Productivity Commission recommends changes to care sector

The Australian Productivity Commission has released its interim report into how the nation can deliver safer, more affordable care, ahead of the government’s economic reform roundtable next week.

The report, Delivering quality care more efficiently, has made a set of recommendations to the federal government that fall under three key themes: quality and safety regulation; care service integration; and investment in preventative healthcare.

Commissioner Angela Jackson said that the recent increase in choice for care services in Australia has created a health system that is struggling to deliver high-quality services at a sustainable cost.

“Our proposed reforms seek to break through government’s siloed approach to decision-making and lift national productivity by improving the quality and efficiency of care services,” she said.

The federal government says the nation’s productivity growth has slowed over the past 10 years, and has tasked the Productivity Commission to undertake a series of inquiries to identify reform areas of priority and reignite productivity in “an uncertain global environment.”

Part of the reason behind the Australian economy’s current sluggishness was the vertiginous rises and subsequent falls of measured productivity during the height of the Covid-19 pandemic, from which the country is yet to recover.

However, as the data also identified slowing growth in the years leading up to Covid-19, the government has suggested there are a variety of systemic factors at play.

Delivering quality care more efficiently is the fifth and final interim report to come out of the current productivity inquiries. Prior to this, interim reports have been released for the four other ‘pillars of productivity’:

• Creating a more dynamic and resilient economy
• Investing in cheaper, cleaner energy and the net zero transformation
• Harnessing data and digital technology
• Building a skilled and adaptable workforce

The delivery of quality, accessible and affordable care – be it in aged care, primary health, disability support, or early childhood education – is the foundation upon which a highly engaged, participative and productive population is built, the report says.

The Commission’s first recommendation centres on breaking down existing silos in our health system in favour of improved alignment of safety and quality regulation that extends across the entire care economy.

1. Reform of quality and safety regulation

The interim report says the Australian government “should pursue” greater alignment in the quality and safety regulation of the healthcare system, starting with aged care, the National Disability Insurance Scheme (NDIS), and veterans’ care services.

Recommendations include establishing a national screening process for workers, creating a singular set of practice and quality standards, and ensuring there is a consistent approach to the regulation of artificial intelligence (AI), reporting and data handling.

“Fragmented regulation across the care sector reduces productivity, heightens the risk of harms, limits access to care and creates unnecessary burdens for care providers,” Commissioner Martin Stokie said.

“Previous reform efforts have faced roadblocks and lost momentum – we need a fresh, concerted approach.”

This unified national approach to carer accreditation, including a single portal through which workers are required to be registered, would improve workforce mobility, the Commission says.

In turn, resources would be able to be redirected more easily and efficiently as provider needs ebb and flow and consumers would benefit from access to more comprehensive information and, therefore, choice.

2. Increasing the integration of care services

‘Collaborative commissioning’ is the practice of organisations working in partnership to plan, procure
and evaluate services for their local communities, supporting the delivery of more integrated care, addressing service gaps and tailoring services to the needs of individual communities.

The Commission recommends that governments should establish governance and funding arrangements between Local Hospital Networks (LHNs), Primary Health Networks (PHNs) and Aboriginal Community Controlled Health Organisations (ACCHOs), to increase collaborative commissioning in the next addendum to the National Health Reform Agreement.

Further recommendations include the removal of current barriers preventing local health organisations from pooling their funding, and the provision of dedicated funding to LHNs and PHNs to embed collaborative commissioning programs.

3. A national preventative health framework

Australia’s first (and only) dedicated Minister for Preventative Health, Sabine Winton, was appointed to the Western Australian government following Labor’s landslide state election win in March of this year, prompting questions about whether this approach should or could extend to other states and territories.

The Commission again highlights intergovernmental collaboration as the key to effective, efficient and lasting change for the health and care sectors. It is calling for the establishment of a National Prevention Investment Framework, through which the federal government can funnel money into preventative health programs, to improve outcomes for the community, and save money on the delivery of more costly acute services later on.

An independent Prevention Framework Advisory Board would work alongside the Framework to assess requests for funding and provide expert advice, the recommendations say.

“Our reform proposal is about encouraging governments to invest now to save later,” Commissioner Alison Roberts said.

“It will help ensure governments work together to support the most effective prevention programs.”

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The Productivity Commission's Five pillars of productivity inquiries interim reports will now undertake a period of public consultation, before delivering five final reports later in the year.

The final Delivering quality care more efficiently report is expected in December 2025.