Blog«Healthcare Is Not The Same As Selling Pots and Pans (OLD)
Healthcare Is Not The Same As Selling Pots and Pans (OLD)
31 December 2017
7 June 2023
6.50 minutes

The Australian Productivity Commission is currently conducting a public Inquiry into the increased application of competition, contestability and informed user choice to human services. In other words, the Government is holding an Inquiry to find ways of using the guise of “competition” to drive down costs in the health sector. 

The HWU has some strong views on this subject! Our Assistant Secretary David Eden and Research and Projects officer Kamal Bekhazi appeared before the Productivity commission Public hearing in Melbourne on July 28th 2017. They provided input direct to the Commissioners!

We are fully aware that the health sector is increasingly resource hungry. Providing high quality healthcare to Australians, especially as the population ages, is a costly business, and a genuine challenge for governments, both State and Federal. It makes sense that policy makers review the operating models and costs structures from time to time to ensure resources are not being wasted or used inefficiently.

We do not support competition for competition’s sake, especially when it comes to the provision of health services. The health sector is not a commodities market. Compassion, care and respect are the life blood of our system but they are not products to be traded like stocks on the exchange or Pots and Pans in a retail outlet.

The key point the HWU has made - and will continue to make - on the issue of the application of competitive models in the health sector, is that quality of care (which depends on fair and safe working conditions for staff) must be the paramount consideration. Quality of care must come before money, and be given primacy over economic models and balance sheets

Increasingly, governments around the world are using competition as a key tool in health care. The federal government believes that competition can help contain the growth in health care expenditure by driving down costs, improving efficiency, stimulating quality improvements and driving innovation. Those that support competition and the use of market mechanisms in health care tend to also oppose direct public sector regulation such as controlling prices. They argue that regulation creates health systems that operate inefficiently and creates barriers to innovation and reform.

The HWU has a very different view, namely, the provision of health care is very different from markets for other goods and services. That is, providing healthcare is not the same as selling Pots and Pans or providing a landscaping service to households. It is not appropriate to simply adopt pro-market mechanisms, such as competition (even though they are used extensively in other sectors of the economy).

The social and community heath sectors are not a series of independent cost centres. They are sectors made up of a people in need of care and support and people skilled in providing that care and support, coming together in a myriad of ways and circumstances. The sector is not generic, or standard, and the transactions between consumers and providers not always quantifiable, or able to be measured in dollars and cents.

Another point the HWU is keen to get across to the Government, via the Productivity Commission, is that competition and contestability can actually cost the government and the sector money. 

In recent years we have seen many providers outsourcing or otherwise selling off the profitable parts of their operating model. By outsourcing Car Parking, or Cafes or Florist shops, healthcare providers have got a short-term profit to their bottom line, but over the long run these sell-offs have resulted in lost revenue or money that could otherwise have been reinvested back into the health sector. 

Instead, staff, patients, residents and visitors end up paying ridiculous prices for private car parking or café owners (for example, $4.50 for a 400ml bottle of concentrated orange juice) and, rather than being re-invested in health, that money leaves the health sector, and in many cases, the country. 

The HWU has made a number of recommendations via our submission and directly to the Productivity Commission. For example:

  • We recommended that the government consider bringing back in-house profitable departments such as car parking and Cafes.
  • Health administrators must move away from a budget and volume driven health system.  Instead, health administrators must focus on delivering and making their explicit goal to deliver excellent outcomes.

The Commission Report is due in October 2017.  You can read more about the recommendations that the HWU have made to the PC and access the written submission made to the Productivity Commission by clicking below.

Health Workers Union Submission Reforms to Human Services - Stage 2 of Productivity Commission Public Inquiry 2016


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