Healthcare management principles and practices

Healthcare Management

Australia's health care system is funded and administered by the national, state, and local government. The initiatives by these levels of government are also supported by private health insurance schemes (Australian Bureau of Statistics, 2012). The Australia's Medicare is funded and administered by the medical services, prescription pharmaceuticals, and hospital treatment. The Australian and territory governments deliver population health programs, community health services, health and medical research, mental health services, and health workforce and health infrastructure. The Australian government primarily funds health services; regulates health products, services and workforce; and national health policy leadership (Australian Bureau of Statistics, 2012). The delivery of healthcare services and management of public health services is the sole responsibility of the states and the territories. This implies that public hospital, community health, and public dental care are a responsibility of state and territorial governments. The state and territorial governments also regulates healthcare providers and private health facilities (Australian Bureau of Statistics, 2012). Local governments normally deliver environmental health programs. The public health delivery system is optimally supported by private health insurance. Not so many doctors and allied health professionals are employed by the government. In fact, many of them are in employed in private practice.

Australia's health care system is funded through general taxation, private payments, and statutory insurance levy. The bulk of health revenue comes from public sources and to be specific through general taxation. This includes Medicare levy that is calculated at 1.5% of taxable income for those above a certain income threshold (Healy, Sharman & Lokuge, 2006). An additional 1% is surcharged for high income earners who choose not to buy private insurance cover for hospital treatment. Some other taxation avenues have since been abandoned to and good and services tax (GST) introduced (Healy, Sharman & Lokuge, 2006). The GST revenues assist assists states in providing essential services that fall under their jurisdiction like the healthcare services. The revenue used by state governments in providing health services are also attained from taxation on property and employer's payroll.

Apart from taxation, health care service delivery is also funded by out of pocket payments. This refers to payments made by individuals at the time of care. Non-governmental funding of health care in Australia is derived from out of pocket payments. As a matter of fact, in 2003-2004, AU$15.9 billion was derived from non-governmental funding of health goods and service (Healy, Sharman & Lokuge, 2006). A whooping 31.4% of this was spent on pharmaceuticals, 20.1% on dental services, 9.9% on medical services, and 13.5% on medical aids and appliances (Healy, Sharman & Lokuge, 2006). Out of pocket expenditures have since risen in real terms as a percentage of sources of health expenditures.

Voluntary health insurance is also used to fund health care delivery services. Members of private health insurance can insure against the costs of treatment and accommodation as private patients in hospital, for the gap between the Medicare benefit and fees charged for inpatients and for ancillary services (Healy, Sharman & Lokuge, 2006). Insurance companies can enter into a contract with hospital and individual practitioners. Primary medical care provided by doctors is not covered by private insurance. Private health insurance funds are not used to cover the costs of out-of-hospital medical services provided by medical practioners after the introduction of Medicare in 1984 (Healy, Sharman & Lokuge, 2006). Ancillary items whose costs are not covered in the Medicare are to some extent covered by the private health insurance funds. These ancillary items include dental and optical services, physiotherapy, chiropractic and appliances, and prescribed medicines. The introduction of Medicare saw the use of private health insurance fall substantially.

The health portfolio has to compete with other portfolios to maintain or increase its budget share. Commonwealth spending on health is determined by commitments under Medicare, Pharmaceuticals Benefits Scheme, and the Australian Healthcare Agreements (Healy, Sharman & Lokuge, 2006). The Commonwealth Grants Commission negotiates allocation of general purpose funds by the Commonwealth to the States. Just as has been enumerated initially, state government funding for healthcare mainly comes from general taxation; block grants and specific purpose payments from the Australian government; funding from state fiscal resources; and funding from non-governmental sources. A state Health Departments budget must be within its budgetary process. Health grants to the states from the Commonwealth are disbursed based on population formula and performance measurements. States that secure large health grants are more likely to suffer reduced revenue from the Commonwealth. Some of the grants given to individual states are subject to fiscal equalization (Healy, Sharman & Lokuge, 2006). This equalization done by the Commonwealth Grants Commission is meant to ensure that all states are capable of providing adequate health services without levying higher taxes on the citizens. Under the Australian Health Care Agreements, public hospitals are a state responsibility. The Commonwealth therefore provides capped prospective block grants to the states. Agreements are therefore reached on basis of the level of Commonwealth involvement. In this regard performance indicators and service targets have been set out. This gives states some considerable flexibility in resource allocation to hospitals (Healy, Sharman & Lokuge, 2006). States often encourage patients to see private doctors who bill Medicare instead of attending state run public hospitals by offering incentives. Salaried medical officers are employees of hospitals and are therefore paid salaries to work at the hospital full time. Visiting medical officers are just but independent contractors and are paid for services they render.

The Medicare Benefits Schedule (MBS) offers financial assistance to patients to cover costs of services rendered by medical practioners, participating optometrists, practice nurses, dentists, and other allied health professionals. The Pharmaceuticals Benefits Scheme (PBS) ensures that those who are eligible for Medicare get affordable access to a wide range of necessary cost-effective prescription medicine. Eligible patients not having Health Care Card, Pensioner Concession Card, or Commonwealth Seniors Health Card are required to pay up to $34.20 for each prescription item for medicines listed on the PBS. Under private health insurance, health insurers may offer policies that cover the above costs of the prescription items as part of hospital treatment. The National Healthcare Specific Purpose Payments (SPPS) enables states to fund public hospital and health services. It has since been replaced by National Health Reform funding. National Partnership Agreement funds the delivery of specific projects or reforms by states and territories. Hospital reform, preventive health, and workforce reform fall under NPA.