Kevin Rudd rescues small-town medicine
By Simon Benson
The Daily Telegraph
March 24, 2010 12:00AM
PRIME Minister Kevin Rudd has performed the first backflip of his $50 billion national health reform, conceding he may have to change it to save small and rural hospitals.
The decision means that Mr Rudd has guaranteed the future of 118 NSW hospitals that The Daily Telegraph revealed last month would struggle to survive under his reforms.
It is also an admission by Mr Rudd that his casemix formula, which funds hospitals for the services they perform, may not work for everyone.
During yesterday's televised debate with Opposition Leader Tony Abbott, the Prime Minister conceded, under pressure from the states, that the activity-based funding model would not be suitable for smaller, mostly rural, hospitals.
Instead, Mr Rudd revealed for the first time that he would now consider block-funded grants for smaller hospitals - the way they are already funded by most States.
The Daily Telegraph has learned that in NSW alone the Federal Government could face a potential bill of $800 million to $1 billion to fund the gap between an activity-based funding and the real cost of maintaining smaller hospitals with fewer than 50 beds.
"What we would propose under our activity-based funding formula, which I thought was actually a formula backed by the Opposition - I might have got that wrong - is that it would take into account all the local costs in rural areas and the rest to make sure it works," he said in the debate.
"But if that doesn't (work) then of course we'd look at a form of national block funding, which was able to underpin the continuation of smaller rural hospitals in the future. They have a vital part in the future delivery of health services to Australians." Australian Medical Association president Dr Andrew Pesce confirmed it was the first he had heard of the change of policy.
But he said the AMA had been warning the Prime Minister of concerns about activity-based funding, also known as casemix funding, since the policy's release.
"Even with the weightings and extra loadings to allow for casemix funding . . . they tried it in Victoria and South Australia and it didn't work," Dr Pesce said.
"I don't know what they have been saying behind the scenes but I don't believe they didn't know about this.
"It was clear that they had to announce alternative funding to regional hospitals. It is of great reassurance to us."
Opposition leader Tony Abbott said that Mr Rudd's health reform policy was being made up as he went along.
"He has performed a complete somersault. He now concedes that casemix funding won't work without massive adjustments for smaller country hospitals. If he had thought it through in the first place he would not have fallen into this trap," he said.
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