The States and Territories report on health funding, released last weekend, found that the Commonwealth is short-changing them to the tune of $1.1 billion per year in hospital funding.

Not surprisingly, state and territory governments are asking that this funding be repaid. Perhaps a better option would be to put this funding into primary care, to address the real reason why our public hospital system is struggling.

According to The Australian Institute of Health and Welfare (AIHW), almost one in ten people who end up in hospital shouldn’t be there. In research published earlier this year the AIHW demonstrated that most unnecessary hospital admissions could have been avoided by better primary care.

This issue is not new but as our population ages and the numbers of people with chronic illnesses increase, the need to address the underlying problems of our health system grows. In a recently published paper A New Approach to Primary Care, the Centre for Policy Development argues that we need a radical rethink of how we fund and deliver health care.

Rather than continually ploughing money into hospitals, the paper advocates re-orienting the health system towards primary care. This is supported by a wealth of international evidence that a health system focussed on primary care achieves better health outcomes, lower rates of all causes of mortality (including heart disease and cancer) for a lower overall cost than a health system focussed on tertiary or hospital care.

The $1.1 billion shortfall provides an opportunity to inject some much needed resources into the primary care sector. This funding could be used to establish primary care centres to provide consumer-focussed, coordinated and integrated primary care to their communities. This would help prevent the development and progression of chronic diseases and reduce the high levels of inefficiency within our current hospital-focussed system.

Continually pouring money into the hospital sector, without addressing the underlying factors driving demand for hospital care, makes no health, social or economic sense. Primary care reform is the single most important strategy for improving the health of our population and ensuring that our health system remains sustainable into the future.