PM reveals national hospital plan

PRIME Minister Kevin Rudd has released his landmark plan for the ailing hospital system, saying it will end the blame game with the states.

Under the plan, the commonwealth would be the dominant funder of hospitals, contributing 60 per cent of all costs compared to the current 40 per cent.

The prime minister said his plan would be put to the states and territories at the next COAG meeting on April 11.

If they do not agree, Mr Rudd will call a referendum before or at this year's federal election "to give the Australian government all the power it needs to reform the health system".

"Today we're delivering on the most significant reform of Australia's health and hospitals system since the introduction of Medicare almost three decades ago," Mr Rudd said in an address to the National Press Club in Canberra.

Mr Rudd said the reform package would deliver a health and hospitals network that would provide better health and better hospitals for all Australians.

It would be funded nationally and run locally, Mr Rudd said.

"For the first time, eight state-run systems would become part of one national network," he said.

"The Australian government's decision to take on the dominant funding role for the entire public hospital system is designed to end the blame game, to eliminate waste and to shoulder the funding burden of the rapidly rising health costs of the future," Mr Rudd said.

He said his message was to work with the government, doctors and health professionals who wanted reform.

"If the states and territories do not sign up to fundamental reform, my message is equally simple," he said.

"We will take this reform plan to the people at the next election along with a referendum by or at that same election to give the Australian government all the power it needs to reform the health system."

Mr Rudd said this would give effect to his promise at the last election.

Under the government's plan, the hospital system would be run through local hospital networks with local professionals given the necessary powers to deliver services to their local community.

He said the government would take around one third of GST revenue which would be placed in a special fund to be spent only on health and hospitals.

"The Australian government will take on the dominant share of the future funding demands of the system," he said.

"At the moment we pay around 35 cents in every dollar of public hospital growth funding. Under our reform plan, we will be funding around 60 cents in the dollar."

The current healthcare system was "a total mess", with one in three emergency department patients waiting longer than the recommended timeframe for treatment.

"Too many of our public hospitals are struggling as demand on the system is rapidly outweighing supply," Mr Rudd said.

Mr Rudd says waiting lists for similar operations differ significantly between states and cities.

An example he gave was an older man told that to wait a year for a hip replacement, when another patient only had to wait five weeks.

"Two different people, both in capital cities, but very different standards of care."

Mr Rudd says the new network will deliver a set of national standards, including access to elective surgery.

"This means both (patients) would get their operations done within a similar timeframe."

"If one of them can't get it at their local hospital then the local hospital network will find ...a bed at another hospital...or with a private hospital."

Mr Rudd said the plan delivered on a promise to "end the blame game" on health.

"Today, I honour that commitment, each and every word of that commitment," he said.

Mr Rudd quoted Treasury figures showing that by 2045/46, spending on health and hospitals would consume the entire revenue raised by state governments.

"This means states will not be able to fund their health and hospital systems let alone meet their other responsibilities," the prime minister said.

He said the National Health and Hospitals Network contained seven major reforms.

"For the first time, the Australian government will take on the dominant funding responsibility for all Australia's public hospitals from the states because the states simply cannot afford to fund the future growth of the system."

The federal government would permanently fund 60 per cent of the efficient price of every public hospital service provided to public patients and 60 per cent of recurrent expenditure on research and training functions undertaken in public hospitals.

It would also fund 60 per cent of capital expenditure - both operating and planned new capital investment - to maintain and improve public hospital infrastructure.

Mr Rudd said the federal government would take full funding responsibility for all GP and GP-related services delivered outside hospitals.

The third major reform would be the creation of a new National Hospitals Fund worth about $90 billion over the first five years of the new arrangements.

It would be dedicated entirely to hospital investments and is estimated to cost the budget a further $15 billion over the next decade.

A system of national standards for patient care would also be developed, with performance statistics for the nation's hospitals to be published.

"These standards will create a more transparent and accountable health system for the Australian taxpayer," Mr Rudd said.

The fifth major reform involved the establishment of Local Hospitals Networks, which would also in time be funded directly by the federal government.

"This has been a strong and consistent call from clinical leaders across Australia," Mr Rudd said.

Mr Rudd said the way in which the services provided by the Local Hospital Networks were funded would also be reformed.

Payments would be made directly on the basis of an efficient price per hospital service, determined by an independent national umpire.

Currently, the federal government provides block hospital funding to states, who then determine how and where this money is spent.

"This is like providing a blank cheque," Mr Rudd said.