The following article appeared in the Australian Financial Review today.
eHealth to save $11bn for budget
David Ramli
22nd May, 2012
The federal government has claimed its troubled electronic health programs will save more than $11 billion over the next 15 years as it guns for a budget surplus.
Health Minister Tanya Plibersek made the comments during a speech to the Committee for Economic Development of Australia in Melbourne last week.
“The national eHealth records system will mean better, more efficient, more convenient healthcare,” she said. “We estimate eHealth will save the federal government around $11 billion over 15 years. However you look at it, that’s pretty good bang for your buck.”
The savings target, which would equate to more than $733 million a year, comes as Labor stakes its economic reputation on a $1.5 billion surplus by 2012-13.
In a copy of her speech, Ms Plibersek attributes the figures to an unpublished 2010 Deloitte report.
.....
Dr Southcott said he’d only seen an earlier version of Deloitte’s report and that the key financial assumptions it had made should not be used by governments to calculate savings.
Ms Plibersek declined to be interviewed. Her spokesman refused to release the Deloitte report, saying Cabinet was using it to inform decisions.
Lots more material is found here:
There are 2 problems with all this.
The first is that the figure is clearly a gross exaggeration unless I badly miss my mark. While we don't have the later Deloittes document we do have their earlier work on the topic.
In the 2008 Deloittes National E-Health Strategy - which can be downloaded from this link:
We read on page 96.
7.2.3 Benefit Summary
There are significant challenges associated with attempting to quantify benefits associated with EHealth, not least of which is the paucity of quality data on Australian health care system costs, activities and outcomes. Despite these limitations, it is possible to develop indicative estimates based on analysis of local and international literature. This analysis shows that the tangible benefits associated with implementation of the Australian E-Health Strategy are estimated to be in the order of A$5.7 billion in net present value terms over ten years.
The annual savings associated with a fully implemented E-Health Strategy are estimated to be approximately A$2.6 billion in 2008-09 dollar terms.
----- End Extract
As for costs which are required to be spent page 90 gives the summary.
7.1.5 Funding Considerations
The total indicative estimated cost of the implementation of the national E-Health Strategy is A$1.5 billion over five years or A$2.6 billion over ten years. This represents a relatively modest investment program when scaled against total annual recurrent spending on health (approximately A$90 billion) and the total annual recurrent spending on health by all levels of government (approximately A$60 billion).
----- End Extract.
If my figures are right we are this looking at a net benefit of $5.7B - $2.16B over 10 years which is about $2.9 billion over 10 years. If you make the heroic assumption that all e-Health IT will all be done after 10 years - and will have no costs for replacements, staff, upgrades and so on then you might come up with a figure like the Minister has - but that far out who can possibly know?
The bottom line to me is we need to see the unpublished report mentioned:
Deloitte, The national PCEHR system: relationship to the 2010 national IEHR business case, unpublished, Version 0.19, 22 June 2011)
So we can try and distinguish fact from fantasy.
Remember the PCEHR is a less useful approach to e-Health than that recommended by Deloittes.
Remember the PCEHR is a less useful approach to e-Health than that recommended by Deloittes.
Without this later report being made public we are really being mushroomed big time!
The second problem is that it is clear any idea of a bi-partisan approach on e-Health is obviously dead. Who thinks any of this will be happening 3 years from now?
The second problem is that it is clear any idea of a bi-partisan approach on e-Health is obviously dead. Who thinks any of this will be happening 3 years from now?
I note others agree with me (see italics):
Troubled HealthSMART System Finally Cancelled in Victoria Australia
POSTED BY: Robert N. Charette / Mon, May 21, 2012
----- Huge Amount Omitted
That said, at the national level, the Australian government is still continuing its support of the controversial personally controlled electronic health records (PCEHR) system, which is supposed to begin its roll out across Australia this July. Prime MInister Gillard's government has recently even allocated $A233 million in this year’s budget (on top of the original appropriation of $A466 million) to bolster the effort's probability of success.
At the same time, the government has also been trying to dampen down expectations about the PCEHR system, saying that it will take years before it will actually be useful. But the government predicts that the changes it will make in the way medical data is handled will eventually save Australia $A15 billion in government-related health costs by 2030. Given the current state of the PCEHR system and the lukewarm support of it by the Australian populace and medical profession, that amount sounds more like political wishful thinking that an estimate grounded in economic reality.
David.