The state of healthcare in Australia: The role of telehealth in improving healthcare productivity

We’re spending more on healthcare than ever before. And while we might be living longer, are we living better?
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While life expectancy has been steadily increasing in Australia, so too have our rates of chronic disease and comorbidities. As spending on healthcare has increased in recent years, is our healthcare system supporting us to not only live longer but better? Two new research reports from the Productivity Commission investigate the productivity growth of Australia’s healthcare sector, alongside the role digital technology can play in improving patient outcomes and enhancing productivity in healthcare. 

The Advances in Measuring Healthcare Productivity report suggests that while Australia’s healthcare sector is amongst the most productive in the world, significant challenges remain in providing more cost-effective solutions. A key suggestion here is the integration of digital technologies to improve the efficiency of our healthcare spend, without sacrificing the quality of care. The Leveraging Digital Technology in Healthcare report considers how better integrating digital technology into healthcare can ease the mounting pressures on the healthcare system while also saving upwards of $5 billion annually.

Let’s explore exactly what this new research can tell us about the state of the healthcare industry in Australia and its digital transformation. 

Advances in measuring healthcare productivity 

Overall, this report reveals that the Australian healthcare sector has seen productivity improvements in recent years — in other words, the sector has increased the ‘bang’ for the government’s ‘buck’. This is based on certain health conditions including cancers, cardiovascular diseases, blood and metabolic disorders, endocrine disorders, and kidney and urinary diseases. On the global stage, we rank third among 23 high-income countries for healthcare productivity, sitting below Spain and Iceland.  

Interestingly, the biggest contributions to productivity growth have come not from cost reductions but from providing more effective healthcare. The Productivity Commission attributes a majority of these improvements to better drugs and equipment as opposed to better services provided by healthcare professionals.

However, the report clearly calls out that Australia’s relatively good performance is not grounds for complacency. While the data indicates that the industry has made quality improvements in saving lives, we have made fewer, if any, gains in improving quality of life.

The report also makes a point of highlighting that quality-driven improvements have done little to ease healthcare’s growing economic strain but that reducing risk factors like obesity and alcohol consumption would further enhance the overall productivity of our healthcare sector. 

As a services-based healthcare business focused on providing preventative care offerings (specifically treatments for overweight and obesity), we are keenly aware of how virtual care models like ours could contribute to even greater productivity gains if endorsed and extended nationwide.

What about obesity? 

Obesity remains a huge risk factor in preventing improvements in Australia's healthcare productivity. Australia has the fourth-highest obesity rate out of the 28 high-income countries included in this study. 

Obesity has a greater effect on health outcomes than any other behavioural or environmental risk factors, including both smoking and alcohol consumption. But Australia spends comparatively little of its budget on preventative care — far less than its OECD counterparts. In fact, another recent study found that in the decade from 2013 to 2022, Australia spent only $778 million on funding allocations for obesity prevention, even though the OECD has estimated that obesity accounts for 8.6% of all Australian health expenditure and that it reduces Australia’s GDP by 3.1%.

It’s clear that Australia needs to spend more on obesity prevention, including not only wider use of GLP-1s but also other interventions like limits on junk food advertising and sugar taxes. 

Leveraging digital technology in healthcare

Just how efficient is telehealth?

The Productivity Commission indicates that integrating digital technology into healthcare could save more than $5 billion a year (largely through better use of electronic medical systems) and ease the mounting pressures on our healthcare system. Significantly, the paper also supports research indicating that when telehealth is used appropriately, it achieves similar clinical outcomes to in-person care. 

According to the research paper, Medicare-funded telehealth consults have saved consumers almost $900 million per year in reduced travel and waiting time. Imagine the savings if more telehealth services were included on this list.

The need for implementing telehealth quality and safety standards

This report serves as another reminder that national quality and safety standards for telehealth need to be implemented, and quickly. 

Importantly, the Productivity Commission surveys the existing patchwork of standards covering various aspects of the Australian healthcare system and concludes that none of them neatly cover telehealth platforms — particularly direct-to-consumer platforms such as Eucalyptus. 

On this point, the Commission quotes Eucalyptus’ 2023 submission to the Medical Board of Australia’s consultation process on its updated telehealth guidelines and recommends that the federal government should expedite the development of an accreditation scheme for the telehealth sector. It notes that the virtual care standards currently being drafted by the Australian Commission on Safety and Quality in Health Care should meet this need.

Why Medicare’s “12-month rule” needs to change

The 12-month rule was introduced early in the COVID-19 pandemic and was created to ensure patients receiving Medicare-rebated telehealth consultations had “an existing and continuous relationship” with their doctor. The rule prevents patients from obtaining Medicare rebates for a telehealth consultation with a doctor unless the patient has seen that doctor (or another doctor in the same clinic) within the previous 12 months.

While the rule is intended to encourage continuity of care, in effect it also disadvantages patients who already face challenges accessing their regular GP (if indeed they have a regular GP in the first place). Eucalyptus has previously criticised the 12-month rule on this basis, including in its submission to the Medicare Review Advisory Committee’s public consultation process on telehealth in late 2023.

In its report, the Productivity Commission criticises the 12-month rule, echoing some of the points from our own submission, as the rule:

  • disadvantages consumers who may want to use, but can’t afford, non-Medicare-rebated telehealth services;
  • discourages competition as it makes it harder for consumers to switch healthcare providers for a similar cost
  • prevents virtual-only telehealth providers from accessing government rebates

The Commission proposes some methods to modify the 12-month rule to minimise its impact on the healthcare budget: 

  • relax it only for patients who are also eligible for other government concessions
  • relax it but only for telehealth services that are deemed to be of a higher health value (e.g. non-cosmetic services) 

In conclusion, the Commission’s research reveals that while Australia is getting relatively good value for each healthcare dollar spent, there are significant improvements to be made, particularly with the integration of digital technologies into the healthcare sector. It’s clear that remote care technologies can help lessen Australia’s growing chronic disease burden, and it’s critical that key decision-makers invest in the digital tooling required to deliver effective telehealth solutions today, to minimise the problems the healthcare sector is likely to face in the near future. 


Lyndon Goddard
Senior Legal Counsel & Head of Public Policy