Public hospitals face increased competition, contestability and user choice. In this environment, those that focus on a superior patient experience – rather than medical excellence alone - will thrive.

The Productivity Commission recently nominated public hospital services as one of six sectors it will review as part of its Inquiry into Human Services. An initial study report (including international examples of best practice) will be released in November and final recommendations to improve competition, contestability and user choice will be provided to Federal Government in October 2017.

Public hospitals can’t afford to take a ‘wait and see’ approach. By engaging in the consultation process and making submissions to the Inquiry, stakeholders can actually shape reform. One only has to look at other services, including aged care and disability provision where consumer-directed care has engendered significant change. Hospitals that invest in change programs and improvements will see dividends in areas flagged for review and reform for years to come.

In its Preliminary Findings Report[1] released on 22 September (Report), the Commission noted “there are numerous policy levers that governments already use to improve outcomes in public hospital services, including quality standards and professional training requirements. Greater contestability and user choice could place indirect pressure on hospitals, as part of a broader suite of reforms, to improve outcomes”. The report goes on to point to a number of areas which will need careful consideration by those commissioning and delivering public health services.

Public patients often have limited choice in their provider and the government’s current MyHospitals website contains little information to enable patients and their carers to compare alternatives. The Report highlights there has been more consistent and transparent reporting of funding and patient outcomes under the National Health Reform Agreement. It stresses, however, that more can be done on this front. Given the generally positive results seen in the US and the UK (where more hospital performance data is published online) MyHospitals is likely to expand, leading to better-informed Australian users and improved medical outcomes.

With respect to data, which may be selected for publication and comparison, a further look overseas offers interesting alternatives. In the US, the Centers for Medicare and Medicaid Services (CMS) publishes patient satisfaction survey scores online, as well as comparative data on quality of care to help consumers make more-informed choices and to encourage hospitals to improve care.[2]

The United States’ CMS patient satisfaction scores are based on post-discharge responses to questions including how well staff communicated, staff responsiveness to the call button, pain management, staff courtesy and respect, and cleanliness. Here in Australia, 90% of patients say hospital doctors, specialists and nurses listen carefully, show respect and spend enough time with patients.[3] However, Australian hospitals have no published patient survey summary data and the patient experience goes beyond interactions with clinical staff.

Patient satisfaction, as a measure of performance, is one that is likely to be considered by the Commission. As KPIs and reportable metrics evolve, boards and management teams in public hospitals will be under increasing pressure to focus on these areas. Underperforming public hospitals will come under increased public scrutiny and boards and executives will need to answer tough questions.

While Queensland recently saw a hospital board resign to be replaced by an administrator, the Commission called out the history of governments bailing out underperforming hospitals. Five NSW local health districts received cash assistance in 2014-15 to pay their bills on time. In Victoria, the State issued letters of support to 31 public hospitals to enable their boards to attest that they could operate as a going concern.

The Commission points out that for government-operated hospitals, replacing the management team or board may be more feasible than commissioning public hospital services from alternate providers. However, it also called for more evidence on the commissioning of public hospital services from public hospitals noting there does not appear to be a formal selection process and providers rarely change. It also questions whether governments use the regular renegotiation of service agreements as an opportunity to commission alternatives from other providers.

This focus will only increase pressure on state and territory governments to entertain contestability or outsourcing of public hospital services and to develop more rigorous assessments as to whether the status quo provides value for money.

With their eye on the future, public hospitals need to understand and improve the patient experience, while maintaining clinical excellence. We may not necessarily see a user choice system for patients needing public hospital services (allowing patients to purchase the service from their preferred provider). However, continued public hospital funding will be increasingly tied to patient outcomes as opposed to activity and patient satisfaction could well become a reportable and public metric. Ensuring that well-designed consumer information is available will be of benefit to everyone.