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Dear Minister, please save yourself from activity-based funding

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Fragmented funding, governance and delivery remain major obstacles to health care reform for sustainability

Reforms undertaken by recent Australian governments have their origin in the 2007 federal election campaign. Then Prime Minister John Howard focused the campaign on hospital funding, as an example of poor state governance, by promising to directly fund the Mersey Hospital near Devonport in Tasmania. The newspapers captured the spirit of the move with the headline “PM goads states with hospital takeover”.1 Then opposition leader Kevin Rudd soon countered with his own plan, reported in the press as the “Health buck stops here”.2 As Prime Minister, Kevin Rudd tried valiantly to implement direct federal control of hospitals by linking it to significant funding increases. However, the states, at the decisive April 2010 Council of Australian Governments meeting, won the political battle — they took the money, but rejected direct federal control.3 Not to be completely outmanoeuvred, the federal government did manage to implement a number of centralised control mechanisms, including the National Health Performance Authority and the Australian Commission on Safety and Quality in Health Care. The most intrusive, from…