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INSIGHTS

Health Care Homes:
A Foundation for 
Transformation

Building on local and international approaches to integrated primary care, the participating general practices and Aboriginal Medical Services serving as the ‘home bases’ in the Health Care Homes (HCH) initiative will be responsible for managing the integrated care of enrolled patients with chronic and complex conditions.i Notwithstanding differences in terms of scope and scale, Australia has seen previous attempts at ‘a patient-centred model,’ including the Coordinated Care Trials (CCT) and the Diabetes Care Programme (DCP).ii Could the HCH initiative far exceed previous efforts and transform primary care?

Addressing the burdens of chronic conditions

Peak medical groups and other stakeholders have welcomed the HCH trial, first announced in March 2016. After all there is widespread recognition—and a growing body of evidence—of the efficacy of a home-type approach to delivering integrated primary care.iii Moreover the need to focus on addressing chronic conditions is well understood. Some 20% of Australians are afflicted by at least one chronic condition; with eight chronic diseases accounting for approximately 40% of health care expenditure.iv

Medicare data on chronic conditions items for just the top 10 PHNs by patients and services illustrates the mounting burden. These 10 PHNs account for 55% of the benefits paid on this class of MBS item. Mirroring growth in patient numbers, total benefits paid for chronic conditions items grew by around a third from roughly $280 million to $370 million between 2013 and 2015. Four of these PHNs are among the 10 that will participate in the HCH trial from 1 July 2017 to 30 June 2019.

Source: MBS, ANZ

Though there is a fact base indicating that integrated care programmes typically do achieve improvements in patient outcomes, there is less certainty about the net economic outcomes.v On one hand, such programmes are typically linked with reductions in hospital admissions and emergency room (ER) presentations. On the other hand, history suggests that gains accrued through reduced demands on acute care can be offset by cumulative costs incurred in establishing, operating and evaluating integrated care. Nevertheless, assuming the kind of reductions in ER presentations, hospital admissions, diagnostics and imagery expenditure achieved by other similar programmes, savings at the system level in 2021 in those three areas alone could exceed $16 billion if the HCH programme is expanded nationwide.vi With further details around the design and implementation of the HCH trial not yet available, we look briefly at some of the key challenges and opportunities.

Getting the blended funding model right

Changing the way that practitioners are paid with the introduction of a blended funding model is a defining element of the HCH trial. A move away from fee-for-service (FFS) is significant given the bulk of practice revenue is tied to this type of arrangement. Homes are expected to receive MBS funding for chronic disease management (CDM) bundled into quarterly payments, with FFS-based payment for ‘routine care.’ If expanded on a national basis, practices would have to adapt their business models to the blended funding model.

Setting the upfront and quarterly payments at suitable levels to incentivise practitioners and support appropriate care is a key challenge in the HCH trial design. The model has to cover ongoing opportunity costs for participating practitioners and avoid imposing excessive administrative burdens that could disincentivise participation. Payments should reflect cost differentials involved in providing care to patients with different risk profiles while rewarding efficient and effective care—all without introducing perverse incentives.

Establishing fit-for-purpose information systems and infrastructure

The lack of fit-for-purpose information systems and infrastructure is a typical barrier for successful implementation of an integrated care model. Appropriate systems and infrastructure are crucial for participating practices to manage and administer funding and payments as well as to coordinate integrated care for their patients across disparate parts of the system.

Health Care Homes: implementation expectations

Typical barriers vii HCH elements HCH challenges
1Financial incentives A blended funding model including upfront, bundled and fee for service payments. Meeting set-up, administration and ongoing opportunity costs of participation.
2Capacity to change GPs and PHNs expected to play central roles in planning and coordinating integrated care. Time and resource constraints: GPs must balance existing demands while PHNs may have differing levels of resourcing and capabilities.
3Culture and workforce Team-based care assumes members can all operate at full scope of practice. Constraints on allied health and nurse practitioners.
4Infrastructure Shared patient records critical to facilitating team care; complete, accurate and accessible information also required for monitoring health and financial outcomes as well as supporting evaluation and improvement. Limitations of current electronic health record systems and infrastructure; and lack of consistent minimum data collection to facilitate monitoring and evaluation for improvement.

Service providers in the HCH trial will require systems and information infrastructure that can facilitate accurate data collection and analysis as well as secure messaging systems for practitioners’ sharing of patient information. Yet significant variation in data and patient management systems currently exists.viii Indeed, there is still widespread use of faxes and paper-based mail rather than electronic communications in parts of the sector. The systems and information infrastructure deployed will need to facilitate team-based planning and management of patient care, collection and sharing of pharmacy and diagnostic imaging information. Accurate records for payments, monitoring and reporting of financial and health outcomes will also be critical for the ongoing operation and evaluation of the trial.

My Health Record (MHR), the national electronic health record, in its current state has been characterised as providing ‘at least some information’—but it could play a larger role in the HCH trial.ix MHR may already provide some benefits to consumers, especially those with multiple chronic conditions, even if its role is limited to ‘memory aid.’ With greater integration between MHR, practice and other systems, perhaps the HCH trial presents an opportunity to develop a more fit-for-purpose system.

Optimising the workforce and support across the wider system

Ensuring that the appropriate resources and settings are in place to provide team-based care is another key challenge. Since the trial’s announcement in March 2016, stakeholders have voiced concerns about the adequacy of funding. The May 2016-17 budget allocated just $21 million funding, specifically for design principles, IT systems and training; the August PHN announcement flagged another $93 million, albeit reallocated from MBS funding to “support flexible and innovative clinical service delivery.”x The sum of those allocations combined implies an average of $570,000 in set-up funding per home, based on 200 homes participating; or around $1,750 per patient, assuming the total number of 65,000 eligible patients enrol. There is no information to hand to make direct comparisons against recent programmes. Yet just crudely assuming the service delivery cost component in the HCH trial roughly equates to the patient cost component in the DCP trial, the implied funding for the HCH on a per patient basis would cover only around 65% of patient costs.[xi] Hence concerns remain around the adequacy of funding.

Support should after all extend beyond the ‘homes’ to other key participants in the wider HCH ecosystem such as Primary Health Networks (PHNs) and allied health practitioners. PHNs are expected to play key roles. Some of the 10 PHNs in which the HCH trial will proceed may be better placed to coordinate services; others may have greater challenges in terms of resourcing, capabilities and geography. Partnerships between PHNs, practitioners and service providers could be organised to facilitate shared services arrangements to support the trial.

Though allied health practitioners are expected to play a role in delivering team-based integrated care, they face existing constraints within the MBS funding for chronic disease management (CDM): for example, caps on the number of visits to allied health practitioners. Hence, removing such constraints may be another critical requirement for the success of the HCH trial.

Practitioners are expected to commit time to planning and managing integrated care delivery. Nurse practitioners and care coordinators may be well placed to take some of the burden off practitioners. Still there may also be some limitations to making optimum use of nurse practitioners. These could arise, for example, if the HCH trial is also going to involve Private Health Insurers (PHI) funding chronic care, as the Department of Health had earlier signalled. Additional reforms could be required to optimise use of the workforce in such cases.

Overcoming barriers to implementation

Local and international experience suggests that integrated primary care through a home-type approach can deliver improved health outcomes. However the right systems and policy settings must be in place. In the face of significant complexities and an ambitious timeline for the HCH trial, a focus on overcoming typical barriers to implementation is crucial. A successful trial could lay the foundation for a full-scale transformation of how our health sector addresses the mounting health and financial burdens linked to chronic and complex conditions.

[i] Department of Health, 2016, Health Care Homes: Reform of the Primary Health Care System, accessed 26 September 2016

[ii] Department of Health and Ageing, 2007, The National Evaluation of the Second Round of Coordinated Care Trials: Final Report - Coordination of Care and Efficiency of Healthcare, accessed 26 September 2016

[iii] The Royal Australian College of General Practitioners, 2015, Vision for general practice and a sustainable healthcare system. RACGP, Melbourne, accessed 26 September 2016, Department of Health, 2016, Primary Health Care Advisory Group Final Report: Better Outcomes for People with Chronic and Complex Health Conditions, Department of Health, Canberra, accessed 26 September 2016 

[iv] Department of Health, 2016, New Medicare payment model for chronically-ill patients, accessed 26 September 2016 

[v] Ernst & Young, WentWest Limited & Menzies Centre for Health Policy, 2015, A Model for Australian General practice: The Australian Person-Centred Medical Home, Ernst & Young, Sydney, accessed 26 September 2016 

[vi] ANZ modelling based on data from Medicare and Australian Institute of Health and Welfare, assuming system-wide reductions of ~10% in ED presentations, ~20% in hospital admissions, and ~50% in diagnostics and pathology services among heavy users.[vii] Typical barriers in integrated care models adopted from Commonwealth Fund, 2015, Models of Care for High-Need, High-Cost Patients: An Evidence Synthesis, Issue brief, accessed 26 September 2016

[viii] McNamara, K, Knight, A, Livingston, M, Kypri, K, Malo, J, Roberts, L, Stanley, S, Grimes, C, Bolam, B, Gooey, M, Daube, M, O’Reilly, S, Colagiuri, S, Peeters, A, Tolhurst, P, Batterham, P, Dunbar, JA & De Courten, M, 2015, Targets and indicators for chronic disease prevention in Australia, Australian Health Policy Collaboration technical paper No. 2015-08, AHPC, Melbourne, accessed 26 September 2016

[ix] Department of Health, 2016, Growing at one every 38 seconds the My Health Record hits 4 million, accessed 26 September 2016

[x] Department of Health, 2016, Healthier Medicare: Reform of the Primary Health Care System, accessed 26 September 2016

[xi] Department of Health, 2015, Evaluation Report of the Diabetes Care Project, accessed 26 September 2016

The information contained in this document is of a general nature only it does not constitute financial advice. It should not be used as a substitute for consultation with professional advisers. 

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