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19 Mar 2014

The Abbott Government is considering a fundamental shift away from the fee-for-service model of GP remuneration as part of an overhaul of health funding.

Fuelling speculation that the Government is considering major changes in the way it pays for primary health care, Health Minister Peter Dutton said the Government was “open to a conversation” about changing the way GPs are paid for their services, flagging the possibility doctors might in future receive an annual fee for caring for their patients.

Mr Dutton said New Zealand’s “blended” approach, under which doctors receive capitation fees and patients are charged co-payments, was being examined.

“I think there is an opportunity for us to perhaps look at doctors and other stakeholders in the conversation about blended payments,” the Minister told a General Practice Registrars Australia (GPRA) conference on 6 March.

“There are international examples. New Zealand is perhaps the closest relevant example to us about the way in which they provide support to their GP network, which is a system of blended payments, probably skewed more towards capitation fee-for-service.”

AMA President Dr Steve Hambleton told the Australian Financial Review the Association was not opposed in principle to changes in the way GPs were remunerated, but said it was the wrong focus for efforts aimed at controlling rising health costs.

“The Minister has been floating a lot of ideas,” Dr Hambleton said. “We have to think about what is driving costs. Chronic disease management is the key, and we have to ensure we do that well.”

In his speech to the GPRA conference, Mr Dutton acknowledged the significant and growing burden of chronic disease, and said the health system needed to be fundamentally recast if it was to continue to be effective.

“Without strengthening our health system, it will fall short of servicing the nation’s health needs over the coming years and decades,” he said. “We need to take what is currently a 1980s model and transform it into an effective, efficient and stable system of health.”

The Minister said the fact that 10 per cent of the population used 46 per cent of Medicare-funded services showed the system was not working for them.

He said general practitioners were central to the Government’s plans for a remodelled health system better able to tackle the challenge of lifestyle-related diseases and health risks, such as obesity and diabetes.

The alignment of incentives in the capitation system of remuneration is seen by some as better suited to treating and preventing complex and chronic disease, by paying doctors an annual fee for each patient enrolled in their practice, rather than being paid according to how often they provide treatment.

According to Melbourne Institute of Applied Economics Senior Research Fellow Peter Sivey, in an article on the Croakey website, “GPs do not receive more money for seeing their patients more often and, indeed, will benefit from lower costs themselves if patient health improves and they require less care in the future”.

But, Mr Sivey added, the system is not without drawbacks: “For capitation to work, patients have to be enrolled in only one practice – say goodbye to the convenience of visiting one doctor near your workplace and one near home.”

Emeritus Professor of Medicine at the University of New South Wales, John Dwyer, echoed Dr Hambleton’s concern that the Government’s apparent focus on models of GP remuneration were beside the point when seeking to address fundamental issues of health funding.

He said the Government’s ‘compartmentalised’ focus on primary health care missed the main point, which was that “cost effectiveness can only be tackled with a whole of system analysis, not just a focus on the Federally funded Medicare program that supports our delivery of primary care”.

In a piece on the blog, Pearls and Irritations, Professor Dwyer said giving primary care the support needed for effective prevention programs “is the most important initiative we need to implement in Australia. Around the world, the trend is to establish primary care systems that encourage citizens to enrol in a wellness maintenance program and benefit from the delivery of health care by teams of health professionals working as “first among equals” in the one practice”.

“Many younger doctors considering general practice would prefer to move away from the traditional fee-for-service payment system to salaried or contractual payments. In New Zealand, over 85 per cent of GPs have voluntarily forsaken fee-for-service payments in favour of guaranteed remuneration in a capitation model,” he said.

Adrian Rollins

Published: 19 Mar 2014