INTRODUCTION

Many factors have converged to place pressure on health care organisations to develop integrated service delivery systems. These include designing systems of care for patients with chronic and complex care needs, patients with co-morbidity and populations with complex health and social needs. The current health system design emphasises general practice gatekeeping and referral to specialists and hospitals. Such a design produces and gives priority to a large volume of acute episodic care. However, as noted in the recent report from the Institute of Medicine, Committee on Quality Health Care in America, most care is now provided to people with chronic conditions, and 40 per cent of these have more than one condition (Institute of Medicine 2001). The current structure is fragmented by specialised services and cannot readily provide the care these people require. The public increasingly expects service industries, including health, to provide ‘one-stop’ or ‘user-friendly’ service. Furthermore, the growth of expensive technology creates the need for economies of scale offered by larger, aggregated organisations. Increasingly funders are seeking to transfer risk to providers and to manage that risk by creating incentives for organisational aggregation and integration. The greater role of the private sector in many countries also creates an incentive for growth through aggregation, as growth is rewarded in equity markets (Robinson 1999). Finally, organisational aggregation and integration has been made increasingly possible because the information needs involved can be met through modern information technology.

All western health care systems face these pressures; their manifestation varies from country to country, depending on funding arrangements, the role of central government in health service provision and the politics of health reform. This is but another example of the ‘accidental logic’ of health system design and reform (Tuohy 1999). In the United States, integrated service systems have emerged largely within the framework of ‘managed care’. Included are a range of organisational configurations, from the original staff model ‘health maintenance organisation’ (HMO) to a variety of private for-profit health care organisations that compete for capitated payment contracts. In the United Kingdom, National Health Service (NHS) reforms to improve integration have been top-down, as befits Europe’s largest bureaucracy. This has included the development of the purchaser/provider split, general practice fund-holding and the current government’s implementation of primary care trusts.

It is not possible to fully cover this range of responses. In this chapter we explore how Australia, with its fragmented public and private health care system, has sought to move towards integrated service delivery systems. In the first section we chronicle historic factors that have led to fragmentation and that continue to inhibit efforts at integration. We then explore some initiatives to improve clinical integration, including Australia’s coordinated care trials, integration in mental health and the growing use of clinical guidelines and protocols. Finally, we outline the organisational theory that underpins structural options for developing integrated service delivery systems. Structural options are often favoured in health system reform. At one level aggregating organisations facilitates the coordination of work between them; in this case the integration of clinical care. In many cases, however, strategy is focused on managerial issues such as control, growth and market share. Structure may also be used to facilitate the integration of the patient care process within organisations. These options are also explored.

THE CONTEXT

The design of integrated delivery systems is made especially difficult and interesting because so many of today’s service boundaries were laid down in an evolutionary process long ago. They have added rigidity to the complex mix of services we now seek to ‘integrate’. The underlying assumption made in recent years, to support the rash of attempts to reorganise the system, is that there does exist a best way to organise health services. If only we knew what it was!

Service boundaries are products of old and new political, professional and managerial arrangements. For a variety of reasons lines have been drawn between one funding program and another, between the states and the commonwealth, institutional and community, public and private providers. The complexity and impermeability of the enclaves in practice hides the simple, underlying truth that the boundaries are there to protect conflicting interests (Sax 1984). This section sets out to explain why they endure even when everybody can see that they are getting in the way of running the health system efficiently.

The difficulties for so-called western industrialised countries started in the turmoil of the nineteenth century. Industrialisation and urbanisation were going at such a pace that parliaments had to intervene to ensure civil peace and order with an organisation plan for public health, mental health and care of the sick poor. Australia inherited a public health system which was based on local government control of public health, custodial mental health care, medical care for the sick poor in dispensaries or public hospitals, hospital care for the middle classes in a ‘voluntary’ hospital system based on public subscription, and finally private medical practice. Later many voluntary organisations emerged to meet specific needs such as district nursing, and care for the aged, chronic sick and disabled either in the community or in religious hospitals and institutions. There was, and still is, no overall plan: only a common desire to find a third party willing to help pay the bills.

THE SHAPING OF THE BOUNDARIES IN MODERN TIMES

The colonial inheritance of separate streams of clinical, community and public health services provided for public and private consumers is not the end of the boundary story. Some positions became even more entrenched in the past 50 years.

Resistance to a national health service

In the immediate post-World War II years the aim was to make the recent advances of modern medicine available to everyone who needed them. The capacity of modern medicine to make a real difference and provide better health services to the public and individuals has inevitably increased cost, complexity and medical power.

The dramatic social changes in the twentieth century and two world wars led to increasing intervention by governments in the financing and organisation of health care. The pace of change in Australia noticeably quickened during World War II as a result of a change in social expectations and the work of the Joint Parliamentary Committee on Social Security, whose recommendations were adopted by the Chifley and Curtin Governments.

The theme of ‘socialised’ medicine developed a variety of forms and was mainly about access and equity as well as modernisation. It was inevitable, however, that a national system of health care and social security would result in increasing government intervention and control. The requirements for accountability, universality and compliance with policy resulted in the grafting of political/bureaucratic systems onto the existing organisation of health and medical services. It became clear that existing institutions for health care were too robust to be absorbed willingly into some kind of structure based on an ideal of an organised health service.

Australia’s efforts to set up a national health service

The relative strength of the medical profession and governments has been severely tested in Australia. The Pharmaceutical Benefits Act 1944 was opposed by the British Medical Association and declared invalid by the High Court of Australia. The 1946 referendum created the powers necessary within the Constitution for the Australian federal government to legislate for health care and social services. It was, however, subject to the important constraint in the Commonwealth of Australia Constitution Act 1900, section 51 (xxiiiA) ‘but not so as to authorize any form of civil conscription’. This clause was inserted into the referendum case at the last minute in response to the doctor lobby, which wanted protection against being ‘nationalised’. The subsequent (1947) Pharmaceutical Benefits Act was declared in breach of this provision and the National Health Act 1948 was never implemented (Sax 1984).

The Earle Page Plan for voluntary health insurance was introduced in 1953 and became the model for the next 20 years (Palmer & Short 2000). This plan fitted with the views of the leaders of the medical profession, who were wedded to the public teaching hospital system. The organisational issues inherent in setting up a demand-driven insurance scheme, which reimbursed fee-for-service charges, were carefully avoided. While this may have been the price of peace with the medical profession it has had a number of organisational side effects. Not the least of these has been the tendency for general practitioners to become isolated from specialists and the other, usually salaried, members of the health care team. This is a real obstacle to service integration. It was inevitable that fee-for-service medicine became a basic principle in the design of Medibank which was also a starting point for another state/territory–commonwealth boundary; in future all fee-for-service medical payments would be met through the commonwealth and the states/territories would only pay for salaried medical services in public hospitals and health services.

Professionals and politicians

The behaviour of the health system at whatever stage of its evolution is critically dependent on the attitude of the medical profession. The relationship between politicians and doctors has been and is likely always to be difficult. The culture of medicine is about assuming personal responsibility for the care of individuals. The politician is responsible for a constituency. Societies have to resolve the conflict between the desire to bolster a culture of freedom and individual responsibility with the desire to care for those in need. Doctors have been caught in the middle of this conflict.

The health system is built on the premise of collaborative behaviour. Organisations, by their nature, need aims, which can be defined and carried out to a performance standard. Within them executive authority is based on administrative, or position, power rather than individual professional expertise. When governments have to meet a major part of the cost of services to the public they naturally seek organisation and performance plans which ensure accountability for public expenditure. They will also insist on efficient working methods, increasingly specified outcomes, and compliance with policies, which may cover a wide range of issues from quality standards to eligibility.

Individuals and organisations may value their independence more than the desire to work with others to agreed aims. They may therefore cooperate only on their own terms. This conflict is an essential part of the recent history of the efforts made by governments to provide a health system that meets the needs of all citizens in a fair and equitable way.

Ideological conflict

Not only in the political arena has ideological conflict been decisive. The more modern medicine achieved, the more necessary it was to delineate roles and make effective use of limited resources. The benefit from advances had to be shared and that meant planning. Greater efforts were focused on organisational sophistication. Official scepticism about the benefits of modern medicine had been foreshadowed by Bernard Shaw and was given further prominence by McKeown (1976), Illich (1977) and others. They popularised the view that medical services do not equate to a health service. Genes, environment, education and social conditions have their part to play. Cochrane (1972) put on the agenda the notion that medical advances, to be funded, had to pass the test of effectiveness and efficiency in randomised controlled trials. There remains today intense competition between those supporting the current distribution of resources on acute care and those who argue for more resources to improve the public health through social interventions, health promotion and changes to public policy.

The two cases are of course well supported by evidence reflecting the values of the protagonists. There is no doubt that this is the age of chronic illness — made possible by advances in living standards and in scientific medicine, as well as lifestyle change. The big killers, cardiovascular disease and cancer in various forms, are at the top of the table because of the complex interaction between improvements in social conditions and medical science. In addition there is a huge burden of chronic mental illness and other forms of disability carried by the community. Because many of these conditions are susceptible to palliation only, it is at this point that the needs for a well-organised health system are paramount. The system as a whole is still not geared up to dealing with an epidemic of chronic illness. It is doubtful that the health system will be able to respond to ‘real world’ needs while health service delivery remains locked into acute illness models.

The modern era

In the late 1960s a series of ‘green papers’ was produced by the Ministry of Health in the United Kingdom to reform the organisation of the National Health Service (NHS). The constant theme was integration. It was recognised that the fragmented status of those providing acute care, general practice, mental health, long-term care, and social support services did not lead to the efficient use of resources or good outcomes for patients and consumers. It was proposed that health services provided by the NHS and social services provided by local authorities should be more closely integrated and that a comprehensive service should be planned on a geographic basis. These ideas were extended and implemented over the next 25 years into a regular cycle of reorganisations. Areas, districts and regions were created and dissolved. It was assumed that the right way to put together services would be found in organisational theory and practice. The introduction of competition and contracting out for service delivery has, however, introduced a major shift in emphasis in the accountability for local decision-making. Now primary care trusts and hospital trusts have the discretion to contract for service provision in a modified market of providers and consumers. This change involves adjustments to the expression of accountability to the central bureaucracy and ministers. One thing is clear however — the strength of central control may have changed shape but it has never been diluted.

In Australia the various components of the health system had continued to evolve in their separate ways. By 1969 the insurance arrangements established by Earle Page were becoming unmanageable. The Nimmo report explained the origins and nature of the problem (Commonwealth Committee of Enquiry into Health Insurance 1969). Scotton and Deeble (1968) took up the debate. Their proposals for a compulsory, universal health insurance system were later adopted by the Labor Government and became Medibank in 1975 (Scotton & Macdonald 1993). This was to be a tax-financed system but administered through an insurance scheme for some services, and grants to states for others. As the commonwealth controlled the funds but not the providers, except through conditional grants, it had limited ability to change the delivery system. The Whitlam Government sought to foster integration in primary care through a system of local community health centres run by cooperating general practitioners (GPs) and staffed by community health nurses and allied health professionals. Integration of services proved expensive, and funding was reduced by the Fraser Government in 1976. Despite this, the community health movement has continued as an authentic Australian response to the need for integrated service organisation and delivery, and has been a starting point for the coordinated care experiment.

The health system and the pursuit of power

The 1970s was an era in which the consolidation of funds projected health to the top of the league table of public spending. It inevitably became the focus of attention for those interested in the manipulation of power. As von Otter and Saltman (1990, p 17) have pointed out:

Public agencies are rarely rational instruments for the smooth implementation of policy decisions. Organisation theorists … have argued that formal goals are among the least important constraints on organisational behaviour for public institutions. Deviation from official goals is due not only to poor motivation, top down communication patterns or bad management but also to the subjectively rational policies of sectional groups.

In Australia, most of the states and territories had already embarked on a consistent program of organisational reform before the Medibank reforms were completed at the national level. The problem was to find a neutral base to create a harmonious whole for:

public and private organisations and individuals;

institutional and community organisations;

mental and acute illness, disability and long-term care;

medical, dental and other health practitioners; and

federal, state, territory and local government funding programs.

For example, there was an exhaustive study of the South Australian health system in the report of the Bright Committee (1973). It identified a need to adopt a modern conception of what we mean by health and how this should be interpreted in the design of an integrated health system. The report is still a model analysis. The proposed solution tried to recognise the need to separate the providers from the political bureaucracy. Doctors, voluntary organisations and other non-state/territory bodies needed to collaborate without having to change their cultural/organisational format. There was to be no attempt to ‘nationalise’ the providers. The key recommendation was that a health agency, the Health Commission, would be set up to be separate from public service and day-to-day ministerial control. Although legislation was passed and the commission established it was clear that neither politicians nor central government agencies were happy with the idea of such a large service being distanced from central control. This was especially the case as it happened at a time when big funding programs (Medibank) started to flow from the commonwealth to the states and territories. Over the next few years the powers, if not the name of the Health Commission, were changed. The device of a commission was tried out in other states/territories at the same time and with the same result: all have been abolished and their powers transferred to conventional public service bureaucracies.

The opportunity for integrating public, private and voluntary organisations in joint working plans with doctors in public and private hospitals and general practice was lost. The elevated status anticipated for public health and mental health services has not been realised. They are still in the shadow of the big-spending acute care services.

In the last 20 years a number of changes have been made to the way in which health services in the public sector have been configured; the changes follow a widespread shift in public administration process generally. Changes in the 1980s and 1990s have been designed to allow more direct central control over expenditure or compliance with political priorities. The changes have resulted in shifts in the distribution of power between various levels of the public health system. The paradox has been that changes in governance have often been described as moves to decentralise management to facilitate integration and to ensure a better match between local needs and service priorities; but they have been implemented in ways which ensure greater central control. They have done nothing to allay the current concerns about the longer term financial burden of an ageing population and the burden of chronic disease. The structural boundaries have become more serious in their impact on system performance as the environment has changed. The theme of integration stemmed from a desire to make the system more coherent by ensuring coordinated management between the functional arms of public health, mental health, chronic and acute care. The New South Wales area health services have been able to distribute resources to achieve this aim in the public sector; funds have been distributed on a population basis to the authority for the purposes of the whole area. The arrangements have been stable until changes in 2005 when the areas were reduced in number from 17 to eight.

Changes in governance have been ordained in the context of changes in the preferences of incoming governments who want to be seen to be doing something without being troubled by any formal evaluation of the impact of previous reforms. Change has usually been based on a proposed solution to symptoms which have much deeper causes. One way of considering this dilemma is to widen the application of the models of horizontal and vertical integration discussed later in this chapter. Organisational or functional boundaries which have evolved over many years may be understood more clearly if they can be seen in stark contrast.

Organisational boundaries would embrace, for instance, the way resources are acquired and distributed, the rigidity of the institutions providing care, the separation of public and private services and the interface between the political system and providers. That boundary and interface, of course, exists in its most significant form in the split between federal and state governments, and between the providers of health care and the respective political and bureaucratic systems. Functional boundaries are those which separate acute care from mental health and public health, community care from institutional care and general practitioner from specialist services.

Current concerns about the burden of chronic disease and the affordability of the current health system have highlighted the need to overcome structural boundaries in the system. The design of organised care for the chronic sick is a classic illustration of the mismatch apparent in the vertical and horizontal dimensions of the boundary system. A plan for care for chronic sick patients is only possible if the financial control system and accountability can be managed in one coherent system of care. The different institutional providers of care running from doctors through to home helps can only work together harmoniously on the horizontal plane, if the constraints in system boundaries can be removed. If the funding and control organisations are listed in order of significance on the vertical axis and the patient services required on a horizontal axis it is possible to see the range of possible agencies which would have to be involved. Solutions based on the latest managerial fashion are unlikely to be effective if these constraints are ignored.

Private health care providers have been taken through a process of integration for reasons explained earlier; they have been brought into horizontally linked groups through ties of financial control and ownership and sometimes linked also on the vertical axis as shown later in this chapter. The driving force for this trend has been part of a wider shift of turning profit-making investment into non profit-concerns. Many former community hospitals have now been absorbed into conglomerates working on an interstate basis.

These issues have been well described and recent contributions explain the current situation (Dwyer 2004, Marchildon 2005, Menadue 2004). These papers make instructive reading compared with the report of the Institute of Medicine (2001), which could only make an appeal to a broad coalition of interests to develop an action plan to improve the quality of services. The Institute’s recommendations are made in the absence of any authority which can act as a legitimate single source of authority with the responsibility to set targets and coordinate the activities of multiple autonomous agencies. In contrast the NHS in the United Kingdom can produce centrally, or through various government agencies, specific plans to improve service provision through a wide range of interventions to be made at the operational level. See for instance, the NHS Improvement Plan: putting people at the heart of public services and the NHS Plan (see http://www.dh.gov.uk/Home/fs/en).