Under‐ and Postgraduate Education in Health Economics for Australia's Medical Practitioners: Time for Change?

• Published date: 01 September 2023
• Author: Jeffrey C. L. Looi,Jasmine M. Davis,Martin Hensher,Stephen J. Robson
• Date: 01 September 2023
• DOI: http://doi.org/10.1111/1467-8462.12520

The Australian Economic Review, vol. 56, no. 3, pp. 393–412 DOI: 10.1111/1467-8462.12520

Perspective

Under‐and Postgraduate Education in Health Economics for

Australia's Medical Practitioners: Time for Change?

Jeffrey C. L. Looi , Jasmine M. Davis , Martin Hensher and

Stephen J. Robson*

Abstract

Directly or indirectly, medical practitioners

influence health‐care policy and spending

through their clinical decision‐making. As med-

ical expertise and technology has grown, and

patient choice has been empowered by the

consumer movement, there are now many more

medical interventions than can be accommodated

in a finite national health‐care budget. We

reviewed the Australian Medical Council,

Medical School and Medical Specialist curricula.

In Australia, medical students, doctors and

medical specialists do not appear to have specific

health economics education that would improve

skills to select beneficial and cost‐effective care.

We propose a framework for medical practi-

tioner health economics education.

1. Introduction

‘The ideas of economists and political philoso-

phers, both when they are right and when they

are wrong are more powerful than is commonly

understood. Indeed, the world is ruled by little

else. Practical men, who believe themselves to

be quite exempt from any intellectual influences,

are usually slaves of some defunct economist’

(Keynes 1936, p. 190).

1.1 Medical Practitioners Substantially

Determine Health‐Care Expenditure

Without the benefitofanintellectualand

practical background in health economics, the

decisions of medical practitioners determine

the majority of health‐care expenditures in

Australia. Australia had approximately 105,000

registered medical practitioners (‘doctors’)in

2020 (AIHW 2023b). A substantial proportion

of the overall health expenditure in Australia is

under either the direct, or indirect, control of

these doctors. This expenditure takes multiple

forms, such as payments from the Medical

Benefits Schedule (MBS) either directly to

doctors (‘bulk billing’) or as cash transfers to

patients after medical services (DOHAC2023).

Doctors also set their outpatient, procedural

and hospital fees, which are decided upon

based on complexity and costs of service

delivery. In addition, doctors' consultation and

* *Looi: Academic Unit of Psychiatry and Addiction

Medicine, The Australian National University School of

Medicine and Psychology, Canberra Hospital, Canberra,

ACT 2605, Australia and Consortium of Australian‐

Academic Psychiatrists for Independent Policy and

Research Analysis (CAPIPRA), Canberra, ACT 2605,

Australia; Davis: Melbourne Medical School, The

University of Melbourne, Melbourne, Australia and The

Australian Medical Students’Association, Barton, ACT,

Australia; Hensher: Menzies Institute for Medical Research,

University of Tasmania, Medical Science Precinct, Hobart,

TAS, Australia; Robson: Department of Obstetrics and

Gynaecology, The Australian National University School of

Medicine and Psychology, Canberra Hospital, Canberra,

ACT, Australia and Australian Medical Association, Barton,

Canberra, ACT, Australia. Corresponding author: Looi, email

<jeffrey.looi@anu.edu.au>.

[Correction added on 5 July after first online publication:

affiliation of Jasmine M. Davis, Martin Hensher is

updated.]

© 2023 The Authors. The Australian Economic Review publishedby John Wiley & Sons Australia, Ltd on behalf of The University of

Melbourne, MelbourneInstitute: Applied Economic & Social Research, Faculty of Businessand Economics.

This is an open accessarticle under the terms of the Creative CommonsAttribution‐NonCommercial‐NoDerivsLicense, which permits

use and distribution in any medium, provided the original workis properly cited, the use is non‐commercial and no modifications or

adaptations are made.

procedural fees, like all prices, will need to be

indexed for inflation. The gap between the

Medicare reimbursement subsidy that accrues

to a patient for a particular consultation or

procedure and the doctor's fees is described as

the out‐of‐pocket cost.

When medications are prescribed for patients,

many will be partially subsidised through the

Pharmaceutical Benefits Scheme (PBS)

(Services_Australia 2023). The ordering of

tests—blood tests, tissue pathology, a range of

other diagnostic pathology tests as well as

imaging (x‐rays, ultrasounds, CT and MRI

scans) are partially or fully subsidised by partial

reimbursement of the patient for the test cost.

Doctors refer patients to other doctors and health

professionals (such as dieticians, physiothera-

pists or psychologists), perform procedures

(such as colonoscopies and breast biopsies) and

operations (such as removing cancers found at

colonoscopies or breast biopsies), as well as

other treatments (for example, the chemo‐or

radiotherapy required to treat cancer).

Consultations, procedures and treatments

require an infrastructure—consulting rooms or

an operating theatre that must be maintained;

disposable medical supplies and staff, not only

to enable practice rooms or operating theatres,

but at every point from admitting a patient to

hospital; and providing post‐operative and

longer‐term care, such as rehabilitation

programs.

While it is difficult to provide a precise

estimate of the total amount of expenditure

across government and non‐government sec-

tors that directly results from the actions and

decisions of doctors, most expenditures

directly stem from the actions or decisions

of medical practitioners. Most hospital care

stems directly from medical decision‐making,

as does almost all spending on referred

medical services, alongside the majority of

primary‐care spending reflecting either direct

medical care or medical decision‐making

regarding the further services. As Dranove

and Burns (2021) observe, ‘the most expen-

sive medical technology is not drugs or

magnetic resonance imaging; it is the physi-

cian's pen'. Estimates from the United States

indicate that doctors’decisions affect 80 to 85

per cent of all health expenditure in that

country (Crosson 2009).

1.2 The Size of the Australian Health‐Care

Industry

Interaction with the health‐care system by

Australians is almost inevitable. The

Australian Bureau of Statistics (ABS 2023)

Patient Experiences report for the financial

year 2021–22 estimates that 83.6 per cent of

Australians had at least one consultation with

a general practitioner (GP), 38.9 per cent saw

a non‐GP medical specialist (such as a

surgeon or psychiatrist), and 14.8 per cent

visited an emergency department (ED).

During that year 12.8 per cent of Australians

were admitted to a hospital.

The COVID‐19 pandemic has greatly

strained health‐care systems globally, with

significant impacts in Australia, and it is

difficult to predict when demand for health

services will return to pre‐pandemic levels

(Cutler 2021; Stobart and Duckett 2022).

The emergence of conditions such as

‘long COVID’and the ongoing increase in

chronic disease means that it remains

a possibility that health‐care demand will

be permanently altered (de Leeuw,

Yashadhana and Hitch 2022).

The Australian Institute of Health and

Welfare (AIHW) data release for the financial

year 2019–20 estimated a total expenditure on

health goods and services of (AUD) $202.5

billion, an average of $7926 per person

(AIHW 2023a). This figure represents 10.2

per cent of Australia's gross domestic product

(GDP), an increase from 10 per cent in

2018–19. Of this spending, governments

funded $142.6 billion (70 per cent), with

$86.4 billion from the Commonwealth

Government and the remaining $56.2 billion

from state and territory governments. Non‐

government entities—private health insurers

($16.7 billion), injury compensation insurers,

other private sources and out‐of‐pocket costs

for individual patients (who spent $29.8

billion)—were responsible for the remainder

of the expenditure. The AIHW data estimated

that a total of $83.5 billion (41.2 per cent) was

394 The Australian Economic Review September 2023

© 2023 The Authors. The Australian Economic Review published by JohnWiley & Sons Australia, Ltd on behalf of The

University of Melbourne, Melbourne Institute:Applied Economic & Social Research, Facultyof Business and Economics.