National Health Reform

National Health Reform – Victoria's approach

On 2 August 2011, the Premier signed a new National Health Reform Agreement, and a package of related documents.

The National Reform Agreement replaces the Heads of Agreement on National Health Reform agreed by COAG on 13 February 2011, as well as the National Health and Hospitals Network Agreement endorsed by COAG (except WA) on 20 April 2010.

This Agreement follows extensive negotiations to secure the best deal for Victoria.

Key highlights of the Agreement are:

• a devolved system of hospital governance based on the existing Victorian model, with States remaining public hospital system managers and the Victorian hospital governance structure remaining the same
• the injection of an additional $16.4 billion nationally in efficient growth funding for hospitals from 2014-15 to 2019-20, providing up to $4.1 billion extra for Victoria
• the retention of funding for Victorian hospitals under state legislative and financial control through the agreed funds pooling arrangements, ensuring that Victorian hospital funding remains in Victoria
• no Commonwealth take back of Victoria's GST revenue
• Victorian Government to play a key role in decisions regarding which hospitals will be block funded
• up to $822 million from 2009-10 to 2015-16 to help meet new performance targets for elective surgery and emergency department access, plus deliver increased subacute capacity
• new national agencies including an Independent Hospital Pricing Authority to set a national efficient price for hospital services, a National Health Funding Pool to make payments to hospitals, and a National Health Performance Authority to monitor and report on hospital performance. In addition, the Australian Commission on Safety and Quality in Health Care has been made a permanent entity
• State government access to Commonwealth health data to assist in the planning of Victorian health services
• establishment of Medicare Locals nationally to coordinate and integrate primary care
• system wide policy and State-wide planning for GP and primary health care services and
• the exemption of Victoria from the Commonwealth takeover of responsibility for Home and Community Care (HACC) services.

Local Hospital Networks

The governance and catchments of Health Services in Victoria will not change as a result of the Reform Agreement, as they already meet the requirements of this reform. This includes governance arrangements for small rural health services, where boards will continue to operate.

Medicare Locals

Under the Reform Agreement, Medicare Locals will be responsible for supporting and enabling better integrated and responsive local GP and primary health care services to meet the needs and priorities of patients and communities.

There will be 17 Medicare Locals established across Victoria from 1 July 2012.

The first four were established in July 2011:

• Inner East Melbourne Medicare Local (existing Melbourne East GP Network)
• Barwon Medicare Local (existing GP Association of Geelong)
• Inner North West Medicare Local (existing Melbourne GP Network and Progressive Primary Health Ltd) and
• Northern Melbourne Medicare Local (existing North East Valley Division of GPs and Northern Melbourne Division of GPs).

The new National Health Performance Authority will report on the performance of both Local Hospital Networks and Medicare Locals.

Financial arrangements

The Reform Agreement introduces a new approach to financing, where the Commonwealth will provide funding on an activity basis, with block funding provided where appropriate. An activity based funding system will be introduced from 1 July 2012 for admitted acute patient services. Payments for emergency department and outpatient services will be made on an activity 'proxy' basis also from 1 July 2012. This will be extended to mental health and subacute services paid on an activity 'proxy' basis from 1 July 2013.

Funding for small rural hospitals and some services will need to be maintained on a block funded basis. The Victorian Government will participate in a COAG process to determine which hospital services are to be block funded in Victoria.

National Partnership Agreement on Improving Public Hospital Services

A revised National Partnership Agreement on Improving Public Hospital Services has now also been agreed. This Agreement sets out performance targets for elective surgery and emergency departments as well as funding for increased subacute capacity. The Agreement incorporates the recommendations made by an Expert Panel of doctors, health professionals and administrators. The Panel was established by COAG to provide advice on the appropriate implementation of the targets.

As a result, the new arrangements for targets will include:

• a new emergency department four hour access target for patients in all triage categories commencing from January 2012
• two new elective surgery targets commencing from January 2012:
• for patients being treated within the clinically recommended time
• for reducing the average waiting time for overdue patients and
• the removal of the National Access Guarantee.

Whilst this is an improvement on the previous agreement from February, achievement of the targets remains challenging.

Mental health, dental health and aged care

The February Heads of Agreement stated that there would be further reforms in mental health, dental health and aged care pursued over the coming three years. With regards to mental health, a working group has been established to tackle major issues around Commonwealth funding for mental health initiatives and to develop a mental health roadmap.

For aged care, funding and policy responsibility for Home and Community Care (HACC) services will be transferred to the Commonwealth in all states except Western Australia and Victoria, where they will continue to be delivered as a joint Commonwealth-State funded program. However, further reforms in aged care are being considered as part of the Commonwealth's broader responsibilities. Victoria is looking forward to being consulted by the Commonwealth in developing its response to the Productivity Commission's final report on Caring for Older Australians released on 8 August 2011.

Further information

Implementation of the reforms is already underway. There is a considerable amount of work to be done, particularly in the lead up to July 2012.

Victoria will maintain active involvement with health services and stakeholders in the implementation process and will provide further updates on this website.

Enquiries should be directed to healthreform@health.vic.gov.au