Insights on Australian Healthcare: Challenges and Innovations

Private Healthcare Australia Conference Simon McKeon Chairman, Federal Government Strategic Review into Health & Medical Research 28 NOVEMBER 2013

Panel Members Mr Simon McKeon AO (Chairman) Ms Elizabeth Alexander AM Prof Henry Brodaty AO Mr Bill Ferris AC Prof Ian Frazer AC Prof Melissa Little

Australias health system delivers good outcomes for a reasonable cost Life Expectancy vs. Health Expenditure 2010 Life Expectancy Australia1 Japan 84 GDP per Capita at US$ PPP Greater than US$35k Spain Switzerland Norway Sweden Israel US$25k - US$35k 82 Less than US$25k Italy Netherlands Korea Greece 80 UK Canada Finland US Denmark Chile 78 Poland 76 Mexico 74 72 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Health Expenditure per Capita, US$ PPP Note: Source: 1. Australia s GDP per capita is above US$35k 2. PPP purchasing power parity OECD, Pacific Strategy Partners Analysis

Australias Share of Global Publications in Selected Journals1 % Share of Total Publications Three Fundamental Science Journals: Science, Cell and Nature Two Key Clinical & Public Health Oriented Journals: The Lancet & NEJM2 5.4% 4.8% 4.6% 4.3% 4.1% 3.7% 3.4% 3.0% 2.8% 2.7% 2.5% 2.5% Lancet 2.4% 2.1% Cell Science NEJM Nature 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 # Australian Publications 108 131 151 146 131 129 153 126 124 144 180 153 131 146 Notes: Source: 1. Australia is estimated to account for ~1.1% of health R&D and ~1.8% of global GDP, but ~3.6% of the above health and medical publications 2. New England Journal of Medicine Thomson Reuters; MA Burke & J-J Monot, Global financing and flows , Chapter 2 in Monitoring Financial Flows in Health Research2006 (pp.33 62), 2006

The current trajectory of projected Australian Government health expenditure is unsustainable Treasury Projections of Australian Government Health Expenditure1 $bn 257 250 Impact of increasing demand for higher standard of care 200 128 166 150 56 105 16 100 71 Impact of ageing and population effects only 3 129 51 111 50 89 68 51 0 2009-10 2019-20 2029-30 2039-40 2049-50 % of GDP 4% 4% 5% 6% 7% Note: Source: 1. Excludes state and territory Government health expenditure Australian Government, Intergenerational Report 2010, Canberra, 2010

Health outcomes are driven by the productivity and cost-effectiveness of interventions Health System Performance Cumulative Health Outcome (e.g. QALYs) Lost or unnecessary diagnostic tests Intensive care for very ill patients Open Heart Surgery for patients >70 Adverse Drug Reactions Renal Dialysis Chemotherapy for most Cancers Preventable surgical complications Screening Programs Estimated at 20% 30% of Health Spend Vaccination Preventative health campaigns Current Aggregate Health System Performance I. High Value Intervention II. Routine Treatment III. Low Value Intervention IV. Waste V. Adverse Events Cost ($) Notes: Source: 1. Based on US estimates Pacific Strategy Partners analysis; TO Tengs, et al, Five-hundred life saving interventions and their cost effectiveness , Risk Analysis, 1995, 15(3):369 484; Institute of Medicine of the National Academies, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, 2012; DM Berwick & AD Hackbarth, Eliminating Waste in US Health Care , Journal of the American Medical Association, 2012, 307(14):1513-1516; Pricewaterhouse Coopers (PWC) Health Research Institute, The Price of Excess: Identifying Waste in Healthcare Spending, 2008

Health outcomes can be improved by better management, increased research translation and new knowledge Levers to Improve Health System Performance 3. Develop New Knowledge and Interventions Biomedical research Clinical research Cumulative Health Outcome (e.g. QALYs) 2. Translate Research into Healthcare Practice and Policy Research translation Evaluation and monitoring Public health research 1. Eliminate Adverse Events and Waste Management Health services research Health economics 0 Cost ($) Source: Pacific Strategy Partners Analysis

The Review proposes a 10-year strategy built upon a number of themes HMR Strategy Framework 1. Better Health Through Research Build HMR Capability Accelerate Translation Optimise Investment 3. Support Priority- driven Research 4. Maintain Research Excellence 5. Enhance Non- commercial Pathway to Impact 6. Enhance Commercial Pathway to Impact 7. Attract Philanthropy and New Funding Sources 8. Invest and Implement 2. Embed Research in the Health System

The US is a leader in philanthropy, while Australia significantly lags the US and Canada in high-net-worth contributions National Giving Levels % Donations of GDP 2004 High Net Worth Contribution Rate % Donations of Pre-Tax Income 2004 1.67% 3.5% 3.2% 0.73% 0.72% 0.69% 0.64% 1.9% US UK Canada Australia South Africa US Canada Australia Source: Philanthropy Australia, Strategies for Increasing High Net Worth and Ultra High Net Worth Giving, 2011

The Review proposes a 10-year strategy built upon a number of themes HMR Strategy Framework 1. Better Health Through Research Build HMR Capability Accelerate Translation Optimise Investment 3. Support Priority- driven Research 4. Maintain Research Excellence 5. Enhance Non- commercial Pathway to Impact 6. Enhance Commercial Pathway to Impact 7. Attract Philanthropy and New Funding Sources 8. Invest and Implement 2. Embed Research in the Health System