Healthcare Innovated: 2025 a year of opportunity for greater productivity

Welcome to 2025

In this edition:

1. The Key to Unlocking Productivity: Why Innovation Matters
2. Reforming Medicare: Is Australia Ready for a Blended Model?
3. Healthcare Innovated: Building Foundations for Growth and Productivity in 2025

The Key to Unlocking Productivity: Why Innovation Matters

Australia faces a significant productivity challenge, with rates at a 60-year low. Business leaders and economists alike recognise that improving productivity is critical to sustaining economic growth, enhancing living standards and ensuring Australia's global competitiveness. In a recent AFR article (CEOs reveal how to fix the productivity problem) CEOs from leading companies have weighed in, pointing to innovation as a central lever to address these challenges.

What Leaders Are Saying

1. Policy Reform: Many CEOs argue that productivity growth requires streamlining regulations and approval processes. For example, Santos’ Kevin Gallagher highlights the need for predictable and efficient regulatory systems to encourage investment and job creation.
2. Technology and Connectivity: Telstra’s Vicki Brady emphasises the transformative potential of technology and AI, which depend on robust digital infrastructure. Leaders across sectors echo this sentiment, pointing to AI’s ability to automate repetitive tasks and enable higher-value work.
3. Workforce Development: Talent shortages and skills gaps are recurring themes. Leaders from Lendlease and Worley stress the importance of training, apprenticeships, and skilled migration to meet demands in construction, energy and engineering.
4. Healthcare Innovation: Medibank’s David Koczkar and ResMed’s Mick Farrell highlight the link between health and productivity, advocating for preventive care and digital health solutions to reduce system inefficiencies.
5. R&D and Green Energy: Fortescue’s Dino Otranto highlights the need for investment in research and renewable energy to drive innovation and create a sustainable future.

Innovation as a Productivity Engine

Innovation underpins every aspect of productivity improvement. Whether it’s through adopting advanced technologies, enhancing workforce capabilities or rethinking outdated processes, leaders agree that innovation is no longer optional—it’s essential.

However, innovation doesn’t occur in isolation. A supportive policy environment, targeted investments in infrastructure and education and cross-sector collaboration are needed to unlock its full potential.

What This Means for Leaders

For business leaders, the message is clear: fostering innovation should be a top priority. This means embracing change, allocating resources to R&D and upskilling teams to adapt to new technologies. Leaders must advocate for policy reforms that reduce red tape and create an environment where innovation can thrive.

By prioritising innovation, businesses can not only improve their own productivity but also contribute to a stronger, more resilient Australian economy.

Reforming Medicare: Is Australia Ready for a Blended Model?

The Albanese government is reportedly exploring a significant overhaul to Medicare, aiming to better address the complex, ongoing health issues that the current fee-for-service model struggles to manage effectively. By blending traditional fee-for-service payments with bundled payments for managing chronic conditions, this reform could lay the groundwork for a more innovative, patient-centred healthcare system. But the question remains: will either major party have the resolve to implement such transformative changes?

The Proposal

Under the proposed model, most GP visits would remain fee-for-service. However, for patients with chronic conditions requiring long-term care, clinics could receive an annual lump sum. This approach aims to incentivise comprehensive, preventive care while discouraging quick, low-value consultations. It also builds on the success of Medicare Urgent Care Clinics introduced in 2023, which aim to reduce hospital pressure by offering accessible, non-emergency care.

Health Minister Mark Butler describes the proposed shift as moving toward a “blended future” for Medicare, combining episodic care with “wraparound” management for complex health needs. The Australian Medical Association has expressed cautious support, noting the potential for improved outcomes and cost savings in managing chronic illnesses.

Opportunities for Innovation

If adopted, the reform could drive significant innovation in healthcare delivery:

• Enhanced Preventive Care: Bundled payments may encourage GPs to prioritise prevention and early intervention, reducing long-term costs.
• Digital Health Integration: Managing complex conditions often requires seamless coordination between providers. This reform could accelerate the adoption of technologies like telehealth and predictive analytics.
• Team-Based Care Models: A lump-sum approach could incentivise multidisciplinary teams, integrating allied health professionals to deliver holistic care.

These changes align with broader trends in healthcare systems worldwide, which are increasingly focusing on value-based care to improve outcomes while controlling costs.

The Challenges

Despite its promise, the blended model faces scepticism. Some GPs question the cost-effectiveness of urgent care clinics, citing higher per-visit expenses compared to traditional general practice. Others worry about the administrative burden and potential risks of underfunding bundled payments.

The opposition has criticised the government’s healthcare initiatives, with Senator Anne Ruston labelling them as distractions from broader systemic failures. However, the Coalition has yet to propose substantial alternatives, focusing instead on expanding Medicare’s mental health support services.

Political Willpower

Introducing such reforms requires more than policy planning—it demands political backbone. With an election looming, both Labor and the Coalition must weigh the risks of alienating voters against the long-term benefits of addressing Medicare’s structural inefficiencies.

What’s at Stake

Australia’s healthcare system is at a crossroads. Without bold reforms, rising healthcare costs and an ageing population will continue to strain Medicare. The proposed blended model could represent a critical step toward a more sustainable system, but its success hinges on bipartisan support and careful implementation.

The key question remains: will political leaders—Labor or Liberal—have the courage to champion these necessary changes? Time will tell, but one thing is certain: innovation must be at the heart of any solution to safeguard Medicare’s future.

Source: AFR Labor considers ‘blended’ Medicare funding model

Healthcare Innovated: Building Foundations for Growth and Productivity in 2025

As we step into a year of significant change in healthcare and aged care, reviewing your operating model has never been more important. With Aged Care reforms including the Support at Home Program and increasing financial pressures across the health sector, organisations face complex challenges. Innovation isn't just about introducing something new—it's about creating greater productivity, scalability and growth opportunities, all while maintaining quality care. But none of this is possible without the right foundations.

An operating model is the engine room of your organisation. It defines how you deliver value to customers, structure your teams and manage resources. If it’s not aligned with your goals—or worse, if it’s holding you back—it’s time for a redesign. A well-thought-out operating model doesn't just address today's issues; it sets the stage for future innovation and growth.

This year, I'll be sharing a 6-part series to guide you through the critical considerations for redesigning and implementing an effective operating model. Topics will include:

• Setting the Vision: Aligning objectives and goals to create clarity.
• Understanding Your Current State: What’s working, what’s not and how to gather meaningful insights from employees and customers.
• Designing with Purpose: Focusing on workflows, activities, and guiding principles before jumping to structure.
• Building for Scalability: Costing and evaluating models to ensure they’re future proof.
• Iterative Implementation: Rolling out changes in a way that allows for early learning and improvement.
• Stakeholder Engagement: Collaborating with employees, customers and partners for sustained success.

This series is informed by best practices and significant experience—I’ve worked with organisations across the healthcare spectrum to develop models that not only improve efficiency but also create platforms for innovation.

If your organisation is navigating reforms, pressures or growth challenges, this series is for you. Together, we will explore what works, what doesn’t and how to ensure your operating model is built to last.

Stay tuned for practical insights, actionable strategies and lessons learned from the frontlines of healthcare innovation.

This is your opportunity to take control of your operating model and set a foundation for a brighter, more productive future.

Contact us to learn more about Healthcare Innovation. How to innovate in challenging times and create the space to grow, without the trade-offs.

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