Health System Reform Needs Medical Leadership (Canberra Doctor - August 2017)

21 Aug 2017

Brendan Murphy

Health System Reform Needs Medical Leadership

Prof Brendan Murphy* is the Chief Medical Officer for the Australian Government

One of the reasons I took on the job of Chief Medical Officer and, before that, a Health Service CEO role, was a view that health system reform is critically dependent on good medical leadership. The aspect of medical leadership that I want to talk about tonight is in the broad area of health system sustainability.

Sustainability is essentially the ability of the nation to afford to continue to provide accessible appropriate and high quality services.

There is no right amount of money per person, or proportion of GDP, that a 1st world nation should spend on health. One thing is clear, if the rate of growth in health costs is growing at 1- 2% more than the growth in GDP, the proportion of government revenue spent on health will continue to increase until it becomes unsustainable. 

Engaging Clinicians

Clinicians are not motivated to control health costs for the aim of “budget repair”.  What will motivate them, however, is when future fiscal constraints could impact on their capacity to adopt new technology and pharmaceuticals and to maintain access to good quality 1st world patient care.

It is worth reflecting on the last few years, in which very significant savings in health care costs have been able to be achieved without materially impacting on patient care. At the Commonwealth level, the most important of these has been substantial savings in the PBS, from a range of reforms.

These savings have provided the capacity for new investments, which might otherwise have not been possible. Because of the material savings in the PBS, not only has the Commonwealth taken on hugely expensive new drugs such as the Hep C drugs, but has adopted a policy of implementing recommendations coming from the PBAC.  It was not always thus and may not always be possible, if the hugely expensive pipeline of new drugs is not able to offset by further savings.

But the driver of these additional savings for clinicians has to be the maintenance of new investment in health and good quality care. This key change in narrative will engage clinicians in a way that ‘budget repair” will never do.


A more robust approach needed

An OECD major health summit in Jan this year concluded that about 20% of the health dollar is wasted. It also concluded that a much more robust approach to technology evaluation was the only way the explosion of new technology could be affordably implemented.

It is abundantly clear that both the management of waste and technology evaluation are only achievable with clinician leadership and that, by having the right narrative, we can broadly engage clinicians in this journey

The need to manage waste and for technology evaluation have been talked about for many years, without much tangible action. One of the exciting things I have seen in my first 9 months in the Department of Health is how we are finally starting to make some substantial inroads in both of these areas, under programs that are critically dependant on clinical leadership.

Clinician leadership

Let me give some examples where clinically led reforms can realise substantial savings with no detriment to patient care.

In the pharmaceutical area, the potential savings on biosimilars is huge. Biological agents have had a huge impact on many diseases and the companies that pioneered them have enjoyed a good return on their substantial initial investment.  We are now spending nearly $3 billion a year on biologicals - close to 30% of the current PBS spend with a very high unit cost. But many patents are coming to an end and competitors are appearing. In some European countries the savings from biosimilar introduction have been huge and they have allowed the market entry of new biologicals and other new agents as well as bottom line savings. It is early days in Australia and there is significant resistance from some clinicians who are reluctant to change to these cheaper drugs.

In discussions with ‘resistant clinicians’ they are all universally responsive to the following counter arguments:

  • Unless the suppliers of biosimilars get a fair share of the tiny Australian market, they will simply not bother bringing in future biosimilars.
  • The current government policy of accepting PBAC recommendations for new drugs can only be sustained if further savings in the PBS make room for them. Given the huge future pipeline (particularly in oncology), headroom must be made.

Clinicians are intensely motivated to do things to improve access, for their patients, to best quality care, including the latest drugs.

Technology Assessment

What about technology assessment? This is much broader than the assessment of new technology. It also involves the methodological reassessment of existing technology and clinical practice that is being undertaken by the Medical Benefits Review.

Let me give a personal example of waste. I have OA in one knee and, prior to a partial knee replacement, I had two arthroscopies and 3 MRIs – none of which changed management. There’s significant MBS and Private health fund money spent on me for no clinical benefit.

The MBS review is rightly looking at all these areas. Limitations on arthroscopy and MRI for simple OA will happen, if the right clinician leadership can be found.

Savings in the MBS will (like the PBS) create room for the MSAC approval for new items, such as trans-catheter aortic valve replacement –which recently received positive MSAC endorsement. There is a whole raft of potential genetic testing items that will be presented for MSAC evaluation. We have to make room for them.

So, in summary, I think there is huge scope for more cost effective use of the health dollar, if we meaningfully engage clinicians in the debate and leading the change. Clinical leadership, to my mind, is the cornerstone of system reform.


* This is an edited version of an address Prof Murphy gave to the AMA (ACT) Annual General Meeting on 31 May 2017.

Published: 21 Aug 2017