We’re great at quantifying medical ‘activity’, but that hasn’t helped funding match the need – it only diffuses political risk.
In the mid-1980s there was a cabal of health economists determined to turn healthcare upside down for its own good.
The long-held tradition of “historical” block funding was going to be taken down and the rogue angel of death became activity-based funding.
It is obvious that activity-based funding has a place. A surgeon performing 100 acute appendectomies in a year is worth counting. The caveat is that you need to know how many of those appendixes demonstrated a positive histology for acute appendicitis. If that was only 50, the activity would need to be subject to clinical audit.
Often the activity is an assumed surrogate for a clinical outcome, but the surrogacy can be at times tenuous. I can generate a lot of activity in a medical ward, prolonging the life of an elderly patient with dementia and minimal quality of life. This is for me an undesirable clinical outcome.
We have also abused the term acuity. Acuity in the medical sense aims to measure the quantity, quality, and time-critical nature of an episode of care. But the claim that I need greater funding because my patient has higher acuity is often flawed. Resuscitating an ED trauma patient with little chance of survival may be a high-acuity activity, but that does not make it a value proposition.
I have seen activity counting escalate at a concerning rate in the pursuit of more funding. The Health Quality Gurus say that 20% of healthcare-related activity is harmful, 20% is neutral, and the remaining 60% beneficial. It used to be said that half of the medical budget was spent on those with at most two years left to live, when quality of life is generally extremely poor.
Holly Payne’s December article “What are they doing at Medicare Mental Health Centres?” cites a Department of Health and Aged Care spokesman confirming that the centres are block-funded outside of the MBS and that staff are salaried. This is a striking reversal of the trend towards replacing block funding with activity-based funding.
I support transparency and accountability when it comes to money spent on healthcare in the public system. It is a policy decision as to whether the service be 2 or 5 stars (a Corolla or a Lexus), but the value proposition should include patient safety and minimal waste. No system is perfect, but I have noticed that most middle management’s response to “imperfect” activity-based funding data is to gather ever more data.
More data does not equal more useful intelligence to support cost efficiencies in healthcare. Sadly, data collection has become an industry within the health industry to the point of data bloat. I am presented with reams and reams of very colourful dashboards at clinical management meetings, but as a big-picture person, I feel suspicious when overloaded with data.
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A valued mentor once advised me that it was a useful survival strategy to share the pain of risk-taking as widely as possible. Given the highly politicised nature of healthcare systems in Australia, maybe this tsunami of data is one way of managing risk in those with a low appetite for it. Could it be that health ministers facing gotcha questions at estimates committee meetings feel more comfortable if their staff can supply them with enough data to bamboozle the inquisitors?
When I was a trainer for the Human Error and Patient Safety course, we looked at the Apollo I Space Shuttle disaster, in which the poor ergonomics of the cockpit dashboard played a role. It was too cluttered; it overloaded the astronauts. Subsequent experiments indicated that the ideal dashboard should be informative, concise, divert the observer’s attention to the sites of anomalies, and not exceed seven primary dials. Why haven’t we learnt from this?
Back to block funding. I work in a Queensland Regional Hospital and Health Service. Most of our funding is activity-based, with some exceptions. There are about half a dozen smaller hospitals within our jurisdiction. They are the lifeblood of their small communities, yet for many reasons, these hospitals would not exist if their viability was based solely on activity-based funding. The value proposition is that they contribute to the sustainability of these small towns. There is a higher political imperative beyond just the healthcare of individuals.
The take-home message is that when there is market failure, the argument for block funding becomes compelling. Could it be that MMHCs cover a service area that is acknowledged to have fallen victim to market failure? Are there other obvious market failures where block funding might be a better bad option?
My reading of perspectives published in The Medical Republic over recent years suggests yes. For example, general practice in low-SES populations or rural and remote areas where communities feel that they cannot pay a gap fee. Fee for service is an activity-based funding variant, but the fee hasn’t kept pace with the costs, driving market failure to the point where GPs are opting to retire early and where only 14% of new medical graduates are opting to go into general practice, versus 50% when I graduated in the mid-1970s.
Many seem to think that the funding of mental health services is another example of market failure. The reasons are controversial. My take is clinical scope creep has played an important role. When we had “psychiatric units”, we all seemed to know what a psychiatric illness was. Now that they have been replaced with “mental health units”, the scope has crept into medicalising the management of those experiencing normal life stressors.
For some, the ideal is neither block nor activity but outcomes-based funding, where cash depends on positive clinical outcomes for the patient. Unfortunately, our systems are not yet sophisticated enough to measure this other than at a whole of population level and then only over a period that extends well beyond the annual funding cycle.
I may be guilty of exaggerating the dichotomy between activity-based funding and block funding. It is not as binary as that and there are other algorithms interwoven in healthcare funding formulation.
Nevertheless, it may well be time for the pendulum to swing back from activity-based towards block funding based on population health demographics or at least some kind of hybrid system. I posit that a considerable drive towards activity-based funding data is motivated by risk mitigation at a political level, and that this zero tolerance for risk is diverting funds from valuable patient care.
Healthcare is a risky business, and both sides of politics will need to acknowledge that some level of risk is unavoidable before we can move forward.
Unless I’ve got it all wrong and the real purpose of healthcare is to provide employment for the many non-clinical staff extracting low-value data from the back end of our digital medical record systems to feed the political funding machinery. Oh, and for that cabal of health economists.
Associate Professor Kees Nydam was at various times an emergency physician and ED director in Wollongong, Campbeltown and Bundaberg. He continues to work as a senior specialist in addiction medicine and to teach medical students attending the University of Queensland, Rural Clinical School. He is also a poet and songwriter.
