The Rudd hospitals reform is, hopefully, the first part of a broader strategy for health reform. While it’s disappointing that he has decided to tackle health system problems in a piecemeal way (hospitals, then primary care, then prevention and so on), it is a pretty good start.

Of course, there are questions about the plan — will the states play ball? Are there enough super managers and clinical leaders to run 200 or so hospital networks? Will the system be even more fragmented than now?

These are all valid questions, but we should focus on the real reform underlying it all rather than the detailed implementation issues. The real positives in the Rudd plan include:

  • Clear accountability at the Commonwealth level for the system into the future including for the standards of the facilities and the teaching and research that they provide;
  • Much greater clarity for public hospitals about what is expected of them and certainty about their budgets, which will be based on real measures of activity; and
  • Ability for local communities to compare the performance of their local hospitals against others and to deal with a local management group who can be expected to do something about it.

What could he have done better? He could have announced his primary health care reforms first. Fixing primary health care will have enormous benefits and affect nearly all of us at some point in any one year —  there are well over 100 million GP consultations alone in any year whereas only about seven million hospital admissions. Primary care, of course, is much broader than GP services and is more complex with Commonwealth, states and non-government organisations all major players yet very much unco-ordinated.

What else is missing? The hospitals reform does not deal with the private health insurance mess. The opportunity has been missed to roll up the massive private insurance subsidy into the overall hospital funding pot and let the local hospital networks purchase the health services from private or public hospitals. People could still take out private insurance to meet their particular circumstances or service preferences.

Why would the states sign up to the plan? Ultimately the states are the winners from the plan. The commonwealth will carry the risk for the escalation of costs of an ageing population and ever-increasing technology for health interventions. The Commonwealth will take responsibility for building new hospitals and maintaining the ones we have. Best of all, the Commonwealth will clearly be in the firing line when the system fails to meet expectations.

So all in all the Rudd plan, while not perfect, is a positive step forward.