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Australia - Digital Economy - E-Health - Overview, Stats and Analysis

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The term ‘e-health’ has been in general use for some time but there continues to be debate over its definition. Digital healthcare describes the whole system of GPs, hospitals and regional healthcare centres.

For the purposes of this report, BuddeComm defines e-health as the use of ICT as a means of supporting health and health-related fields, with a particular emphasis on the use of high-speed networks to deliver these services to people’s homes. Other terms for e-health include tele-health, telemedicine and health informatics.

Over the last decade there has been a huge increase in digital healthcare services, particularly in hospitals. However, the development of these services has remained largely in-house and has not really advanced beyond pilots and small-scale projects.

BuddeComm believes that there are various reasons for this:

most importantly, the funding and health insurance mechanisms generally don’t cover the cost of e-health applications;
a lack of clear policies is another problem which has led to many, non-compatible, private and public systems being utilised; and
the lack of affordable broadband.

In Australia there are dozens of semi-independent sectors within the healthcare industry and there is a similar number of semi-autonomous state and regional authorities. While the benefits of e-health have been known and discussed for over a decade, there has been little system-wide progress beyond trials and small projects. Implementing innovative e-healthcare initiatives is predominantly left to the private sector while the public sector continues its efforts to adopt proven solutions on a case-by-case basis. However, from a national perspective there remains a need to develop a suitable strategy designed to take full advantage of emerging e-health applications. National projects are by their nature large in scale, which is often a significant impediment when projects are implemented.

Certain worthwhile initiatives such as the government’s National Clever Network Program do exist, but overall the public sector suffers to a degree from strategic drift with respect to the e-health policies.

A major constraint is the lack of widely available, high-quality, affordable broadband infrastructure which would enable the healthcare sector to provide services to their end-users at home. Significant healthcare benefits may only be achieved when patients can be directly linked with a healthcare professional in an interactive and personal way, such as via a two-way video link.

Healthcare is a $60 billion industry, the government has committed to a $16 billion investment to reforms in the healthcare system. Annual ICT spending in healthcare is around $2 billion, driven by e-health investments. ICT spending in healthcare is in many other countries between 5-10% per annum. Australia remains well under this percentage and the gap in these developments will only increase between Australia and its trading partners. However with the Hospital Reforms Commission Report focussing in on ICT developments such as the introduction of the Electronic Patient Record system and the development of the NBN, this is set to change.

The Australian market is likely to continue to be well serviced by firms around the globe as well as to support domestic firms providing solutions to domestic and international clients. The introduction of an NBN in Australia based on fibre optic cabling to homes and businesses is likely to spur innovation and investment in the market by both local and foreign firms.

Exhibit 1 - Primary and community health sector statistics

According to the Report on government services 2012 the primary and community health sector it has become the part of the healthcare system most frequently used by Australians.In 2010-11, Australian government expenditure on general practitioners in Australia was around $6.4 billion, or $287 per person.

Australian government expenditure on the Pharmaceutical Benefits Scheme was around $7.3 billion, or $326 per person, in 2010-11.

Total expenditure by all governments on community and public health was around $7.9 billion in 2009-10.

Australia’s health system is inexorably moving into crisis. Demands placed on the system are changing in nature and rising sharply, due to chronic disease and an ageing population, coupled with demand for new clinical treatments and technologies.

The health system we have today was created for a bygone era, and is fragmented, inefficient, overwhelmed, and poorly equipped to meet these new demands. According to a CSIRO report published in early 2013, the system is struggling to cope with escalating challenges in health service delivery, staff shortages as our workforce ages, a changing case mix and an identified productivity gap of around 20%. Many rural and regional areas are also under-served, with limited access to appropriate care resulting in higher hospitalisation rates and poorer health outcomes.

Economic forecasting predicts that, left unchecked, Health will consume 40% of Australian taxes by 2043, at which point state government health expenditure will exceed their forecast revenues. Such a situation is alarmingly unsustainable and is providing the imperative for change.

Digital health information systems and technologies, broadband communications and big data analytics are all areas which can help provide cost-effective services in a health system, offering better access, greater efficiency and higher quality healthcare.

The problem of implementing e-health systems is the nature of the healthcare system itself, which is a mixture of public and private organisations, a very large number of small businesses (such as GPs and pharmacists), and a large number of individual carers.

It was widely agreed that the NBN would revolutionise the healthcare system by pushing primary care closer to the people, but the task is daunting as there so many silos and vested interests in the various sub-sectors involved in this level of care. The existing culture which has been developed over many decades, and the sheer size of the healthcare system (around 800,000 employees), will make this a massive exercise, the enormity of which cannot be underestimated.

The solution needs to be around reallocating funds, rather than looking for more funds. A good way to kick-start such a process is to allocate seeding money for a large scale demonstration project containing blueprints for national implementation models. The smart grid/smart city project instigated by the government is a good example of such a project.

While many in the healthcare sector are more than ready to move into e-health, in order for this to happen some serious policy commitments will need to be made by the government, and unfortunately there is still quite a bit of resistance at the highest bureaucratic levels.

According to a report published by IBM in 2009, titled Towards a Smarter Economy: A roadmap for making it happen:
over the next four decades, the number of people over 85 is forecast to quadruple to 1.6 million;
the average Pharmaceutical Benefits Scheme (PBS) costs for a person aged 65-74 are more than 20 times greater than for an 15-24 year old;
the percentage of GDP spent on health is projected to double in a generation;
20-30% of treatment is not based on the latest research evidence;
poor diabetes management led to 200,000 preventable hospital admissions in 2004/05;
the Victorian Auditor-General reported 135,000 Victorians may have experienced a potentially or actually harmful ‘clinical incident’ in 2007;
the Australian Health Workforce Institute claims ‘nurses are an endangered species’.

ABS data shows that the annual health expenditure grew by 45% between 1997 and 2007 to reach $4507 per person.

A report from the Australian Academy of Technological Science released in 2010 shows that with the demographic ageing of Australia’s population, a suite of emerging innovative technologies is needed to offer enhanced security, safety, diagnosis, treatment and physical assistance to improve the quality of life for elderly people, to help them remain at home, and to provide financial savings in aged care and medical treatment.

Exhibit 2 – Aged care services statistics

Total government expenditure reported on aged care services in 2010-11 was $12.2 billion. This included residential care services ($8.1 billion) and community care services ($3.4 billion).

In June 2011, there were 182,302 operational places (excluding flexible care) in residential care facilities (83,963 in predominately high care services, 3975 in predominately low care services and 94,364 in services with a mixture of high and low care).

(Source: Report on government services 2012)

With people living longer and birth rates falling the balance of the population between older and younger people is undergoing a dramatic change. An aging population presents a major economic challenge because a smaller proportion of people of working age will have to support the cohort of people who are retired.

In Australia the demographic support ratio, that is, the number of people of working age (20 to 64) relative to older people (65+), will fall from the present ratio of 5:1 down to 2.7:1 by 2050. This means that productivity must be increased to maintain economic growth and that there will be a shortage of healthcare professionals and carers to cope with the increased number of frail elderly.

Technology can offer possible solutions to issues of safety and security, diagnosis and treatment, while assistive technologies offer the potential to reduce costs.

For instance ageing-in-place supported by smart technologies offers the potential for substantial savings in residential aged care and in reduced admissions to hospitals, by providing early alerts to changing health patterns and by minimising falls and other accidents in the home. Many of these technologies for elderly-friendly housing depend on information and communication technologies to address social communications, personal health monitoring, telehealth, shopping and education. While these can be installed in existing homes, future dwellings will need to be custom designed to incorporate such systems and to cater for the lifelong needs of people.

Technological opportunities in Australia have been identified in the report:
security and safety – elderly-friendly homes, prevention of falls, communication and social interaction
diagnosis and treatment – telehealth, coping with degenerative diseases, nanomedicine; and
assistive technologies – biorobotics, brain/machine interaction, mobility systems.

The total cost of age care in Australia is over $9.5 billion in 2010 and this is about 6.5% of total health costs. While the estimated cost of government spending on health care is predicted to double from that in 2010 to 2050 relative to national income as population ages. It is estimated that those aged over 65 will increase from 13% to 27% of the population in 2050.

Table 2 - Percentage of GDP and government spend on aged care - 2001; 2008 - 2010; 2040; 2050
Year | % GDP spent on aged care | Govt spend $ (billion)
2001 | 1.2% | 3.9
2008/09 | 0.8% | 8.9
2010 | 0.8% | 9.6
2040 (e) | 1.8% | 100
2050 (e) | 2.8% | 125

(Source: BuddeComm based on ABS, various industry and government sources and industry estimates)

Chart 1 – Overview of GDP spent on aged care versus government spend – 2001; 2008 - 2010; 2040; 2050

(Source: BuddeComm based on ABS, various industry and government sources and industry estimates)

In order to develop e-health it would make sense to first canvass the requirements of the profession by securing the involvement of GPs, hospitals and regional healthcare centres, and then consulting with the wider community.

The lack of national government policies is the main component which is missing to enable the development of this national scheme. Most of those involved in healthcare understand the benefits of e-health and most health economists clearly see the cost savings that can be made, once a proper e-health system is in place.

How to get there is the big problem. There is currently not a single country in the world that has achieved that aim, but it is very obvious that there is an increased awareness of the benefits of a national broadband network that can be used for e-health and other applications. The countries which are making the most progress are those whose governments are putting trans-sector policies in place directed towards using national broadband for e-health applications.

Such policies should start with input from the health professionals. While this process may be better applied to digital education, there are still far too many silo-based activities within the healthcare system itself, which is one of the main obstacles to the development of an efficient and effective e-health system.

1. Synopsis
2. The size of the Health Care Market
3. E-health in the context of BuddeComm research
4. Introduction e-health
4.1 Definitions, overview, challenges
4.2 Healthcare challenges
4.2.1 Emerging health crisis
4.2.2 The healthcare system
4.2.3 Challenges in aged e-health
4.3 E-health: start with the professionals
5. Budget 2013: eHealth overview
6. Smartphones are pushing mobile health
7. Digital economy benefits
7.1 Healthcare is a key driver
7.2 This is how to stimulate e-health uptake
7.3 Accessing e-health records using a single sign-on
8. The national health reform
8.1 Introduction
8.2 National E-Health Transition Authority
8.2.1 Overview
8.2.2 National Authentication Service for e-health (NASH)
8.3 National Broadband Network will play a key role
8.4 Breaking down silo system through leadership
8.5 E-health identifiers
8.5.1 Healthcare Identi?ers Bill 2010
8.5.2 GP networks starting to use the identifier
8.6 Interoperability of electronic prescriptions.
9. BT’s e-Health plans for Australia
9.1 E-Health initiatives in Britain
9.2 BT’s involvement
10. Optimising e-health
10.1 Critical e-health assessment from Booz & Company
10.2 Key conclusions
11. Analysis by Frost & Sullivan
12. E-health (separate report on the National Broadband Network)
13. E-health (separate report – projects, pilots and initiatives)
14. E-health (separate report on global developments)
15. Related reports
Table 1 - Australian Health Market 2010
Table 2 - Percentage of GDP and government spend on aged care - 2001; 2008 - 2010; 2040; 2050
Chart 1 – Overview of GDP spent on aged care versus government spend – 2001; 2008 - 2010; 2040; 2050
Exhibit 1 - Primary and community health sector statistics
Exhibit 2 – Aged care services statistics
Exhibit 3 – Costs of e-health plan
Exhibit 4 – Funding for e-records

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