Regulator forgets competitive roots

Letter

Australian Financial Review

4th September 2007

Little wonder that the confused analysis of federalism by Alan Fels and Fred Brenchley (Opinion, August 28) leads them to call for both political leaders to set out their ideas in "far more detail".

It is particularly surprising that a former chief competition regulator seemingly proposes the centralisation of management of health and other government services in Canberra rather than a move to a more competitive framework. This is highly relevant to the current debate about the funding of hospitals, where the private sector is increasingly taking over the provision of services and reducing the call on state finances.

Over the past 10 years patient separations from private hospitals have increased from 32 per cent to about 40 per cent of all separations and, Australia-wide, such hospitals now perform the majority of surgery and almost the full range of complex treatments. Importantly, such treatments are recognised as being of a high quality and cost weight data compiled by the Australian Institute for Health and Welfare show significantly lower average costs in private hospitals.

A range of options that could be adopted to encourage the expansion of this competitive arm of the hospital sector is outlined in my report last year to Commerce Queensland on The Role of Government in Queensland. Adoption of such options would improve the quality of hospital services, further relieve the pressure on state finances and eliminate the need for federal intervention in state hospital activities.