October 02, 2007 | Graham

Announcement rolls back Rudd’s hospital “reforms”

One of the earliest things that the Goss government did when it gained power in Queensland in 1989 was to abolish the hospital boards that up until then had helped to administer the state’s hospitals. It was part of their allegedly “economically rational” agenda, in which Rudd was an integral player. It happened in most states, and now, two decades later, we have a conservative prime minister promising to reverse it.
There was in fact nothing “economically rational” about abolishing Queensland’s hospital boards. Economic rationalism is about a number of things, including devolving decision-making down as close as possible to the people affected by a system. Abolishing boards wasn’t rational in any economic sense, because it moved control away, not towards, the community.
It did, however, make good political sense. Most hospital boards had become stacked to some extent, particularly in country areas, with National Party hacks. Eliminating the boards eliminated political opponents and whistleblowers.
Modern economies are as efficient and wealthy as they are partly because they have moved away from centralised, bureaucratic, industrial age structures into networked communities of linked producers. Today, when you buy a car, for example, there is a good chance that only some parts of the car were made by the manufacturer. Many will have been made by smaller components manufacturers, like PBR in Australia who produce brakes for GMH, Daimler Chrysler and Fiat, to name just three.
Another example is the franchise system, which has dramatically improved the survival prospects of small businesses. Yet another is the Internet, which using a network structure has facilitated efficiency in industries as diverse as dating and terrorism.
Networks succeed by allowing for nodes of specialisation and linking them together.
The federal government has been very good at embracing this modern management approach to running large scale social infrastructure. One of their innovations is the Job Network, from which, ironically, the Rudd family made its millions.
When you look at where Labor states have gone wrong with hospitals, it isn’t so much for lack of funds, but the way those funds have been spent. The numbers of administrative staff have increased in size, while the numbers of doctors and nurses stagnated. Command and control solutions just don’t work, and similar tricks have been played in the hospital system to those that the Soviet era managers used to play. Need to decrease a waiting list? No problems. Create a waiting list for the waiting list and you can cut the official waiting list at the same time that the total number of people wanting a particular operation actually increases!
The Liberal proposal appears to be to directly fund hospitals themselves, while leaving some sort of light touch bureaucracy over the top of them. It’s where Rudd should have gone in his Queensland days. Hopefully it’s an issue where he will again play Howard lite having learnt from his previous experience.

Posted by Graham at 10:11 am | Comments (8) |
Filed under: Australian Politics


  1. One of the first things that the Kennet government did in Victoria was to close down all of the Community hospitals both in Melbourne and country Victoria.
    Hospitals that had been built up via years of community service and involvement, including cake stalls.
    The Burwood Community Hospital was a case in point. It was in a solid liberal electorate and a great reputation for its birthing and maternity services. There was strong coomunity opposition to its closure. But oh no Kennett and his IPA advised clones new what was best.

    Comment by John — October 3, 2007 @ 10:10 am

  2. “Economic rationalism is about a number of things, including devolving decision -making down as close as possible to the people affected by a system.”
    I suspect you made that up, but I’ll give you the benefit of the doubt, and expect you will provide a reference.
    What I’d call rational is to have a look at just who is going to be on these supposedly accountable boards of the PA, the Mater, Greenslopes, etc. I suppose finding existing examples of well-run modern comprehensive hospital enterprises ( not the cherry picking private ones) and getting their wunder-boards to train-up successors, and inducing them to then move on to the challenge of basket-case operations will be a doddle. For the princely sum of $10,000 each.
    I’d like to know how these wunder-boards are going to be held accountable for their stuff-ups. I’ll take the concept seriously when would-be boardmembers have to sign off on an agreement to surrender all their, and their families’, and corporate, worldly goods should they mess up.
    Or a Greg Maddock clause.
    Let’s be honest, they’ll just say sorry, and move on to another career opportunity, just like the regular bureaucrats do, and we are left with the legacy of their incompetence.
    What we need is a better class of bureaucrat, and a training program for more of them. Hha ha, an apprenticeship program , $10/hr, working in every department, with competencies, a TAFE course for hospital board membership.
    And what are we going to do with the duds when they are given the bullet? Gulags’R’Us?

    Comment by Fred — October 3, 2007 @ 11:39 am

  3. The Goss government also significantly reduced the power of the ‘Rural Lands Protection Board’ which had overseen the allocation of funds to the research station I worked for back then.
    As a consequence any change to any budget became the business of the new middle managers who made life difficult. The Board had been outcome focused, the middle managers were process focused and risk averse.

    Comment by Jennifer — October 3, 2007 @ 12:18 pm

  4. I didn’t “make that up” Fred. That’s what markets are about – enabling those closest to decisions. That’s why they work better than top-down, because the players generally have a better idea of what is happening than those who are abstracted from it.
    Your suggestion as to what board members should put on the line is absurd. The difference between public servants and private sector employees is that you can sack the latter. If you seriously thought your ideas reasonable, you’d apply them to the current situation.

    Comment by Graham Young — October 3, 2007 @ 11:23 pm

  5. Graham,
    At the risk of being seen again as a labor footsoldier, your thesis presumes that this was a considered, thought through policy decision, instead of the ad hoc, back of the envelope, on the run, made up policy that everyone knows it to be. One could argue just as logically that the kinds of area health boards that we have in NSW provide local control which links with strategic policy focus. And at the end of the day no amount of “spin” will disguise the fact that more than a billion dollars has been ripped out of the public health system by the Howard government. The discussion yesterday on radio national (forget the program) gave the lie to the “economic rationalist” approach. The health experts were saying that you could set emergency departments up so they had enough resources to meet most circumstances (the economic rationalist approach) or you could over resource them so that when the peaks occurred (which you could not know exactly when they would happen) you could respond effectively (certainly not economically rationalist but rational in health terms). It also pointed out that what was needed was more emphasis on preventative strategies,. This was echoed by none other than Michael Wooldridge.

    Comment by barney — October 4, 2007 @ 9:53 am

  6. Barney, I don’t think this policy was done on the back of an envelope, anymore than Kevin Rudd’s was. Abbott’s been wanting to do something about health for a while, and no wonder when the Feds get the blame for everything even when in most cases the states are to blame.
    Hospitals are like hotels, and I don’t think you’ll find anyone say it’s economically rational to run a hospital at 100 percent capacity all the time, anymore than they’d suggest you should run a hotel at 100 percent capacity. But what has that got to do with the issue of boards?

    Comment by Graham Young — October 4, 2007 @ 5:40 pm

  7. Graham,
    I think you should attach the label Liberal Footsoldier to your signature and dispense with any pretence at objectivity. To suggest that this was not an ad hoc decision beggars belief.
    Re boards. The argument from professionals is that health policy requires both local input plus a strategic approach top ensure that that resources are allocated equitably and rationally. Based upon Howard’s record for micro management of all government appointments, what we would end up with is each local board being yet another opportunity for political appointments and croneyism. Are you seriously suggesting that these local hospital boards set up by the federal government would not become the basis for marginal seat campaigning which would ignore health needs in favour of the government’s political agenda? The Mersey hospital provides the model for how this system will work. How is that rational?

    Comment by barney — October 5, 2007 @ 10:12 am

  8. The thought of placing part of local hospital management back into the hands of ‘good ol’ boys’, who wouldn’t know either a wart from a wound or what comprises best practice management, leaves me cold.

    Comment by Judith M Melville — October 5, 2007 @ 12:33 pm

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