Care Down Under

Managing the land Down Under Australian healthcare system makes great strides with its innovative disease and behavioral management initiatives

By Ian Lazarus, CHE, Andrew J. Wilson, MD, and Matthew J. Cullen, MD

A country once considered too distant and exotic to warrant much attention from American healthcare companies is now catching world attention as Australia demonstrates its ability to attract not only the Olympic Games, but an increasing share of recognition for its contributions to the healthcare field. Australia’s leadership in restructuring elements of their own healthcare system through demand management initiatives may ultimately precipitate a chain reaction to include other Pacific Rim countries such as New Zealand, Singapore and the Philippines. Such developments have important implications for American companies seeking participation in the global health movement.

As with a number of countries around the world, Australia is looking at American care management strategies to assist in containing costs and improving access to services. Australian healthcare officials have also actively studied the impact of programs in Canada and the United Kingdom, two countries that share a strong heritage with the country, in developing their platform for reforming the healthcare delivery system. While not operating in a true managed care environment, there is increased interest in those supply side or “demand management” programs that could bring more orderly utilization of healthcare resources to the diverse needs of the population.

Although there are significant differences between the United States and Australian healthcare systems, the issues of cost, quality and access are becoming paramount within the healthcare debate in Australia just as they are within the United States.

Allocating resources

While the Federal Government is responsible for the overall distribution of a health budget equivalent to $30 billion, the bulk of this money is administered by the various state governments for provision of hospital- and community-based care. Payment for primary care services, specialist outpatient services and drugs are administered directly by the federal government via the Medicare Benefits Fund and Pharmaceutical Benefits Services. Both are uncapped and have rising costs versus the domestic Consumer Price Index. This separation in funding between the state and federal health system has led to significant cost shifting within the Australian healthcare system.

The private health insurance industry is responsible for the payment of hospital-based services within private hospital facilities. Unlike the United States, the majority of memberships are taken out on an individual basis, with the corporate dollar accounting for only a small number of covered lives. Until recently this sector has shown declining membership, although recent government initiatives such as providing a tax rebate for contributions have started to reverse this trend.

After decades of uncontrolled growth in healthcare expenditures, Australia is now coming to terms with the growing problems within its health system:

  • Per capita demand for health services continues to rise, exacerbated by the country’s aging population.
  • The percentage of the population with private health insurance has fallen from 50% in 1984 to less than 30% today.
  • There is growing unrest among primary care practitioners and the state-funded hospital sector with increasing fees and funding shortages leading to a reduction in overall health resources that are available.
  • Health costs increases are significantly exceeding other economic parameters such as the domestic CPI (Australia still have a much lower level of health expenditures than in the United States at only 9% of gross domestic product).
  • There are significant cost increases occurring in the provision of pharmaceutical benefits under the Pharmaceutical benefits Service.

The result of these funding pressures has led to some innovative programs that are being watched closely through the Pacific Rim. One demand management initiative has been modeled on the NHS Direct Program” of the United Kingdom, as well as various supply-side initiatives focused on coordinated care.

Getting it direct

The largest and perhaps the most innovative demand management initiative undertaken in Australia to date has been the launch of HealthDirect in Western Australia. This service, funded by the Federal Health Department and the Health Department of Western Australia, provides 24-hour health information and advice and triage of services to the population of Perth, covering about 1.6 million lives.

The service is of particular interest in that it provides a demand management program to a geographically isolated population, including many of the indigenous populations of Aboriginal origin. Because of this population, the service has been integrated into a series of initiatives, including the establishment of after-hours ambulatory care centers throughout the region. It also is being coordinated with metropolitan hospitals, which are transferring certain clinical information and advice calls directly to the HealthDirect call center.

There has been increasing interest in disease management initiatives in Australia, particularly from the private health insurance sector and the international pharmaceutical industry. The commencement of a price-capping policy across various drug categories in Australia has led to intense competition and lowering of margins, making these service strategies increasingly important for drug manufacturers.

At High Performance Healthcare in Sydney, a large scale, consumer-driven disease support and treatment persistence management program has been in place for several years. The program has covered medical conditions including heart failure, osteoporosis, ischaemic heart disease, obesity, psychosis and HIV medicine.

The company utilizes the same call center concept that helped it secure the governmental project in Western Australia. Here, the call center services as the coordination point for pharmaceutical patients, and reinforces medication compliance, dietary requirements, exercise regimens and fluid intake for patients who require ongoing supervision. The program also includes ongoing health education so patients appreciate the importance of strict adherence to the program, and support agencies, social services and primary care physicians are all accessible to call center personnel.

Going one step farther in partnering technology with primary care improvement is the use of sophisticated psychological strategies, such as motivational interviewing and cognitive behavioral approaches to identify and address barriers to treatment persistence. Australia has been a true pioneer in this area, which is of increasing interest to American healthcare strategists because of its potential application in the growing industry of disease management.

Obstacles to overcome

In this particular care management strategy, providers classify the specific obstacle to treatment persistence by reference to a behavioral model explaining the cause of noncompliance:

  • Lack of Patient Understanding
  • Impact of Side Effects
  • Motivational Problems
  • Imperfect Habit Development
  • Disruptive Belief Systems

For example, the strategies used to overcome a “disruptive belief” which interferes with a treatment program are very different than those used to overcome the problem of medication side effects successfully. Similarly, if a patient is simply not motivated to endure the complexity of some treatment programs, then this must be addressed first before any attempt to ensure that the proper habits can be developed and retained during the course of treatment. By creating care management programs within centralized call centers, nurses can monitor the progress of several patients concurrently and have access to scripts that assist in dealing with such issues.

Australia provides some important lessons and exciting opportunities for American healthcare companies. Already the developments in Australia are influencing neighboring New Zealand, where the government is entertaining bids for a medical call center service organized around the capabilities of American software systems, and utilizing the same demand management principles currently developed in Australia and well rooted in the American managed care model.

It is likely that future developments in Australian healthcare will focus on further developing the consumer-based models which assist and enhance the role of the primary care practitioner as the mainstay of treatment. However, it is unlikely that more restrictive managed care initiatives will take root in this region in the near future, however, and the fragmented nature of the system could make it a graveyard for American healthcare organizations seeking to import their models into the country. But there are clearly opportunities for American expertise to be applied in a flexible and locally modified form to assist in the delivery of better healthcare to Australians.

Andrew Wilson and Matthew Cullen are co-managing directors of High Performance Healthcare, Sydney Australia. Ian R. Lazarus is managing director of Creato (

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