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PC News - August 2017

Improving human services through greater choice and competition

A Commission draft report recommends reforms to improve the effectiveness of certain human services by introducing informed user choice and competition.

Human services – such as health, social housing and family and community services – are essential for the wellbeing of individuals and their families, and
underpin social and economic participation.

The effectiveness of many human services can be improved by putting people who use them at the heart of service provision. In the second stage of its inquiry, the Commission has recommended reforms to six services where user choice and competition could improve outcomes for users.

Why user choice and competition?

Users of human services could make choices over: their provider; the service they receive; and where, when and how that service is delivered. Allowing for these choices can improve outcomes by giving users greater control over their lives and to make decisions that meet their needs, while making providers more
responsive to users’ preferences.

User choice is not always appropriate. For example, a person in the late stages of dementia or experiencing a medical emergency may struggle to make an informed decision themselves. In these cases, governments and providers usually make choices for users, and should do so with a firm focus on the user.

Competition is a means to improving the effectiveness of service provision, rather than an end in itself. Competition can provide incentives to deliver more effective services.

When competition is not possible or desirable, contestability, by mimicking competitive pressures, can deliver many of the same benefits as competition. Sometimes, neither competition nor contestability are appropriate.

Government stewardship is important

Stewardship involves a range of functions that help to ensure service provision is effective at meeting its objectives, and users are protected. Unlocking the potential benefits of competition or contestability relies on careful stewardship by governments. Stewardship arrangements are difficult to get right, and it can be harmful when they fail.

Seventy per cent of people would prefer to die at home

  • Figure: Seventy per cent of people would prefer to die at home. This chart plots deaths in Australia in 2015 by location of death, around half of people died in hospital, around a third died in a residential aged care facility, around one in 15 died in an emergency department, and the rest – less than ten per cent – died at home or other.

    Data source: see Productivity Commission 2017, Introducing Competition and Informed User Choice into Human Services: Reforms to Human Services, Draft Report.

The Commission’s reforms

Better care for people at the end of life

Each year, tens of thousands of people approaching the end of life are cared for and die in a place that does not reflect their choice or fully meet their needs. Most people who die do so in two of the least preferred places – hospitals and residential aged care.

People will benefit from more community-based palliative care services, which assist people who wish to die at home. Better resourced and delivered end of life care in residential aged care could also improve the quality of care.

Fixing social housing

The current two tiered system of financial assistance for people who live in social housing or the private rental market is inequitable, and limits tenants’ choice. The system would be improved if a single model of financial assistance was applied across social and private housing, based on an increase and extension to Commonwealth Rent Assistance.

Social housing should continue to provide a home for people who are not well placed to rent in the private market.

Shifting the focus of family and community services to commissioning

Family and community services are not meeting users’ needs. Poorly designed contracting and contestability arrangements are hindering providers in their efforts to achieve positive outcomes for service users.

Practical changes could shift the focus to improving outcomes for users. These include system planning that builds a better understanding of users and their needs, selecting providers with skills and attributes that help them deliver outcomes and extending contract lengths to give service providers greater certainty.

Smarter data collection and contracting arrangements would assist providers to more effectively deliver services.

Improving outcomes for Indigenous people in remote communities

Although more effective services alone will not address the disadvantage in some remote Indigenous communities, human services are not making the contribution they should. Increasing contract lengths for service providers, developing better planning, evaluation and feedback systems, and improving processes for selecting and managing service providers would help to improve outcomes.

More information and choice to public hospital patients

Many Australians will be admitted to a public hospital at some stage of their life, often for elective (planned) care. Elective patients are often given limited control over the pathway which determines the hospital and clinician that treats them.

That pathway typically begins with a referral from the patient’s general practitioner (GP) to an initial specialist consultation at either a public outpatient clinic or private outpatient rooms.

Public hospital patients should be given greater control over this pathway. This requires removing barriers to patients choosing the outpatient clinic or specialist they initially attend when given a referral by their GP.

Improved public reporting on individual hospitals and specialists would support greater user choice and encourage performance improvements in hospitals.

Shifting public dental towards targeted preventive care

Public dental services do not focus on prevention and early intervention. Public dental patients have little choice in who provides their care, when and where.

Patients’ choice and outcomes could be improved by rewarding preventive care through a new consumer directed care model, where users are given the choice of a public or a participating private dental clinic.

Summary of the Commission’s key draft recommendations

  • End-of-life care

    State and Territory Governments should use competitive processes to select providers of additional community-based palliative care services. The Australian Government should remove restrictions that limit >access to palliative care in residential aged care, so that people living in residential aged care receive end-of-life care that aligns with the quality of that available to other Australians.

  • Social housing

    Commonwealth rent assistance should be extended to cover tenants in public housing, and increased
    by about 15 per cent. State and Territory Governments should charge markets rents for tenants in social
    housing, and provide additional payments to those in need of additional assistance. Social housing tenants
    should have more choice over their home.

  • Family and community services

    Governments should improve the way they select service providers on behalf of users, and should plan and contract services in a way that puts users at the centre of service provision. Tenders should be held open for longer and governments should announce forward schedules of tenders. Default contract lengths should be increased to seven years, to enable investment by providers and ensure continuity for users.

  • Remote Indigenous communities

    Governments should increase default contract lengths for human services in remote Indigenous communities to ten years (with safeguards in case of serious failure) and better align tender processes for related services. There should be a strong focus on transferring skills and capacity to the community.

  • Public hospitals

    The Australian Government should clarify, in regulation, that referrals to a specialist do not need to name a particular clinic or specialist, and that any specialist can accept a referral to a specialist of their type. State and Territory public outpatient clinics should accept any patient with a referral, regardless of where the patient lives.

    Governments should strengthen and expand their commitment to public reporting on hospital and specialist performance by publicly releasing data and improving the MyHospitals website.

  • Public dental services

    Governments should give users choice over dental provider, and use a payment model that increases the incentives to provide preventive care and rewards high quality care.

    Where user choice is not feasible (such as remote locations) the government should take a more systematic approach to selecting providers and monitoring their performance. Work should begin on data collection needed for the outcomes framework that underpins these reforms.

Introducing Competition and Informed User Choice into Human Services: Reforms to Human Services

  • Read the Draft Report released June 2017
  • The Commission’s final report will be handed to the Australian Government in October 2017.

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