National Health Reform

Primary Health Care Reform in Australia - Report to Support Australia’s First National Primary Health Care Strategy

Element 7: Flexibility to best respond to local community needs and circumstances through sustainable and efficient operational models

Objective: Primary health care services in Australia operate with an accountability and governance framework which is responsive to local needs, and is sustainable, flexible and well-integrated with other non-health services in local communities.

The priority issues, identified through the Discussion Paper, and confirmed through stakeholder feedback, are the need to:

• enhance the capacity and responsiveness of regional organisations; and
• improve service planning to meet local needs and circumstances, particularly in terms of integration of services.

Underpinning Element 7 is the idea of a future primary health care system which works more closely with local communities, including non-health services where relevant, to effectively plan, target and deliver primary health care services which are responsive to the needs and priorities of their local community.

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Where are we now?

As discussed throughout this Report, primary health care in Australia is characterised by a mix of service delivery and funding models through investment from the Australian and state/territory governments and private arrangements, which has resulted in an often times fragmented and complex system – which is perceived as chaotic and uncoordinated. This is also the case for regional health infrastructure.

From a Commonwealth perspective, investment in regional infrastructure has been through the Australian Divisions of General Practice, which is comprised of the Australian General Practice Network (AGPN), 111 individual regionally-based Divisions (each with their own board of governance) and 8 State Based Organisations. The Divisions have been relatively successful in bringing together general practitioners as a group, as it is estimated that around 90% of the total GP population are members of the Divisions Network. Such coverage of one of the key health professional groups in the primary health care sector would seem to place the Divisions Network in an ideal position to be heavily involved in any introduction or expansion of the role of regional organisations in service planning and delivery. However, as highlighted earlier in this report, primary health care is about more than services delivered by GPs – and is constantly evolving. While some Divisions have been highly successful in improving the provision of general practice services and localised initiatives, they focus on and are generally run by GPs.

The role of Divisions within the primary health care system is further complicated by activities undertaken by state/territory-funded regional health services and community health services. While some of these services have strong links with the local Division, it is more often the case that activities are undertaken exclusive of each other. This is despite the fact that programs will often target similar issues within the primary health care sector – although to different groups of providers, which may be driving a further gap between health professionals delivering the most integrated and coordinated services to a patient.

It has been suggested that one of the ways of improving the level of coordination and integration of primary health care service delivery is to establish broad regional infrastructure, responsible for a wide range of primary health care services in a region (not isolated to either Commonwealth or state/territory-funded services). The responsibilities of such organisations could range from planning and coordinating services to allocating resources for health service delivery. Ideally, such organisations would be well placed to ensure the types of services being delivered were appropriate, necessary and delivered as effectively as possible, while allowing for local flexibility. The governance of these structures would need to be responsive and accountable to the local community for the health services delivered in their region, and could include representation of patients and providers.

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What the submissions said

Many submissions commented on the need to streamline the current planning, resource allocation, funding and monitoring systems between the different tiers of government and providers. Such observations essentially confirmed and acknowledged the widespread duplication and wastage of effort inherent in the current fragmented primary health care system which the Draft Strategy seeks to improve.

There are simply service and cost inefficiencies inherent in all tiers of government that must not be further entrenched – it is not just health services that need to strive for efficiency gains.³⁰⁰Successfully coordinated and effective planning and delivery mechanisms are lacking in Australia due in part to fragmentation and different agenda of the various stakeholders.³⁰¹Top of page

Regional organisational structures

A common theme raised in submissions related to regional organisations. Submissions were generally supportive of the idea behind the need for some type of regionally-based structure, or meso-level organisation, to bridge the gap between national planning and policy directions and local needs and circumstances. Such commentary regularly included an examination of international health systems that utilise such structures and organisations, and their applicability to the Australian primary health care system.


Evidence from recent systematic reviews suggests that regional mid-level PHC [primary health care] organisational structures such as Primary Care Organisations (PCOs) in New Zealand and England can play an important role in the planning, development, delivery and organisation of PHC services. The devolution of responsibility to PCOs for contracting/commissioning the full range of PHC services gives them the required leverage to influence the range and availability of PHC services.³⁰²
The involvement of well resourced and appropriately auspiced regional organisations were seen as having an important role in enabling greater involvement of communities and consumers in the planning process of health services as well as providing a greater capacity to address the social determinants of health and greater equity of access. It was noted that such organisations may also assist in maximising efficiencies in service delivery and avoiding duplication as well as increasing the capacity for population-based approaches to health priorities.

It should be noted, however, that while the establishment of regional organisations was viewed as having potential advantages, concern was also raised that their widespread introduction might also generate additional layers of bureaucracy and red tape, thereby exacerbating the very problems they are being established to address.

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Having been involved in the failed regionalisation of health in Queensland we have some concerns about another roll-out of regionalisation. There is a risk of wasteful duplication of administration and insufficient funds for actual service delivery as each region builds their own structures. The economies of scale, population characteristics, and adequate funding of the regions are critical factors.³⁰³Opinions were also divided as to whether existing organisations could effectively take on the roles and functions that would be expected and required of Regional Primary Health Care Organisations.

Presently there are no organisations that could effectively undertake responsibility for planning and delivery of health care services. State area health boards and regions would claim to do so however the constant restructuring of such bodies indicates shortcomings with the ability to plan and deliver new services.³⁰⁴The challenges facing regional level organisations are multi-faceted, and should not be underestimated. The current proposals of a regional organisational structure, with responsibilities for primary care services, are not achievable at this stage due to insufficient information and data on the prevalence of disease and health outcomes within each given community.³⁰⁵As already indicated, one such existing organisation that may have the potential (albeit with significant restructuring) to take on additional responsibilities envisaged of Regional Primary Health Care Organisations is the Australian Divisions of General Practice Network. In their submission to the development of the Strategy, the AGPN identified that:

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All Divisions could contribute to a regional enterprise with different levels of involvement:
• Become the regional enterprise with broader representation and responsibilities.
• Act as one of several voices at the table of these new organisations or of existing regional structures which expand their roles and responsibilities.
• Sit beneath these new organisations as service providers which operate in a contestable environment, competing for funds held by these new regional enterprises.

The Network goes on to say that: ‘ the Divisions’ Networks preferred outcome is for high capacity divisions to evolve into regional enterprises and then work with other divisions and relevant organisations within their region’.³⁰⁶ Interestingly, there are differing views between individual Divisions and the AGPN on this issue. Almost half the individual Divisions made submissions on the Discussion Paper and they were evenly split for and against the concept of Regional Primary Health Care Organisations.

The content and views presented in submissions diverged further when it came to the role that fund-holding or fund-pooling could theoretically play (or in some circumstances is already playing) in such organisations to better meet localised health service needs.

The principle of having regional level bodies who can pool the funds available for primary care is supported. We believe that the above sources of funding – to GPs and Practices need to continue through the current Medicare system. Other activities funded through different government sources – state, federal and local would be better pooled, managed locally according to local needs and resources.³⁰⁷ North and West Queensland Primary Health Care for example has [already] pooled funds from a variety of sources to employ 75 primary health care professionals, including dietitians, psychologists, occupational therapists and a pharmacist, to address the needs of a dispersed population with limited primary health care access.³⁰⁸That is not to say that fund-holding and fund-pooling are not without risk, particularly when proposals involving cashing out (or even ‘cashing up’) of the MBS are involved to the point where the very idea was presented as too risky for government to contemplate and should be dismissed.

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Possible disadvantages could include fragmentation of the health system from a national perspective due to regional variation, difficulty in measuring (especially at national level) their outcomes when models differ from region to region, and rationing of services in order to fit within budgets.³⁰⁹ Fund holding would be appropriate but only once the organisation has proved itself to be accountable and effective, in terms of its advocacy and responsiveness to community health needs.³¹⁰ Though pooling resources may appear attractive at a superficial level, there is a high potential for distortion and conflict of interest in a small market for health services where the funds available may be insufficient to provide quality care across the region.³¹¹While some submissions viewed the existing Divisions Network as the obvious leverage point for a broader role in localised health planning and primary health care service delivery, others raised issues around the inherent conflict of interest in the current Divisions’ structure (ie they generally represent one component of the primary health care sector and operate without representative community governance). Concerns were also raised around the disparity in effectiveness of some Divisions, that business and operational processes are well entrenched across the Network, and that achieving fundamental culture and attitudinal change would be unlikely.

Irrespective of the potential benefits that might be delivered from the establishment of new organisations or by expanding the role and focus of existing organisations and networks, there was no clear prevailing view across the submissions as to the best way forward. Furthermore, where Regional Primary Health Care Organisations were discussed, concerns (and accompanying opinions and viewpoints) emerged including high level issues around the perceived benefits, boundaries and size of organisations, to specific models including governance structures and how to appropriately resource any such organisations to meet localised needs. In terms of the submissions, stakeholders agreed that a ‘one size fits all’ model is no longer appropriate for the primary health care sector and that jurisdictional issues need to be recognised and accounted for.

What is the way forward?

Table 10 illustrates some of the range of possible approaches to Regional Primary Health Care Organisations which have been canvassed.

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Table 10: Alternative models for primary health care regional organisations

	Model	Description	Possible functions	Comment
Level of Reform	Enhanced regional partnerships	Collaborative (MOU) arrangement of existing service delivery and regional organisations.	monitoring and reporting of local health outcomes planning and coordination of services among members of partnership delivery of supplementary services through some members of partnership	Similar to existing PCPs and CHIC models
	Regional Primary Health Care Organisation	Separately constituted organisations …with incremental service planning and purchase responsibility	monitoring and reporting of local health outcomes planning and coordination of local services within funding scope intervention into local service delivery where needed fund-holder for some local primary health care services advocate for local area to funding providers peer support and education (based on evidence/data)	A number of governance issues would need to be addressed including: legal structure of new collaborations or organisations; the relationship between the regional organisations and local service providers; and the level of control and accountability of the organisations. It would also need to be decided whether funding and accountability for these organisations will be to the Commonwealth, state level or joint.
		… with pooling and consolidation of existing program streams	As above, with additional levels of responsibility due to increased funds. Also, there would be increased accountability to ensure funds are being allocated appropriately.
		… with all non MBS/PBS funding allocated on a ‘needs based’ capitation formula	As above, with an increased need to represent the needs of the region to funding providers and to manage funds responsibly.
		… with the responsibility for all primary health care (including MBS/PBS) funding	As above, with a significant increase in the level of funding provided. Monitoring and reporting standards would need to be established and maintained by the regional organisation to ensure the regional management of funds results in improved health outcomes.

NB: The highest level of reform would see the development of Regional Health Care Organisations – separately constituted organisations with service planning and purchasing responsibility for all health services.

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Existing regional infrastructure organisations

In considering the introduction of integrated Regional Primary Health Care Organisations there must also be an examination of what jurisdictions and existing organisations are already doing and what are the lessons learned. In order to truly maximise efficiencies, there will need to be national consistency in many areas, while also providing flexibility for jurisdictional variances in others acknowledging the different pressures and issues faced by communities across the country in relation to primary health care. Importantly, the administrative costs associated with any new structures will need to be carefully monitored and minimised, to ensure service delivery funding is not diverted to administrative overheads.

Any reform in the way regional organisations might build local flexibility and integration in the delivery of primary health care, including governance arrangements, would need to carefully consider the future role of the Divisions Network.

The AGPN has acknowledged that the Divisions’ Network currently lacks the capacity and expertise to immediately take on a broader regional governance role. They advise that they are keen to ‘step up’, believing the Network has the capability of transitioning into this expanded role. However, issues of how such a transition might occur in practical terms are of concern, particularly in terms of change management, governance, performance, and current geographic boundaries.

State and territory views on this issue, in addition to their existing relationships with and engagement of Divisions, is also variable and is an essential consideration.

A key step in the consultation and planning process for Regional Primary Health Care Organisations would be to ensure that new models do not simply introduce an artificial structure on top of existing structures, thereby further complicating funding and service delivery models.

Size and coverage of Regional Primary Health Care Organisations

Any new regional organisational entities would need to have explicit responsibility for clearly defined populations, though there are divergent views on how large a population might be appropriate, with estimates ranging from 300,000 to 1 million people. The size of the population covered by each new Regional Primary Health Care Organisation needs to be carefully considered across both numeric and geographical proportions to ensure a balance is struck between:

• being large enough for the organisation to assume responsibility for the majority of health risks (particularly important if the organisation was to take on a service purchasing role); and
• being so big that an organisation risks losing its clarity of purpose, is unavailable (through distance) to constituent practices and is unable to effectively engage health care practitioners in meeting organisational goals.

A further consideration is that size and coverage of Regional Primary Health Care Organisations would need to be able to adapt to future needs and pressures as a result of population and demographic shifts, and changing clinical practice and service delivery challenges, within their boundaries.

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Fund-holding/pooling

The suggestion of introducing fund-holding and funds-pooling across sectors and providers under Regional Primary Health Care Organisations is a further possible area for reform.

For fund-holding organisations to have sufficient purchasing and service delivery power, pooled funds generally comprise prospective and aggregated averaged payments or capitation arrangements in respect of enrolled individuals. The largest and most available funding sources within the primary health care sector are the MBS and PBS, but opening these structures up to fund-holding and fund-pooling (for enrolled populations) pose some risks.

For example, one of the potential uses of fund-holding/pooling through Regional Primary Health Care Organisations is potentially through targeting the management of patients with chronic and complex conditions by providing highly integrated funding and service delivery pathways for patients electing to enrol under such a program. Such a model has the potential to improve the level of access to funding for currently underserviced populations – but also risks exceeding allocated funding.

Arrangements such as these are far removed from the current model of a universal health insurance scheme, where there is a relatively good level of understanding and high levels of support across the community. The introduction of such arrangements may therefore be considered controversial, and will require considerable development and discussion in consultation with the community to explore their potential benefits, as well as ensure that targeting and governance is effective in improving health outcomes.

There are, of course, many other primary health care programs and elements of the MBS where funds could potentially be accessed, such as the Practice Incentives Program (including Service Incentive Payments) and the MBS Chronic Disease Management items, as well as from various programs and projects that involve both Commonwealth and state/territory investment. However, it is not clear whether the funding allocated under these programs would provide the necessary capital and capacity for organisations to be effective in meeting their aims.

These issues require careful consideration in consultation with the community, noting the strong potential benefits for at-risk or high needs patients to be able to access regionally organised and delivered services responsible for their ongoing care.

Concerns have been raised that fund-holding could disadvantage patients and providers, particularly if patients’ access to health care according to need is undermined or rationed and the professional autonomy of individual doctors is limited.³¹² Regional purchasers would need to have continuing close contact with relevant health care providers and community organisations to ensure that purchasing of services is well targeted and responsive to regional requirements. This would be further complicated if the regional organisation was to have no responsibility for the hospital and acute sector in their area as more careful management of the patient in the transition between care settings (home to hospital, hospital to aged care facility, etc) needs to be an essential component of the health system particularly in terms of team-based care arrangements.

Governance

The introduction or enhancement of strong regional organisations in primary health care is not a ‘silver bullet’. The same inherent risks around perverse incentives are still likely to exist and would need to be carefully monitored and addressed. Such risks include:

• under-servicing of the patient population if the fund-holder benefits from underspends in budget;
• over-provision of services to low severity individuals; and
• under-provision of services to individuals with the most complex needs, ie potential to discriminate against high cost users.

In addition, there are issues relating to governance (particularly community involvement, liability/indemnity, information/data management and the quality of care that would need to be assessed and addressed.

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Improving integration and planning of service delivery

Alongside the Divisions’ Network, there are a number of emerging models of integrated service planning, development and delivery that rely on better integration and partnership arrangements at the regional level (such as Primary Care Partnerships) that are worthy of consideration and perhaps could also be the base for future regional primary health care development. Over recent years, a range of measures have been introduced, aimed at addressing the current system fragmentation, lack of integration and impacts this has on patient experience and outcomes:

• Australian Better Health Initiative Primary Care Integration Program, Primary Care Partnerships and the Connecting Healthcare in Communities initiatives have focussed on improving networks and information sharing and care protocols (including some standardising of assessment – for example, the Primary Care Partnerships initiative has successfully implemented a single suite of tools used by over 500 agencies) between different providers at the regional level.
• GP Super Clinics and NSW Health One initiatives are focussed on an integrated service model which encompasses clinical, functional and administrative integration of a range of services and service providers including GPs, nurses, allied health providers and community health.
• Clinical networks activities, for example in WA where 18 clinical networks currently operate including the recently formed Primary Care Health Network.

Internationally, there is a move to building networks and formalising partnerships between health care providers to enable the delivery of more comprehensive and integrated care, and to support greater continuity of care over the life-course. Health care professionals are also recognising the value of working more closely with their peers.

When many health professionals are involved in a particular patient’s care, the issue of who is responsible for clinical management and/or coordinating the care can lead to either conflicting information being provided to patients or, in some instances, no-one taking responsibility.

To address this issue, internationally there has been a shift towards increased collaboration and integration between providers including establishing networks of doctors, integrated medical groups or integrated networks in which ambulatory practice groups are often linked to a hospital.

The reorganisation of primary health care services into ‘networks of care’ has potential to transform services to provide more integrated care. The provision of integrated care requires general practices, allied health services, community health, specialist providers, hospital outpatient departments, consumer organisations, self-help groups, social supports and the community sector to form effective long-term working relationships focussed on providing patient-centred care to their communities. Formalising networks has potential to build and enhance long-term relationships and communication amongst these groups. Individuals, their families and carers are also more likely to take up services if comprehensive or better integrated care is offered.

The Draft Strategy has identified this as a potential area for reform. In order to be truly effective, it is important for all parties involved to come to a common understanding and agreement on how such structures might be most effective and reduce risk (including financial) as far as possible. A staged approach to dealing with this issue including a rigorous and comprehensive planning process and community consultation on design and implementation is needed to move forward. As a first step, the future role of, and related changes to, the Divisions’ Network needs to be a consideration.

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300 Submission from G21 Geelong Region Alliance (#Sub 29)

301 Submission from Greater Green Triangle University, Department of Rural Health (Sub #225)

302 Submission from the Health Inequalities Research Collaboration Primary Health Care Network (Sub #57)

303 Submission from GP Links Wide Bay (Sub #211)

304 Submission from Australian Association of Practice Managers (Sub #202)

305 Submission from The Royal Australian College of General Practitioners (Sub #173)

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306 Submission from Australian General Practice Network (Sub #141)

307 Submission from GP Connections (Sub #23)

308 Submission from National Primary Health Care Partnership (Sub #149)

309 Submission from Australian General Practice Network (Sub #141)

310 Submission from Australian Health Care Reform Alliance (Sub #212)

311 Submission from Rural Doctors Association of Australia (Sub #262)

312 Australian Medical Association, 2004. Fundholding Position Statement, available from: http://www.ama.com.au/node/1756 (accessed June 2009).

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