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How bulk-billed healthcare payments reward quantity, not quality of treatment

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Posted September 17, 2015

With rampaging overall health spending in a system which is geared for quantity over quality, perhaps it is time for change.

Take this example. Mr Jones is a 50-year-old man who goes to see his GP about back pain. He is overweight, smokes, does no regular exercise and has had back pain on and off for a few years. It worsened after some gardening, hence the visit. His doctor has a cursory look at his back and gives him a form for an X-ray and advice to take painkillers.

Within six minutes, the consultation is over, the fee is bulk-billed, with the patient happy that he is not out of pocket, but returns in a week to discuss the results of the X-ray.

The taxpayer has paid for the consultation and the X-ray – a test that is not recommended for uncomplicated back pain – and the patient has received an ineffective therapy. The pain returns a few weeks later after another bout of gardening.

This time Mr Jones goes to another doctor who takes a detailed medical history, noting that Mr Jones’s father died of a heart attack at the age of 54 and that Mr Jones has had high cholesterol. He examines the patient carefully and counsels him about causes of back pain, the need for exercise regimens to strengthen his back and lose weight, his risk of heart attack and appropriate preventative care.

The consultation lasts 25 minutes, and the fee is also bulk-billed.

There is no doubt the second doctor provided Mr Jones with better care and provided the patient with a greater chance of recovery and of preventing further back pain – and time off work. He also helped him understand that he’s at risk of heart disease and provided a plan to reduce this risk.

Unfortunately, healthcare funding is mostly based on the quantity of service, rather than the quality. The first doctor Mr Jones visited sees more patients, so earns significantly more than the second doctor. Both doctors have similar practice and other costs to pay, so the difference in take-home pay is significant.

One problem with bulk-billed fee-for-service payments for healthcare is the effective financial penalty imposed on the many doctors who provide high quality care and the reward for those who don’t.

Half of all Australians have a chronic health condition which highlights the impact this is likely to have on both the health of the population and healthcare costs. Clearly, there is an urgent need to overhaul the way doctors are remunerated to the provision of the best care most efficiently.

This is important for those with chronic conditions which require ongoing care, such as back pain, heart disease, diabetes and others. It is also important for those at high risk of poor health outcomes, such those in country areas including Aboriginal and Torres Strait Islanders, among others.

Ideally, people with chronic diseases would enrol with their doctor of choice who is paid an annual amount by Medicare to co-ordinate the care of that patient with some (likely smaller) fee continuing to be paid by Medicare for each visit.

The advantage is that doctors who deal with the health problems of their patients and help to keep them healthy, will end up earning more, promoting effective and efficient healthcare.

Additionally, performance-based payments should be considered so that the type of care provided would be assessed and doctors providing high quality care as recommended by clinical guidelines, could be paid more.

Performance based payments are used in other countries, and much can be learnt from them about the traps and the benefits of this approach.

GP payments have risen only slowly over recent years, so that doctors feel pressured to see more patients in just to maintain their income relative to inflation. The present freeze in GP payments will add to this pressure.

If we want high-quality care, we need to change our health funding approach to stop discouraging it.

Our health depends on it.

Source: George Institute

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