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Curing our crippled healthcare system

22 June 2003

By ROD ORAM

We have a chronic health problem. New Zealanders keep demanding more and better healthcare but our ability to pay for it is under increasing strain. Fortunately, a ground-breaking report last week suggests a remedy.

The demand side is driven by an ageing population and rising expectations. Why shouldn't we do at 60 what we did physically at 40? Medical science can help but the technology gets ever more expensive and complex.

On the supply side, government spending on healthcare will have risen from 4.8% of GDP in fiscal 1984-85 to a forecast 6.5% in fiscal 2003-04. On top of that, much smaller sums are spent by ACC and by people dipping into their own pockets for private medicine.

To try to cope with these pressures, successive governments have put the health sector through the wringer for the past 20 years. Rounds of radical restructuring every three years or so have focused mainly on making healthcare provision more efficient. While this has been achieved, it has come at a huge cost. Many health professionals are demoralised, unfulfilled, exhausted and change-averse.

The Clark government has made its contribution to this picture. It introduced district health boards in 2001 and primary health organisations last year. The latter are designed to help GPs give better, earlier and more comprehensive help to patients to prevent illnesses escalating into hospital cases.

Yet despite all these changes, there's a growing view in the health sector that the present system is misguided and doomed to collapse. With widespread diseases such as asthma and diabetes, for example, medical intervention often comes only after the symptoms have taken hold. This makes the cost of treatment far higher.

Perhaps fewer than 50% of people with symptoms of those two major diseases are getting treatment to prevent or delay more serious and expensive complications.

Current models used by the health sector take a narrow view when weighing up the costs versus the benefits of using each drug and treatment. They very imperfectly measure wider issues such as the cost to a company when one of its employees takes a few days off for a mild, early and undiagnosed asthma attack.

Would health spending on earlier intervention bring bigger long-term benefits to the patient in terms of quality of life and to the economy in terms of lower long-term costs and greater productivity?

These are not simple issues. The calculations are very complex. There is an even bigger challenge in designing and running a healthcare system that could provide such fully integrated help from doctors, nurses, nutritionists and other specialists from the earliest stages of a disease and then keep people on course with their treatments.

In fact, these are management techniques on the very leading edge of healthcare. Only a few organisations around the world are attempting pilot studies even though the cost/demand pressures are even more chronic in some countries than here.

Last week saw a big step forward in New Zealand with the publication of A Model for Delivering Better Health Outcomes. It was undertaken by a PriceWaterhouseCoopers team led by its economist Suzanne Snively on behalf of the Researched Medicines Industry, the industry association for pharmaceutical companies.

Cynics will complain, of course, that the drug companies have a massively vested interest. There are simply trying to sell more drugs by demonstrating that the present system, particularly the government's drug buying agency Pharmac, is failing New Zealanders.

Not so, say the drug companies, which insist they're trying to help make a complex system better to ensure money is spent in the most effective way.

They deserve credit for taking the lead in developing these new and challenging methodologies. The industry gave the report to the government four months ago. Since then, Treasury and relevant ministries such as health and research, science and technology have been examining it carefully before last week's public launch.

The government has welcomed the report. Research, Science and Technology Minister Pete Hodgson is "actively and positively engaging" with the RMI in developing the methodology further.

But he went on to say there were "some flaws in the model. Some of the methodology and assumptions are controversial". The health ministry was similarly welcoming but circumspect. Rather defensively, it suggested its programmes such as Healthy Eating-Healthy Action would achieve similar goals of prevention and early treatment.

While caution is called for because the report is breaking very new ground, the government's attitude smacks of its long-standing distrust of drug companies in particular and of corporate involvement in the health sector in general.

If this government attitude got in the way of letting, for example, district health boards trial and develop these concepts, it would be a serious disservice to the health of the nation. It would exacerbate the burden of illness and treatment on the economy.

While PriceWaterhouseCoopers has developed a generic model with wide applicability, it has applied it in detail to our two most chronic illnesses - asthma with nearly 700,000 sufferers and type 2 diabetes with around 100,000 diagnosed cases. Associations representing sufferers of both welcomed the model, saying it held the promise of delivering much greater relief to the afflicted.

For example, a much more comprehensive programme of services and treatments for asthma would increase the number of people receiving help from 201,000 currently to 572,000 by 2010.

But the average annual cost per patient would fall to $230 in 2010 from $420 in 2000 because fewer asthma cases would become chronic and thus expensive to treat.

And there are wider economic benefits. The current treatment regime results, per asthma sufferer, in a loss to the government of $1960 in taxes and $9280 in other economic output losses, the model calculates.

Under comprehensive integrated care, the loss per sufferer falls to $920 in taxes and $3370 in other outputs because the symptoms are less chronic so people work more and better.

In other words, treating more people earlier is an investment in a healthy society. It reduces the cost of future treatment and lowers the economic cost of ill health. The model demonstrates the same benefits with diabetes.

What's the way forward? Clearly, a huge amount of development work and trials have to go into this methodology. Logically this should happen in District Health Boards.

Counties Manukau has probably the best understanding of the issues of any DHB in the country. It has started to push down this route with 2500 diabetes sufferers in a comprehensive, integrated programme that breaks down the silos in healthcare treatment.

But this and other pilots will only work if there is real enthusiasm and commitment from government. The DHBs will need financial help because under such integrated care programmes, they are making the investment and will reap some of the reward from fewer acute cases later. But since the wider social and economic benefits will not flow back to the DHBs, the government will need to justify the investment by modelling the bigger picture.

There is, though, an even bigger cultural change the government and perhaps the public at large will have to make. This new approach will require much greater involvement of the drug companies because they have some knowledge and skills doctors and health administrators lack.

If the whole healthcare sector can collaborate well together on this - in contrast to some dysfunctional behaviour in the past - then New Zealand has a chance to be at the forefront of developing world-leading intellectual property and software systems in this exciting new field.

Not only would New Zealanders get better treatment but the economy would benefit from more cost effective healthcare, better productivity and exports of the knowledge.

D I S C L A I M E R

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