Implications for New England from health reforms

I have just finished a post on my personal blog, Unpacking the Rudd Government health care changes. I wrote it to try to clarify my own thinking.

One of the problems for New England from the changes is just what the changes might mean at local level. This is quite complicated, but I think that locals need to watch this like a hawk. I thought that I might tease this out a little, taking Bellingen Hospital as a case study.

By way of background for those who don't know Bellingen, the services at the local hospital have been cut back. The fight now lies in the best way of recovering some of them, preventing further erosion.

The new health care approach provides for direct funding to local hospital networks. Generally, this will be on an activity basis - a specified price paid for a particular type of service delivered. The more services, the more paid. However, there is provision for bulk funding for regional/rural hospitals in some cases that might otherwise be disadvantaged under the arrangements.

In addition to these changes, the Commonwealth is taking over full responsibility for primary health care and for aged services.

Now what might this mean for Bellingen and the surrounding area? Well, based on my experience we can put forward some tentative conclusions:

1. The decline in services offered at Bellingen hospital means a decline in the potential revenue from activity based funding.
2. The ability of a hospital network to access bulk funding depends upon the way the network is defined. A network that includes a relatively large base hospital such a Coffs is less likely to receive bulk funding, more likely to be on a fee for service basis. This applies across the whole network. In this event, the capacity of smaller hospitals to get any extra cash will be reduced because it means taking cash away from bigger hospitals who have "earned" that cash from bigger volumes of services.
3. This adds to the urgency for Bellingen Hospital to re-build its service offerings in advance of any move to the new arrangements. It's now become an absolutely time critical issue.
4. The issue of just what local hospital network and the boundaries of that network Bellingen might belong to also becomes quite critical.
5. Given that the existing area health services are to be abolished, this will affect their planning and willingness to do new things. I do not mean this in any way as a criticism. It's just going to add to inertia.