19
Aug
2018

Making hospitals safer will save taxpayers’ money

by Stephen Duckett


Australia could save $1.5 billion a year on health spending by improving the safety of patient care in hospitals, a new Grattan Institute report has found.

Safer care saves money shows that safer hospital care doesn’t just reduce harm to patients, it also saves money for taxpayers.

One in nine patients who go into hospital in Australia suffers a complication. The report finds that those complications cost public hospitals more than $4 billion a year, and private hospitals more than $1 billion a year. If all hospitals in Australia lifted their safety performance to match the best 10 per cent of hospitals, an extra 250,000 patients would go home complication-free each year and the health system would save about $1.5 billion every year, freeing up beds and resources so another 300,000 patients could be treated.

Public hospitals get extra funding for treating a sicker patient even if the patient became sicker because of a complication suffered in the hospital. But Grattan analysis of Australia’s 20 biggest public hospitals shows that in every case, the cost of complications to the hospital was larger than the extra funding. On average, a complication cost the hospital more than three times the extra revenue it received.

The report concludes that hospitals don’t need extra financial incentives to reduce complications. Instead, they need better information, and accreditation systems that encourage useful improvements rather than ticking boxes. Complication rates and accreditation outcomes should be public, so that governments are held to account. And medical students should learn only in hospitals with lower complication rates.

State governments should make it clearer to their hospitals that improving patient safety also boosts the bottom line. States should give public hospitals – and the public – information on the estimated cost of and revenue from complications. Private health insurers also benefit from lower complication rates: their costs and future premiums fall. Insurers should increase pressure on hospitals to improve their safety performance, through contract negotiations and by making information on complication rates available to their members, either directly or through GPs.

Australia’s hospital accreditation system has failed: it does not improve patient outcomes; doctors dismiss it as irrelevant or a waste of their time; it provides no incentives for excellent safety performance; and accreditation reports are kept secret. Practically every significant hospital safety failure in recent decades – from Bundaberg in Queensland to Camden and Campbelltown in NSW, Bacchus Marsh in Victoria and, most recently, a gas mix-up at Bankstown-Lidcombe Hospital in NSW– has happened in a hospital that had passed accreditation with flying colours.

The report recommends replacing ‘one size fits all’ accreditation with a system based on measurable safety outcomes, tailored to each hospital’s situation.

“Hospitals would no longer be spruced up for a once-a-year visit by accreditation inspectors,” says Grattan Institute Health Program Director Stephen Duckett.

“Instead, surveyors would conduct safety tests without notice, but concentrate on helping hospitals to give safer care.

“And for the first time, patients and taxpayers would have access to detailed accreditation reports on all hospitals, so Australians could hold their governments to account on the quality and safety of hospital care.”

Read the report

Further enquiries: Stephen Duckett, Health Program Director
T. 03 8344 3637 E. media@grattan.edu.au