As a psychiatrist at the coalface in a NSW public hospital, Kevin Rudd’s health plan seems to me to be a lot about showing his government taking charge. But beneath the soaring rhetoric its substance fills me with foreboding.

The real story of the health crisis is the encroachment of privatisation and neoliberal ideology into the public system. Yet Rudd’s “solution” starts from these trends remaining unchallenged and that, instead, the government will get “efficiencies” by increasing pressure on clinicians and patients in an already ailing system.

Behind popular talk of ageing populations and spiralling patient demand—both of which could be anticipated and managed in a rationally planned system—spending has outstripped economic growth because of two main trends. First of all, federal governments have simultaneously increased subsidies to the private system and encouraged people to move into private cover, such as with the 30 percent private insurance rebate.

Secondly, giving ground to corporate interests has led to increased costs for public provision. One major example is the emasculation of the Pharmaceutical Benefits Scheme, with the government weakening its commitment to contain Big Pharma’s profiteering, thereby adding hundreds of millions to the federal and state drugs bills.

Rather than tackling these imbalances—and remember he is yet to actually promise any new funding—Rudd’s plan turns on some nasty economic rationalist sticks dressed up as carrots. Take “activity-based funding”, which sounds friendly enough but is actually about creating an internal market within the public system that runs not on patient outcomes, not even on arbitrary KPIs, but on dollars and cents.

What this will mean in NSW is “local health networks” coming under tremendous pressure to preference certain types of patients and procedures that net the most funding compared with costs. For example, a hospital may choose to let other services run down to become a hip-replacement factory because it can deliver the operations at lower cost than the government payment.

But where will efficiencies come from? If anyone thinks that NSW public hospitals have a lot of fat to cut they should come spend some time in an acute psychiatric service to see clinicians making tough rationing decisions 24/7. For example, lack of beds means that as new patients arrive in the emergency department we are having to choose patients to be discharged from the ward, even if they are short of full recovery or have outstanding social issues that need to be addressed. For years we have had to deal with growing work intensification and resource shortages.

Rudd’s plan is designed to ramp up this pressure, with doctors and nurses also drawn into local managerial committees to implement cuts, driven by a bottom line determined from Canberra. It is no accident that Rudd’s report talks a lot about finances, standards and waiting times, but makes virtually no mention of patient outcomes.

I have never bought the idea that "blame-shifting" between levels of government was the main problem, although it certainly goes on. It is the growing dominance of powerful corporate interests, encouraged by Canberra, which distorts public health provision.

The real alternative is not imposing a different paymaster but tilting the balance back towards a stronger public system.

This would mean cutting against the corporate welfare that goes on now. Based on international experience, countries where public systems dominate not only cost less but also deliver similar or better health outcomes.

The PM is making George W. Bush-like threats that if states are not with him they’re against him on this issue. Yet for NSW, where the hospital crisis is particularly serious, it would be much better if the state government refused to play ball until Rudd showed he was serious about redirecting money currently supporting the private system back to public hospitals.

Ceding health budgets to Canberra might ease NSW Labor’s immediate political problems, but arguing for a genuine strengthening of public hospitals would be a vote winner, and better yet would be the right thing to do for the patients and health workers of our state.

Dr Tad Tietze is a public hospital psychiatrist in Sydney