A historic, geographic, cultural, and economic guide to Australian health care.

This is the first in a series of articles that will explore the health care systems of countries around the world. To begin the series, the President of the Royal Australian College of Medical Administrators describes the current status of the health of his country's people, its health care delivery system, and how it has responded to historic, geographic, cultural, and economic factors that characterize the growth and development of Australia.

In this island continent, approximately the same size and shape as the United States, the aboriginal people existed in isolation for at least 40,000 years as nomadic Stone Age people. In 1770, Captain James Cook of His Majesty's Royal Navy explored the east coast of the continent, and, in 1788, Governor Arthur Phillip established the first European settlement in Botany Bay, just south of Sydney. The primitive and peaceful aboriginal people offered little organized resistance and were systematically dispossessed of their land and, with it, of their cultural heritage.

Today, some 200,000 aboriginal persons with dark skin survive and comprise less than 2 percent of what is essentially a light skin population of some 17 million. Their treatment at the hands of the conquering European settlers and subsequent generations of our forbearers remains a national disgrace that has been seriously tackled only in the past two decades. Aboriginal land rights and other specific remedial programs offer some solutions to the problems and injustices that have reduced the large number of these proud people to urban fringe dwellers.

It took more than a generation for European settlers to move west across the continent and establish major towns on coastal inlets and harbors with a source of fresh water. During this period, the sovereign states of New South Wales, Victoria, Queensland, South Australia, Tasmania, and Western Australia, as well as the Northern Territory were established, each with its own sovereign government. It was not until 1901 that the states were federated and Australia became one nation.

Our system of government is modeled on the British Westminster system with an upper and lower house in the parliament of each state and at the federal level. The two major political parties are "Labor," derived from the Trade Unions that were established to protect worker rights, and "Liberal," which is a party more aligned with business interests. We are a constitutional monarchy, but there is a movement toward becoming a republic. We have a constitution that was modeled on that of the United States, but we do not have a written Bill of Rights. Initially, the seat of federal government was based in Melbourne, the capital of the southern state of Victoria. Interstate jealousies prevented this from being a permanent arrangement, and, during the next 20 years, there was argument, then planning about establishing a separate national capital approximately half way between Sydney (the capital of the most populous State, New South Wales) and Melbourne. Canberra, the national capital, was established in southern New South Wales on land designated as the Australian Capital Territory, which is constitutionally separated from the State of New South Wales. The state capitals developed to become major cities; Sydney and Melbourne have populations of between 3 and 4 million people. The nation's population is highly urbanized; the six capital cities of the states contain more than 70 percent of the total population of the nation. Further, the population remains largely centered on the eastern seaboard of the continent. If one draws a line between the coastal resort center of Cairns on the north east seaboard and Adelaide, the capital of South Australia on the southeast coast, the one-seventh of our land mass east of that line contains more than 70 percent of the nation's population.

The two major effects of our history and geography on our health care system are:

* The division of powers and responsibilities between the states and the federal government reflect into health care administration and service delivery. As a result, each of the states is responsible for provision of public hospital services, yet funding of the services is in part provided by block grants from the federal government. The federal government is responsible for the national pharmaceutical benefits scheme to ensure that all citizens have access to prescription medications, and the federal government funds the bulk of fee-for-service medical payments to both private practice-based family physicians and medical specialists. These measures are the cornerstones of "Medicare," our universal health insurance scheme. Funding is a "jigsaw." Aged care, public health, and a range of other programs targeted at specific groups/issues are funded jointly or separately by each state or federally.

* There are significant logistical difficulties in providing a full range of high-quality health care services to people in rural and remote centers. While the major cities boast university-affiliated tertiary referral teaching hospitals that are centers of excellence, comparing favorably with the best centers in the world, and the metropolises are well served by a network of community hospitals, the tyranny of distance mitigates against equal opportunity and access for those in rural Australia. There are base and district hospitals in provincial centers, and, for the more isolated areas, there is support from the Royal Flying Doctors Service, but Perth, for example, the capital of Western Australia, is some 2,000 miles from the nearest major city. The arid, inhospitable nature of much of the continent, combined with its sheer size, are major limiting factors. There is a significant maldistribution of medical practitioners. While there is one doctor for every 570 citizens (more than enough), medical practitioners are concentrated in the large cities and major provincial centers. Because of professional aspirations, social factors, and family priorities, a minority of doctors choose to settle and practice in rural Australia, where the patient-doctor ratio is 1 per 1,200 or greater.

Australian Culture

More than 30 years ago, Australia was dominated by the culture and heritage of our British forbearers. Apart from a small remnant of the original black aboriginal Australians, Australia was "white" British stock. Today, 30 percent of Australians were born overseas or have a parent who was born overseas.

Immediately following the first and second World Wars, there were waves of immigration from the Mediterranean and Central European Nations. Large numbers of Italians, Maltese, Greeks, Yugoslavs, Turks, and, to a lesser extent, people from across the rest of Europe migrated in the hundreds of thousands to settle and be assimilated into the Australian way of life. Following the Hungarian uprising in the 1960s, there was a further wave of central European immigrants, and, after the Vietnam War, there were significant waves of immigration from South East Asia, in particular Vietnam and Cambodia.

Migration has enriched our society, which enjoys a multicultural blend of traditions, yet retains unique Australian values best expressed in the colloquial "a fair go for all, mate." Ethnic tensions are low, and the nation tightly enjoys a reputation for a carefree way of life in a sunburnt country where personal safety is taken as a given. There are low levels of lawlessness, and we treasure the ideal of social justice in an egalitarian society.

We have comfortably accommodated the balance between civil liberties and the public good, as is demonstrated by our strict gun control laws, compulsory random breath testing to detect alcohol-intoxicated drivers, and compulsory seatbelt legislation. These measures have contained and even reduced trauma, injury, and death, producing levels that are the envy of those in North America.

The Australian Economy

Traditionally, our economy has been based on primary agricultural production and mining. We boast of the most efficient agricultural industries in the world and are major exporters of wheat, wool, sugar, rice, iron ore, bauxite, and diamonds.

During the early part of this century, the "manufacturing powerhouses" of the nation were developed in Melbourne and Sydney. More recently, there has been enormous growth in construction and manufacturing to the north in the Queensland capital, Brisbane, and nearby in the major resort centers. Perth has developed rapidly because of the minerals boom of the 1970s and '80s.

Export markets were traditionally oriented to Europe and, to a lesser extent, North America. Now we are focusing our attention on the rapidly expanding markets in South East Asia and the Middle East. Export earning enhancement on value-added products is a major challenge.

In 1992, tourism overtook agricultural products as the number one export earner of the nation. If we are to retain our way of life, we must improve our competitive position by further reforms in our labor market, greater commitment to productivity and quality, investment of national savings in both the service and manufacturing industries, and debt reduction to reduce the burden of interest payments on our balance of trade. Certainly, this is preferable to selling off the national assets, which is the expedient method for debt reduction.

During the 1950s and '60s, there was full employment, low interest rates, and low rates of inflation. By the 1980s, inflation was heading for 10 percent per annum, interest rates climbed to near 20 percent per annum, and there was significant unemployment, rising toward 10 percent of the workforce. During the past 3 years, as the worldwide recession has deepened, our inflation has fallen to near zero and interest rates have dropped to 5 or 6 percent, but unemployment now exceeds 11 percent of the workforce and the economy is only growing at 2 percent per annum.

Because the household sector is the main generator of savings, thrift is essential if we are to finance the capital needs to expand our service and manufacturing industry development. While Japan saves more than 11 percent of household income, Singapore 23 percent, and Taiwan a whopping 31 percent, Australians only save about 5 percent of GDP, instead of the necessary and responsible level of 10 percent. This gap is about A$16 billion a year and adds to the accumulated borrowings of $160 billion. The nation has now achieved major debtor status. Because of interest on the debt, although our export earnings almost exactly offset our import costs, the balance of trade is unfavorable and this year will approach a $20 billion deficit. (An Australian dollar is worth about 70 U.S. cents.)

In the short term, the national priority is job creation, but government and business are both unwilling to further increase the burden of debt by borrowing to stimulate the economy. The room to maneuver is tight, but, in our favor, we have a resource-rich continent; political stability; excellence in education, training, and skills development; and the infrastructure upon which to build.

Not surprisingly, our federal and state governments are critically reviewing all major public expenditure programs in an attempt to reduce costs and diminish the burden of debt. Because public expenditures on health exceed those of education and transport combined, the political focus has been to spotlight the issue of return on investment in health care.

An Overview of the Health of Australians

For more than a decade, expenditures on health services have been stable at 8 percent of gross domestic product, and the marked decline in death rates that has occurred in Australia since the late 1960s has continued into the 1990s. Reflecting these declines, the life expectancy of Australians at birth increased, 73.9 years for males and 80 years for women. The change in the overall death rate and expectation of life at birth largely reflects further declines in death rates from diseases of the circulatory system. However, heart disease and strokes remain the leading cause of death and were responsible for 45 percent of all deaths occurring in Australia in 1990.

While death rates from injuries have steadily declined because of safer work practices and reduced motor vehicle-related mortalities (as a result of compulsory seatbelt legislation, blood alcohol limits for drivers and random breath testing, reduced speed limits, and an aggressive public campaign to make drunk driving and speeding socially unacceptable), death rates from cancers have been steady in recent years and were responsible for 26 percent of deaths in 1990. Vigorous public health campaigns warning about the health dangers of tobacco smoking and the dangers of excessive exposure to sunlight have gained popular support and will in time yield further improvements in the health status of Australians.

The 1990 Australian infant mortality rate was 8.2 infant deaths per thousand live births, and the perinatal mortality rate was 10.3 deaths per thousand total births. These figures have declined slightly in recent years.

Concerning the various risk factors identified as contributing to mortality, morbidity, and disability, onesixth of Australian adults suffer from high blood pressure and more than two-fifths have elevated blood cholesterol. Almost 50 percent of men and more than 30 percent of women are overweight, and, despite a national passion for sport and vigorous health promotion aimed at increasing public participation in sporting and physical activities, about one-third of adult Australians do not undertake any exercise in recreation, sport, or fitness. The smoking of cigarettes is responsible for more health problems than any other drug of addiction, and currently 30 percent of Australian men and 25 percent of Australian women are smokers. Almost 10 percent of men and 3 percent of women consume alcohol at levels that put their health at risk.

There are significant differences in the mortality illness experience and disability rates among various subgroups of the Australian population characterized by age, sex, socioeconomic status, country of origin, and place of residence. However, these differences are substantially less than those between the Australian aboriginals and other Australians. Australian aboriginals remain the least health identifiable subpopulation in Australia. National information about aboriginal mortality is not available. For the regions for which data are available, death rates (after age-standardization) are at least two and-a-half times those of the total Australian population. Overall, death rates for aboriginal males is 3.1 times that of the total Australian male population. For aboriginal females, it is 3.2 times that of the total female population.

An Overview of Australia's Health Services

The combined expenditure by Australian governments and individuals on health services during the most recent financial year exceeded $30 billion, representing 8.1 percent of the gross domestic product. Total expenditures on health services have remained remarkably constant for more than a decade.

"Medicare" provides all Australian citizens with universal health insurance coverage. There is a 1.25 percent additional levy on taxable income, but these monies fall short of the total amount required to cover "Medicare" expenditures, and general income tax monies are used to make up the shortfall. The "Medicare" agreement between the federal government and the governments of the various states and territories was renegotiated so that, from March 1993, the "Medicare" levy will be raised to 1.4 percent of taxable income.

"Medicare" provides universal coverage and access for all Australian citizens:

* Public hospital outpatient care, with no copayment from the individual except for minimal charges on prescribed medications.

* Public hospital-based medical, nursing, allied, and other services for inpatients, with no copayment from individuals.

General practitioner (family physician) and specialist (physicians, surgeons, pediatricians, and other medical specialists) services, with no copayment from the patient, provided the attending doctor accepts a discounted fee of 85 percent of the government schedule of payment for the item of service. Currently, 70 percent of doctors "bulk bill" the government and accept this as full payment. Where the attending doctor elects to render an individual account and charge the government schedule fee or above, the patient and/or the patient's private insurer is responsible for payment of "the gap," but the patient may only insure for "gap payments" on services rendered during an inpatient hospital stay.

Citizens may take out private insurance for coverage of the cost of health care from "the doctor of their choice" and for private hospital care. There are relatively few private health insurance companies operating in Australia, and the cost of the administrative overhead of these companies is not a significant factor in overall health expenditures. During the past decade, there has been increasing general acceptance of "Medicare," and, with economic pressures on families, these factors have contributed to a fall in separate private health coverage from 67 percent to 41 percent of the population.

Although hospital admission for emergency medical care is guaranteed to all citizens via "Medicare," the public hospital system cannot accommodate the total demand for elective admission of patients seeking treatment for surgical and medical conditions. Currently, there are more than 100,000 Australians registered on public hospital surgical waiting lists. Average waiting times vary from state to state and from city to city. Average waiting time for admission is also related to the urgency of the condition for which the patient is seeking treatment. Generally, patients with urgent medical conditions, such as suspected malignancy, are admitted within one month, but patients with disabling and/or painful conditions that are not life-threatening (e.g., severe arthritis requiring joint replacement) may wait one year or more. The Labor government has just announced an initiative to purchase the use of 10,000 private hospital beds for admission of public patients awaiting elective surgery.

An Overview of Arrangements for the Delivery of Health Care The Australia health care system involves three levels of government-- federal, state, and local--as well as public and private providers who may be individuals or institutions. Most medical and dental care is provided by private practitioners on a fee-forservice basis. During the past three decades, governments have been taking an increasing role in the financing of health services, and cost pressures have focused attention on hospitals that account for more than 40 percent of total health expenditures. While the public hospital sector is straining to accommodate the increasing demands of an aging population and an increasing proportion of the population without private health insurance coverage, there is substantial unused capacity within the private hospital sector.

Over the past decade, the federal government and most of the state governments have been Labor Party governments, which are philosophically wedded to the concept of a single-tier system of health care delivery based on "Medicare" and the nation's public hospitals. During the past 12 months, there have been state government elections in which the Labor Party governments have been defeated and the Liberal Party returned to government. However, a federal election has just been held, and the Labor Party was returned for a fifth term in government.

During the election campaign, the Liberal Party advocated policy reform to provide tax deductibility for private health insurance premiums and tax penalties for upper-income earners electing not to take private health insurance coverage. This was aimed at increasing the use of private hospitals and decreasing pressure on public hospitals (as demonstrated by the substantial and growing elective surgery waiting list numbers). Private health insurance remains affordable to many because of community-rated rather than risk-rated premiums.

It is Liberal Party philosophy to increase the gap between the rebatable amount and the full amount for each of the items contained in the government schedule of payments for medical services. Currently, the "Medicare" rebate is 85 percent of the schedule fee. The Liberal Party would have reduced this to 75 percent and restricted "bulk billing" to the medical fees for aged pensioners and other disadvantaged persons holding a health care card. This policy change aimed at reducing the demand for medical services by placing a greater individual responsibility through copayments.

Historically, most medical services were provided on a fee-for-service basis. This remains true for most services provided outside the hospital and for services provided in the private hospital. Over the past two decades, there has been a growing trend to remuneration for medical services provided in the public hospital sector on the basis of full-time salaried staff or part-time "sessional" payments on an hourly rate. A Liberal government would have moved away from centralized wage fixing to a more "flexible" system of individual contracts linked to productivity. It intended to abolish or reduce several existing taxes but introduce a new 15 percent tax on goods and services (similar to the value-added tax) that would not be applied to health services. These proposals proved electorally unpopular. The people chose to return the Labor Party to govern again and preserve "Medicare."

The increased opportunities and range of services afforded by the development of new medical technologies and techniques, the increased demand for health services associated with an aging population, rising community expectations for good health and longevity, and the service demands arising from the spread of HIV have compounded the upward pressure on health expenditures. Government and other funding authorities have responded by seeking to improve the efficiency of health service administration and to critically review health care outcomes. The medical profession is developing clinical indicators to monitor and report on quality (effectiveness and efficiency) of care as compared to national and international benchmarks.

Financing of the nation's public hospitals has traditionally been based on government grants plus hospital generated revenues to cover a total expenditure budget derived from historical data, annually adjusted for changes in the cost of living. We are about to replace these arrangements with funding based on output measures using a modified diagnosisrelated group/case mix funding model for inpatient services and, in the future, for outpatient services. Block grants will still support approved teaching, training, research, and development costs. Funding for hospital capital projects remains a major issue that has not been satisfactorily addressed, so the effect is the application of funds on an ad hoc basis and/or because of political expediency rather than a nationwide rational plan of health facilities, building projects, and equipment purchases.

There is growing political momentum in favor of introduction of administrative reform to more clearly separate the responsibilities of health purchaser authorities from public sector providers. This follows a similar initiative in the United Kingdom that moves "half way' toward full privatization of the public health utility. While other public utilities (power, water, transport, etc.) have been progressively privatized, it is argued that public health utilities should be retained, but reformed to introduce a greater element of competition. The purchaser authorities, acting as proxies for the government, would negotiate a "best value for money" service price and ensure satisfactory standards of care, quality, and service outcomes. Provider hospitals would bid against each other for government funded public patient "business."

As cost pressures inexorably rise, it is inevitable that these and similar measures will be developed and introduced in an attempt to hold costs down. The effectiveness of these proposals is yet to be evaluated, but there are early indications that, in an attempt to control costs by reducing length of hospital stay, outcomes of care may be compromised unless there is early and detailed discharge planning supported by adequate domiciliary services.

The medical profession has an important role in advising the public and our politicians on the ethics of rationing health services. No nation can afford "an open checkbook" system of funding for health care. There will always be the need for priority setting based on ethical principles, including medical urgency and prognostic outcome, in a health care system designed to achieve universality of access, regardless of individual economic means, cultural or social grouping, or geographic location. These decisions can only be satisfactorily taken if we have the capacity for extensive community consultation guided by visionary leaders of impec- cable integrity.

Conclusions

Finally, I will attempt to summarize this overview with my perceptions of the strengths, weaknesses, opportunities, and threats that characterize Australian health.

Strengths

Access to high-quality health care is everyone's right.

* A caring, compassionate society, holding as a central ethos "a fair go for all."

* Adequate funding and excellent cost controls.

* High standards of physical facilities and equipment and welltrained expert personnel, delivering health care services at affordable prices, accessible to all, and of a quality equal to the best in the world.

* Relatively simple and efficient systems of health care administration, with low levels of corruption and profit-focused entrepreneurial activities.

* A sensible focus on health promotion and disease prevention/screening programs with high rates of return on invested time and money (e.g., seatbelt legislation; random breath testing; stringently enforced road speed codes; bans on tobacco advertising; health promotion funded through heavy levies on tobacco and alcohol; high-quality intensive advertising aimed at changing self-destructive behavior, including sunbathing, smoking, speeding, and drunk driving; and directed screening for early detection of cervical and breast cancer, with national linkages in the epidemiology databanks).

* A professional ethic among health care workers to provide high-quality care and customer-focused, personalized attention as a fundamental right for all citizens.

* A strong base for delivery of primary care by general practitioner/family physicians, who selectively refer their patients to specialists in the various branches of medicine and so "gate-keep" on access to costly diagnostic and therapeutic techniques and technologies. There are financial penalties for accessing specialists without being referred by a general practitioner.

Weaknesses

The complexity of the ethics of health resource distribution mitigates against the prospect of a truly informed debate involving a wide cross-section of the community. As a result, political decisions are inappropriately influenced by nonrepresentative pressure groups.

* Australian aboriginals, the indigent poor, and non-English speaking migrants are not so health conscious, engage in risk-taking behaviors, and neither seek nor access appropriate services. As a result of their social, cultural, and economic disadvantages, their standards of living and standards of health are below that of the general population.

* The distribution of services and specialized personnel is uneven. Rural and remote communities that suffer from the tyranny of distance are at a disadvantage.

Opportunities

To selectively introduce new technologies in a cost-effective way. To critically review patterns of clinical practice and achieve greater efficiency and effectiveness from health care interventions. To target disadvantaged groups. To improve the management of both the number and the distribution of health professionals in the medical, nursing, and allied health workforce.

* To improve productive output through multi-skilling and work practice reviews.

* To refine health services administration in an attempt to further reduce duplication, wastefulness, and corruption.

* To restructure the national health insurance entitlement so that private hospital capacity may be better utilized.

* To partially privatize public sector hospitals, with competitive tendering for service contracts, e.g., catering, cleaning, linen, pathology, and imaging.

* To align community expectations of health care with what's realistically achievable and affordable.

* To provide strong leadership to ensure that health industry planning and funding achieve effective and efficient programs of professional training, service delivery, and research and development.

Threats

The worldwide recession, resulting in unemployment, poverty, homelessness,heightened feelings of helplessness, self-destructive behavior, and reduced funding for health care programs.

HIV, which threatens to move beyond the confines of the homosexual and drug-taking communities to widely afflict the sexually active heterosexual community.

Human frailties, including greed and selfishness, mitigating against compassion and kindly care for the disadvantaged, disabled, frail, aged, and indigent poor citizens of society.

* Debased standards of professional behavior expressed as overservicing, overcharging, lack of commitment to patient welfare and quality of service, and other unethical behavior.

* Poor public advocacy regarding the importance of national health and the continuing need for these matters to receive high public and political priority through strong leadership, good planning, adequate funding, and well-executed programs.

* The destructive effects of the exercise of "industrial muscle" by certain union leaders, suffering the effects of extreme ideology and/or delusions of grandeur.

The Australian health care system compares favorably with any other in the world, and our national health strategy documents provide government, of whatever political persuasion, with a comprehensive analysis of relevant information on demographics, needs, utilization of facilities and technologies, professional training and manpower, systems of service delivery, research and development capacities, ethically contentious issues, and our systems of health financing, such that we may plan and implement the necessary innovations to remain a world leader in health and health services.