In the wake of the explosion that was the Federal Budget, plenty of details have gone missing in action and may take time to surface.

In the article below, health policy consultant Dr Sharon Willcox identifies some of the details that are missing from planned primary health care reforms, and also highlights some contradictions in the Horvath Review of Medicare Locals.

Sharon Willcox was a former Commissioner on the National Health and Hospitals Reform Commission that recommended the establishment of primary health care organisations evolving from the previous Divisions of General Practice.


Let’s stop equating health reform with governance and organisational restructures

Sharon Willcox writes:

The Government-commissioned review of Medicare Locals (the Horvath Review) was released without much fanfare on the eve of the 2014 Commonwealth Budget.

The Review’s main thrust is two-fold:

• new primary health organisations should be established (replacing the relatively new Medicare Locals) with the remit of improving health outcomes through ‘integrating and coordinating health services’; and

• there should be far fewer primary health organisations compared to the existing 61 Medicare Locals. (In the Budget these new organisations have been titled Primary Health Networks or PHNs).

The evidence and arguments for what is the right number of PHNs are not apparent from the Review.

Perhaps some of this evidence may be included in the analytical studies (a review of the functioning of Medicare Locals; an independent financial audit of Medicare Locals; and stakeholder consultations and submissions) that sit behind the Horvath review, but have not yet been released by the Government.

But, at the moment, the key argument appears to be that there should be ‘boundary alignment’ between new PHNs and Local Hospital Networks (LHNs).

However, if the problem is ‘misalignment’, reducing the number of Medicare Locals is likely to worsen, not improve the situation.  There are currently 123 geographically based LHNs.

If one-to-one alignment is desired, we need to either increase the number of PHNs/Medicare Locals or reduce the number of LHNs (but the Horvath Review is silent on the issue of the ‘right’ number of LHNs).

More substantively, the key premise of the Review’s recommendations is that the problem of system fragmentation and uncoordinated care for patients can be ‘fixed’ by creating yet another organisational structure (whose job it is to coordinate the existing array of health providers).

The Review is relatively silent, however, on the authority and tools that might be given to new PHNs to enable them to deliver on this significant challenge.

There are many other contradictions in the Report.  The Terms of Reference of the Review required it to ensure that Commonwealth funding supports ‘clinical services’, otherwise referred to in the Review as ‘frontline services’.

Yet, the Review argues against Medicare Locals (or their successors) having any direct role in service delivery except in instances of market failure.  It strongly criticises the Medicare Locals that have ‘established services in direct competition to existing services’.  It goes on to argue that the main role of these organisations should be restricted to ‘facilitators and purchasers’.

Elsewhere, the Review proposes that reducing the number of Medicare Locals would free up ‘a higher proportion of funding for frontline services’.

However, no benchmark is provided as to the desirable share of funding allocated on frontline versus ‘corporate’ or support functions, nor is any evidence provided from the financial audit as to the existing share of funding allocated to so-called frontline services.

Another contradiction concerns whether it is better to allow the relatively young Medicare Locals to develop and improve with some refocusing, or scrap them and start again.

Interestingly, the Review identifies that similar primary care organisations in the UK, Canada and New Zealand have evolved over time ‘as learnings take place’ and acknowledges that ‘system change takes time’.

It also appears to recognise that, with hindsight, it may have been better not to delegate the administration of the after-hours program to Medicare Locals.

However, rather than build upon these learnings, the proposed solution is to establish a limited number of ‘high performing regional primary health organisations’, selected on a contestable basis.

The determination of what is now (or in the future) a high-performing primary health organisation is not specified.

The Review recognises that the National Health Performance Authority is (currently) reporting on the outcomes of Medicare Locals under a joint Commonwealth-State Performance and Accountability Framework.  However, these outcomes – and variability in performance across Medicare Locals – appear not to have been considered in the Review.

Finally, the Review argues that GPs have been ‘disempowered’ and that governance and functions of new primary health organisations need to better involve and engage GPs.  To this end, the Review recommends the establishment of Clinical Councils under the new primary health organisations.

Medicare Locals are still barely out of the toddler stage; the last group of 24 were only established in July 2012.  The Review of Medicare Locals was established in December 2013, barely 18 months into the new organisations’ operation.

Yet, the Budget has announced that Commonwealth funding for Medicare Locals will cease on 30 June 2015, with a selection process for the new PHNs to commence in late 2014.

At the least, let’s hope that some of the evidence and studies underpinning the Horvath Review are promptly released, so we can have an evidence-based discussion as to the real ‘learnings’ about the performance of Medicare Locals to inform the establishment of the new Primary Health Networks.

• Sharon Willcox was a former Commissioner on the National Health and Hospitals Reform Commission that recommended the establishment of primary health care organisations evolving from the existing Divisions of General Practice.


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