00:00We can see within those states big differences in cost between some hospitals.
00:08So for common kinds of reasons, for going to a hospital like a caesarean delivery or
00:12a hip replacement or a knee replacement, you can see the most costly hospital and the cheapest
00:18hospital in a state, the costs will vary by $10,000 or more per visit.
00:24And so those costs all add up, that's how we found that figure of $1.2 billion.
00:30And we know that there are lots of opportunities to scale up best practices and learn from overseas.
00:36A standout example is sending people home the same day after some surgeries, which frees
00:42up hospital beds and saves costs.
00:43But there are also ways to use AI, to use workforce skills better.
00:49There are countless examples, but the problem is the way hospitals are funded doesn't support
00:54them to make those changes.
00:55They don't have the resources or the incentives to really get the most out of every dollar.
01:00Yeah, hospitals, if they need to do the work to become more efficient, they are getting
01:04bailed out by state governments if they do run out of cash there.
01:08So the incentive isn't there, is it?
01:10That's exactly right.
01:11We see that the federal government isn't tipping in as much money as it needs to, to meet the
01:15growing costs of care.
01:17But also, as you say, in most states in most years, they end up bailing out the hospital
01:22system by a lot.
01:24And that's because the budgeted money isn't realistic.
01:28They'll project often that funding in the system is going to go down in the next year,
01:32which almost never happens.
01:33So on average, over the last decade, state and territory governments are tipping in 6%
01:38extra at the end of every year.
01:41And that creates all of this uncertainty and instability in the system, with hospitals not
01:46knowing what their next budget is going to look like, often until very late in the financial
01:50year.
01:51So they don't have that security and certainty to invest in productivity improvements.
01:57And importantly, they anticipate another bailout.
01:59Rationally, they focus more on wait times and other things, instead of financial management,
02:05and getting the best value for taxpayers.
02:07So Peter, how would you describe the strain that hospitals are under?
02:12Well, it is really troubling.
02:14We've seen in the last decade, on average, an extra $3 billion go into the system every
02:20single year.
02:22And yet hospitals are still under great strain.
02:24So we see wait times are increasing.
02:28Emergency departments are often full to overflowing.
02:31And staff report that they're stressed and burning out.
02:34So that's why we need to really reset the financing of the system and build in stronger incentives
02:40to make care more productive, because we know that no matter what happens, there's going
02:44to be more public hospital care and more spending is going to be needed.
02:48But we really need governments to come together and make a deal to set the system up for success.
02:53And that means reinvesting that $1.2 billion, which could fund an extra 160,000 visits every
02:59year, and really setting up the system to get the most out of that growing investment to meet
03:05the growing care needs of Australia.
03:07And what's your reaction, Peter, to Prime Minister Anthony Albanese writing to the States
03:12and Territories to rein in spending if they want a funding deal on it?
03:16Well, I know that states and Territories are pretty grumpy, because since the Federal
03:23Government imposed a cap on its spending growth, they've shouldered three quarters of the growing
03:27cost of hospital care.
03:30But at the same time, the Prime Minister has a good point.
03:33If you want to invest billions and billions of more investment in a system, I can understand
03:39the Prime Minister wanting some reassurance that we're putting policies in place to bring
03:44cost growth under control and get the best value for money.
03:48And so we've proposed that governments should come together.
03:51Ask the Independent Pricing Authority to come up with new funding rules that ensure we're
03:56funding best practice, efficient care.
03:59And I hope that will give the Federal Government the reassurance they need to tip in the significant
04:04extra investment which is needed.
04:06Care-sized.
04:07For more information, please visit the Federal Government of the United States.
04:09Thank you, the Federal Government of the United States.
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