Big bold new digital hospitals might be  to our future healthcare needs what, to some extent, coal fired power stations ended up becoming for our energy sector


Like the energy sector, healthcare paradigms are changing rapidly. Unlike the energy sector we haven’t even started to argue about why we aren’t planning and designing for a drastically changed  future in healthcare we all know is coming.

The energy sector will not be recognisable in a few years as we eventually settle on some sort of transition to a mix which will include a significant component of renewable energy. Underpinning that change has been the rapid rise in the cost effectiveness and reliability of renewable technologies, as much as a drive to reduce our carbon footprint. We haven’t managed that change well yet, but it’s at least accepted that the change is upon us and will have to be managed better.

In healthcare, the paradigm change is potentially even more drastic. It involves a rapid shift in our current structural set up to meet the demands of acute illness, to one which will be able to cost effectively manage a lot more chronic illness. The former was managed reasonably well through fee for service funding of our primary care sector (GPs) and a reasonably strong program of hospital development to meet growing population needs in certain regions.

But while energy strategy is being forced to the table of change, our current healthcare strategy feels stuck in a 1970s electricity grid model, in which hospitals are the base load coal fired power stations. Back then, coal power stations were the core of the future needs for electricity on the mainland. In Tasmania, replace base load coal stations, with giant  hydro-electric dam projects. Back then both were huge,  challenging  and very expensive (billions) engineering projects which governments could be proud of (maybe not the Gordon Dam project from an environmental perspective, but from an engineering perspective, an amazing feat).

The other important change in healthcare that is upon us is the facility that digital technology is likely to start providing us to connect all aspects of our system and patients, and the entry of the giant global platforms into health, which is likely to skew a previously asymmetrical information model in health strongly more towards the patient.

Healthcare has thus far failed to make the digital transformation journey that markets, like finance and travel, have already travelled far down, but we are on the cusp of that journey in health as we get more on top of the complexities of risk and regulation and as the technology gets better and better. And it looks like it will be very empowering for both patients and governments who manage health.

Why, if we know that these changes in healthcare are upon us –  that no amount of large digitally enabled hospitals will help us in the management of the impending chronic care tsunami – are our politicians still selling the building of new hospitals as their key plank of  the future  of  our healthcare system?

In the future we will likely need less hospitals overall, and likely ones set up to be smaller, more local, and more agile. In the future we will need a connected primary and allied healthcare system to manage chronic health. Someone with Alzheimers, diabetes or Parkinsons, isn’t going to benefit much from what hospitals do best.

But if we don’t manage chronic care downstream in the healthcare system, where these conditions can be effectively managed by GPs and a cohort of connected allied health and community health professionals, we will need more hospitals – manage the seriously end of life stage ill. That is healthcare system fiscal suicide. And both State and Federal governments know it.

There are plenty of highly authoritative and, even government sponsored, reports which are warning us of the need for more change. The Productivity Commission has been banging on about such change for years, as has the Australian Institution for Health and Welfare.

So why so little change? Why are we obsessed with building big new hospitals, and not trying to crack the more relevant problem of networking our primary care assets in a manner that will make downstream management of chronic care a lot more effective. Why don’t we look at the examples overseas, in some US HMOs and some smaller Scandinavian countries, where effective vertical and connected management of a healthcare ecosystem has resulted in quite a rapid reduction in the need for bigger hospitals. In some of these cases there has already been a net reduction in hospitals.

The reason these ‘experiments’ (not sure you could call Denmark an experiment) have worked is that in each case the whole ecosystem is managed by one entity, and that entity is focussed on health outcomes of patients longitudinally, not just treatment at point of care, as our system is.

The reason they are focussed on outcomes is simple. It’s exponentially more cost effective. In its rawest form, if you can keep a lot more people out of hospital, by better management of their health in the community, you will save your system a lot of money. And if you can get them out of hospital much quicker, again, because of your community and primary care network effectiveness, you get the same effect on the other side of a hospital visit.

This has always been the case for healthcare. Hospitals are our major cost. But as we move to having to manage chronically ill older populations on mass versus managing acute illness the costs of keeping this structure in place will spiral quickly out of control.

Someone needs to put a stake in the ground. But who, how, and when?

Who will lead and then manage such an enormously complex and high potential for catastrophe change to our current healthcare system platform?

It’s very hard to identify where that leadership might come from at present given the stance each of the major political parties took on health in this month’s election. Both  parties still harbour what  looks like a clear misunderstanding on where the opportunities of digital health transformation lie.

The issues in changing the system are, of course, extremely complex. They involve a lot of structural change for both government and industry and a lot of change in the flow of money and jobs. It’s going to be hard.

A big issue is that we’ve built a system that is finally finding it’s mojo in building big, digital and quite impressively capable hospitals around the country. The problem is that our whole state by state infrastructure, is hitting its straps on this capability at the wrong time – when we need to think about less, smaller and agile hospitals that are better connected and integrated to our primary care sector.

How do you start transforming state health departments whose whole existence and culture relies in large part on their hospital building capability?

As a younger journalist I was sent to Tasmania to interview the then head of the Hydro Electric Commission (HEC), who had just finished the Gordon Dam project, and was planning several new and similar ventures. What I found was an organisation of highly intelligent, passionate and committed dam builders. They were smart and engaging professionals. But they only knew how to do one thing – how were they supposed to self reflect enough given their centre of gravity, to see that the age of building giant dams in Tasmania was nearing its end. Most of them wouldn’t have jobs in Australia within the next decade. That was a very difficult time for the Tasmanian government and people. We don’t want that in healthcare.

The problem may not be as bad for state based health departments. Potentially hospitals are never going away like coal fired power stations might, one day. They just need to adapt their form and hierarchy to a very different future.

But culturally there is massive change. Today, tertiary and primary care are two tribes, culturally very different from each other, with different priorities and different outlooks on our digital future. Bringing that together is a major change management problem, made harder by our federated health structure.

If your main job is building big hospitals and they are getting bigger and bigger, more expensive, more complex, and need more and more specialists to keep building them,  how do you wind that back to something a little more pragmatic to meet the actual future needs of the system?

Ultimately such change has to be initiated where  the upstream source of funds to build the hospitals starts – the Federal Government. The people who were just a few weeks back championing bigger hospitals as a key plank of their election platforms.

In general terms our funding of healthcare has the Federal Government funding the primary healthcare system, mainly through the MBS, and states funding tertiary care, or hospitals, through agreed Federal funding rules.  In the end all the money is coming from the commonwealth. The Federal government will have to face up to reality sooner or later and evolve this set up somehow.

The only policy that emerged in this current election that had any hint of addressing  this issue was the promise by Labor to establish and independent healthcare  reform commission that would oversee ‘big structural reforms in health’. Didn’t hear about it? It sunk pretty quickly after its announcement just over two months ago and has potentially sunk even lower now given the election result.

There are a lot of other issues imbedded in our political psyche which will need to be addressed as a part of this change.

GPs, who are at the hub of an effective network to manage chronic care, aren’t paid for outcomes they are paid for seeing someone. They are entirely freaked out by shifting from a fee for service payment model, which is simple and transparent, to a model which is much more grey scale in how they would be paid. They want to do change, but after 30 years of stable system, and after years of being shafted on pay freezes by the Federal government, who can blame them for wanting to resist such a change? So far, pilots of mixed funding for chronic care have failed spectacularly for being way too complex. There is a lot of work to do and neither side of government have really showed any interest in the GP sector, partly because they don’t see it as broken. That’s the problem with a changing future and politics. If something isn’t broken, but it’s going to be, it is that much hard to change.

The big hospital vendors and builders naturally would not be happy with any change to the current trajectory of our hospital centric system just yet. Many of these vendors are very large global entities that build and integrate highly sophisticated electronic medical records (EMR), patient administration systems (PAS) and other inter and extra hospital administration and communication systems. They are all billion dollar ventures.

To build a big new hospital you can pay more than one billion dollars just for a new EMR and PAS that talk to each other. And we have a lot of hospitals with these systems already which are on long term contracts.

The good news is that as the world changes, these global vendors tend to adapt. They won’t be entirely surprised or disrupted if Australia shifts its emphasis on different types of installations in the next decade.  They see these changes already in the US and Europe. But for now, these organisations are in deep and complex relationships with each state government in building and managing these systems.

There is a fair bit of debate about how our national digital health strategy, once again directly mainly Federally (although with good hooks into each state) isn’t pointed in a manner that might most effectively accommodate a shift from tertiary to primary care connectivity. If our future is enabling our general practice sector to network effectively with allied and community health to longitudinally manage patients, rather than point and shoot when a patients visits them for something that has gone wrong, then our digital health strategy is potentially overweighted to systems which don’t address this challenge.

The My Health Record (MHR) might be the most obvious example of misdirection. It is an old world centralised honey pot data base that will likely never be agile enough to manage GPs and their allied and community peers on the run with patient over time. Much more likely a solution for this problem will be distributed health databases talking to each other and directly to the patient via their mobiles, using open APIs and new enabling distributed resources such as the newly emerging standard for web sharing of health data, Fast Healthcare Information Resource (FHIR).

If our national agency for developing and implementing digital health strategy remains focussed on something like the MHR and tries to keep pushing it because it’s cost so much to implement and has some political cache now, we are going to go slow. Much better would be a direct focus on the problem we are moving to in healthcare and building a standards and governance environment for industry and the primary care sector to implement far more powerful distributed and connected technologies.

Everyone sees this problem, from the Federal secretary of the Department of Health, to our various State based Health secretaries and eHealth CEOs and directors, to our peak clinical bodies, such as the president of the RACGP.

It’s just who is brave enough to get us started on this journey and how. Without causing so much angst that they are closed down by the various interests and lobby groups that are firmly established in our current paradigm of delivering health.

Who breaks first bread on this problem.? And when?

Wild Health Summit on June 25 will be dealing with all the issues in this article via a series of panel debates with key stakeholders including the ADHA, State governments and industry. Tickets HERE. Program and speakers HERE.