Synergies was engaged by the Queensland University of Technology (QUT) to assess the economic benefits of the proposed QUT Health and Wellness Precinct, which will be designed to operate as a hub of excellence for translational research, innovation, teaching and learning with a strong focus on evolving technology. The project involved assessing the economic benefits of several programs and initiatives that are similar to the activities to be conducted within the Precinct in addition to modelling the economy-wide benefits to be derived from the Precinct’s outcomes using a Computable General Equilibrium (CGE) model.
The increasing cost of chronic illness
The current trends in the Australian healthcare sector are concerning. The combined effect of an ageing population and the continued deterioration of key health risk factors is resulting in the increased incidence of chronic conditions such as cancer, cardiovascular disease, diabetes and mental health disorders. The cost of providing care to the increasing number of patients with chronic conditions is placing significant stress on the healthcare system.
Failure to address these trends will have significant consequences. Based on current projections, by 2030, healthcare expenditure will exceed $340 billion per annum, around 13.5 per cent of Gross Domestic Product. This is in addition to the economic cost and loss of labour productivity resulting from the increasing incidence of chronic illness.
QUT’s Health and Wellness Precinct
QUT recognises the role that health education and research institutions have to play in terms of implementing the changes required for the sector to address these trends. QUT is planning a new development at its Kelvin Grove campus, to unify and extent the university’s expertise in concert with its nearby clinical health facilities. The QUT Health and Wellness Precinct will enable QUT to expand the capacity of its current operations and to improve its overall efficacy in education, training and research across all its healthcare disciplines.
Synergies was engaged by QUT to assess the economic benefits to be derived from the Precinct. A two-step approach was adopted to assess the economic contribution of the Precinct:
Assessment of several case studies based on QUT’s current activities that are indicative of the nature of the activities and programs that will be developed and expanded upon as a result of the development of the Precinct; and
Estimation of the economy-wide impacts of the improvement in preventative healthcare, using a Computable General Equilibrium (CGE) model.
Synergies worked with QUT to identify current programs and initiatives considered representative of the activities to be developed and expanded upon within the Health and Wellness Precinct. The case studies assessed included:
Research into the development of non-invasive diagnostic testing to diagnose chronic conditions such as cancer and cardiovascular disease:
Healthcare costs associated with cancer cases that are avoidable with improved early detection and diagnosis was estimated at around $1.6 billion p.a.;
Replacing 10% of colonoscopies with non-invasive tests would result in a direct cost saving of up to $300 million p.a.;
A cardiac rehabilitation clinic providing rehabilitative services to reduce the incidence of rehospitalisation for patients with cardiovascular disease:
Direct cost savings from the provision of effective cardiac rehabilitation could be as high as $170 million p.a.;
The total economic cost of repeat hospitalisations for people with cardiovascular disease is estimated at around $3.3 billion p.a.;
An interdisciplinary program for patients with type 2 diabetes with the objective of improving patient self-management and avoiding the need for hospitalisation and advanced treatment;
Potential reductions in the direct costs of treating several complications from diabetes, including diabetic foot disease ($154 million p.a.), Diabetic Macular Oedema ($29 million p.a.), and kidney failure ($15 million p.a.);
Research aimed at expanding the scope of practice of healthcare professions by enabling professionals to conduct additional procedures and also expanding prescribing capabilities:
Expansion of scope of practice to enable nursing assistants to undertake certain procedures estimated to result in a potential cost saving of $360 million p.a.;
Expanding roles of physiotherapy and occupational therapist assistants estimated to result in direct cost saving of $43 million p.a.;
Development and implementation of a more effective and efficient model for providing palliative care:
Potential cost savings of $33 million p.a. from avoided hospitalisations;
Provision of community-based care rather than hospital-based care could result in up to $2.3 billion in annual cost savings;
Research on the development of innovations for improving mental health through early intervention and resilience programs:
Potential economic benefits from improved prevention and early intervention of mental illness estimated at $6.8 billion p.a.; and
Every 1% reduction in the incidence of depression results in an economic cost saving of $126 million p.a.
The economy-wide impacts of the Precinct were modelled using a Cadence Economics General Equilibrium Model (CEGEM) based on the estimated savings in direct healthcare costs and the avoidance of lost labour productivity from the reduced incidence and severity of chronic conditions. These estimates were derived by reviewing health expenditure data and published estimates of the loss of labour productivity for each of the key chronic conditions on which the Precinct is expected to have the greatest impact (cancer, cardiovascular disease, diabetes, mental illness) and applying estimates from studies on the efficacy of improved preventative treatment.
The economy-wide impacts were modelled under the two scenarios – a ‘base’ scenario, based on the assumption that the Precinct would result in the realisation of 14% of the total identified cost saving and productivity improvement (based on QUT accounting for 14% of Queensland health student enrolments) and an ‘alternative’ scenario, based on the assumption that the Precinct would result in the realisation of 50% of the total identified cost saving and productivity improvement, representing a more optimistic scenario.
The results of the CGE modelling showed that by 2040, the Precinct will result in additional:
Gross State Product of $701 million p.a. under the ‘base’ scenario and $2.5 billion p.a. under the ‘alternative’ scenario;
Gross State Income (economic welfare) of $772 million p.a. under the ‘base’ scenario and $2.7 billion p.a. under the ‘alternative’ scenario; and
Employment of 401 Full Time Equivalents (FTEs) under the ‘base’ scenario and 1,423 FTEs under the ‘alternative’ scenario.