of ways in this system particularly when we introduce one size fits all programs.

If we introduce a prevention program, we have one prevention program that’s catered the same to everyone in this room. The challenge is everyone in this room is different or respond to different incentives, different motivations, we have different drivers, we have different family structures.

The future of healthcare, we’ve heard a bit about personalized medicine, it’s also around personalized health. What does that mean? One of the things that’s come up is one of these technologies from a company called Acumen that we partnered with.

What this company does is it actually takes a piece of text analysis so you could write an essay. You will take that essay and actually pull out keywords in metaphors from that essay and define your personality time. It will say whether you are more scientific, whether you’re more communitarian, whether you have more order.

This is actually the personality type of Richard Branson. We just pulled that one of his essays and you can see Richard Branson is high on order, second on scientific and then third communitarian. For Richard Branson, if he was doing a wellness program or a prevention program, what you would do for order, you would give him structure. A step by step guide. He’ll love it. He’ll keep going on that thing. Day one do this, day two do this, and so on and so forth.

Also, he’s very high on scientific. Give him the research data, give him numbers to work with. Give him to weigh himself everyday so he’s got a number to track and then communitarian. These sorts of things are starting to come into healthcare and well-being, so we personalize everything that we roll out and we have less weight so people don’t drop off as much.

We know when it comes to compliance with drugs and compliance with healthcare programs, usually it’s about 50% drop off rates within six months. Things like this will change that sort of equation.

Cost effectiveness. I know we’ve talked a lot about economics. Probably the pharmaceutical industry and the PBS is probably the most advanced in this country when it comes to measuring cost effectiveness of a treatment. They will take one drug, they will compare with something else in the market, they’ll find out which one … The value of the one drug over the other and they’ll compare the cost of that.

In other areas of healthcare, we don’t do as much and in the future we’re going to have to look at that. Our procedures more cost effective, not just highly effective but more cost effective. Treatments and devices more cost effective. As we become more cost-conscious nation like the UK with their healthcare system, these things will start to come into play.

Then when we talk about prevention, one of the other transits emerging and becoming more important is the combination of modern medicine with things like nutrition, alternative therapies and here in the US they call it anti-aging but this is really around maintaining vitality and well-being.

What we know from our health system is we don’t want to just treat me when I’m sick, but also how do I keep well. Right now, a lot of the time, we do that outside but we’re already working with hospitals in the US. One thing to keep their patients well to prevent them from coming back into hospitals again.

One final thing that I like to say is around the role of health experts into influencing areas outside healthcare. The health system only covers a certain amount of people’s health. As I showed you, it’s part of the health ecosystem. A large of the influence, junk food, fast food advertising is happening every day to our kids, is happening every day to our teenagers, and once those behaviors are ingrained, they become very hard to change.

These things in healthcare are not very sexy. Behavior change is not very sexy. Treatments is sexy, drugs is sexy, but behavior change is not very sexy. Whereas that is the absolute key, the main thing that we need to change, we need to change prevention. These areas are areas that we need to work on.

I won’t go through the challenges because they’re all in the paper, but really I’ve covered a lot of them and these are some of the things we need to introduce to change that vicious cycle into a virtue cycle and actually maintain the spend so it actually relates to better health outcomes. From quality of life from a quantity of life perspective.

Right now, it’s a vicious cycle and we continue to spend, it’s just going to get worse and worse. There’s a lot more root causes to that. The key thing though if we really had to do one thing and I ask the analyst, if we really had to do one thing as a nation, what would we need to do out of all the solutions? He said, “The one thing is this. We need to change how success is measured.”

Right now, the entire system is geared towards activities. For as long as its continued to be geared to its activities, it’s just going to drive increasing costs. It’s just a fact based on the analysis. We really need to change that to introduce outcomes and I know that’s an easy thing to say but other countries are already doing it and pilots already being done.

Answers aren’t going to come very quick because this is about changing, moving the Titanic. Right now, the Titanic is heading towards the iceberg and it’s really about shifting that Titanic to move away from the iceberg and that’s really what we’re talking about.

In conclusion, really I talked about a little bit of how the healthcare system is an ecosystem. We are all interdependent. The six major challenges that are leading to this unsustainable vicious cycle, we need to transform that cycle in multiple solutions that can be implemented.

It depends on your organization. Some of the forces work more on the organization and some of the forces work more on other parts of the organization. Some forces work in Federal government, some of the forces impact more on state governments.

There six categories of solutions to solve that, but the number one reform that we need to do is change how we measure success. We talked about vision. If we give vision around cost, then be it a clear vision around cost, but let’s have a clear vision around outcomes because that’s going to inspire people. In the end of the day, this system is built around people to care for people.

That’s really what I wanted to cover today. I know there was a lot to cover in this paper, but as they say, the opportunity is there for you to read it. If you are interested and we are launching today and we’re launching it to the media today as well.

Feel free to use this as a source of ideas for policy, for organizational strategy and for solving any particular problems or directions that you want to go moving forward with your organizations.

Before I head, I just want to say, with a lot of the discourse that’s happened and I go to a lot of health conference I’ve spoken in Australian, I’ve spoken over in the US and it is a real privilege to be involved in healthcare. I’ve worked in other industries and I’ve come back into healthcare and it’s just important to remember that everything we do every day is making a difference in people’s lives.

I know sometimes we’ve seen in our corporate offices and it’s all paperwork and all that we can get quite frustrated, but for those of us who are close to the cold phase, I salute you and please keep up the good work. Thank you very much.

Speaker 2:       Thanks Avi, maybe I can take up your invitation to call you sir, so thank you Sir. I thank you also for delivering what I think is a really unique approach because we know that healthcare is a multi-faceted, multi-stakeholder sort of discipline and you really harvested the insights from a wide group of people and bought it into a distilled way.

Thank you for that, but also thank you for sort of framing it along the lines of outcomes not activity. That really opens us up to getting closer to some of the solutions and also some of the issues in our environments to make that more receptive.

Questions? One question. You talked about root cause Avi. Why have we got to this situation that we’re fixated on costs, not investments? That seems like something that I think obviously has a long history and maybe even sort of a cultural element, but it’s self evident yet it’s obviously very challenging.

Avnesh:            Healthcare is part of the broader government obviously and we have to balance income and we have to balance expenses. As a nation, when we have treasury, moving a lot of the levers, cost becomes a major issue and everything that you do, every major policy in healthcare has to go high up the food chain, right up to the prime minister who knows a lot about health in the sense that he’s also been a health minister in the past and then has to approve these costs.

It’s not surprising that these are some of the targets that have come down. Where the balance has been lost is in terms of … Perhaps we could have some more consultations with the experts in healthcare, look at models overseas on how to change outcomes.

The challenge is this. Right now, we’re measuring what’s easy to measure. Activity is easy to measure. It’s easier to measure because you just clock one person in, clock the next person in and so on and so forth. Outcomes is harder to measure.

Certainly when I talk to the people in the UK, when you start to measure outcomes, you actually need some capability within your practice to measure those outcomes. How can you tell if the person that’s just come in to a practice and then left to a practice is going to have a better life or going to live longer?

The cardiovascular disease, how do you know it’s going to improve? Activity is easier to measure. A lot of healthcare systems are guilty of measuring what’s easy, but … hat’s been fine so far, but moving forward, it’s not going to be fine, so we really need to change that equation.

Speaker 2:       Actually, let’s go with the question at there just right at the front there.

Speaker 3:       I think measurement based on patient outcomes is not something new. Michael Porter has repeatedly since 2010 in all his Harvard Business Review articles has mentioned this numerous times in terms of shifting the paradigm from cost to care. Not only that, the Institute of Healthcare in the US looking at the triple aim, so everybody is moving towards that.

Like you said, it is difficult. It’s easier for us to measure it this way. What I’m interested in is your research, what did it mention or has it mentioned anything about integrating care across all the stakeholders and how do you feel that fitting into the paradigm?

Avnesh:            Absolutely it did. There were lots of ideas around how to improve integration. Here are some of the challenges if you listen to what’s happening in government. If we talk about integration, integration can help in many different levels. Systems level, organizational level, practice level and individual level.

When we take about integration and sometime we confuse integration. That’s such a big piece. Integration, federal and state systems level. When we talk about organizational level, two parties just working together, collaborating partnerships.

When we talk about practice level, sharing perspectives across different practices. Individual level working from the doctor, allied health worker in the same practice. All of that could happen a whole lot more. One of the challenge is this disempowerment of we have to wait for government to help integrate stuff.

You can be waiting a long time. Whatever area, a division, organization you worked in, just do your best to integrate the area that you are in and you will achieve much better outcomes for your patients very quickly by just integrating people within your teams, integrating with other practices nearby, engaging with the local hospitals.

A lot more of integration is going to happen because everyone knows it’s a problem, but I certainly see that as one of the directions.

One of the real ideas is around this idea about the influence of politics into healthcare. One of the big issues is we can’t plan long term when we only have three political cycles and Federal government on average is in power for two and a half years only. There were some ideas and really some of the ideas are really innovative around the linking of politics from healthcare and as president already said with treasury and monetary policy.

The reserve bank sets a monetary policy based on some guidelines from the treasurer, but they’re independent from government. That’s one of those very cool ideas that has come out. Should we move away from political influence in driving a lot of health outcomes in organizations?

Speaker 2:       Thank you for that question. Just a comment because I think it is relevant in terms of outcomes oriented. I think there’s the other element that the holy grail here is good outcomes which also coincide with lower cost. At the moment, that’s an article of faith rather than absolutely evidence-based. A room full of healthcare professionals, we do need to be evidence-based. It was interesting that the shadow minister earlier today mentioned the diabetes care project which we are working on and that is what we are seeing as an early sign that you can actually achieve high outcomes at a lower cost or in your words Avi lower investment.

There’s a higher return on investment which is really the holy grail. That I think is the sort of chink of optimism in all this. You presented another challenges and I think they’re very sound and very valid, but to work through those, as you say, is going to be quite a challenge.

Avnesh:            When we look at a lot of studies being done as you know, looking at prevention and saving costs in some of the programs … Like the PepsiCo study just looked at prevention among employees across a five year period, when you take your high risk patients and you do prevention on them and they’re costing a lot of money, you can start to see cost savings very quickly.

When you do broad-based prevention programs to entire society and you’re trying to pick up screening and things for the entire population, the cost actually go up. The savings will only happen in 10 to 20 years. That’s the biggest challenge. They’re trying to expect savings within 12 months, 24 months, it’s not going to happen with broad-based prevention program, I tell you that right now.

Speaker 2:       Avi might be staying for lunch, more opportunity of asking him more questions. Thank you for giving us the opportunity of launching the white paper with us today. We look forward to seeing more of it in the coming days.

Dr Avnesh Ratnanesan
About the Author: Dr Avnesh Ratnanesan

Dr Avi is a medical doctor with broad healthcare sector experience including hospitals, biotech, pharmaceuticals and the wellness industry. He is a leading expert who coaches and consults to senior executives, entrepreneurs, practitioners, organisations and governments.



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My name is Avi Ratnanesan. I run a company called Energesse. Energesse is really a healthcare consultancy firm, we really...

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