Strategic directions for a national primary health care policy

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Strategic directions for a national primary health care policy

Prepared by Rod Wilson, Victorian Medicare Action Group, Tony McBride, Health Issues Centre, Tim Woodruff, Doctors Reform Society


This strategy identifies the steps required by Australian governments to create integrated and accessible primary healthcare teams at a local level. The implementation of
this strategy is vital to providing a comprehensive health care system for all
the people of Australia. It requires and enables governments to exercise cooperative federalism and is intended to be undertaken as a long term reform to be progressively introduced over a 5 to 10 year time frame.


Most health policy analysts and lobbyists accept that improving primary health care is a priority if we are to improve the equity and efficiency of our health system. The recent paper, ‘A New Approach to Primary Health Care for Australia‘ by Jennifer Doggett details
the many benefits of integrated and comprehensive primary care centres. We believe the model described provides an excellent basis for reform. The benefits of new infrastructure are very clear in circumstances where there is very limited infrastructure available. It is likely that new infrastructure will help to attract both staff and patients to the centres. In other circumstances however it is unnecessary, and the use of existing infrastructure
as suggested by Doggett would be appropriate.

Far more important is the integration of funding and the formation of professional teams, rather than individuals working in silos. This is essential to promote integration and the equitable distribution of resources.


The following principles should underpin a primary health care system, and there is
considerable evidence to show these are well supported by many Australians.

  1. Accessibility
  2. Equity
  3. Sustainability
  4. Efficiency
  5. Community
  6. Cultural
  7. Comprehensiveness
  8. Integration
  9. Universality

The development of a sound, responsive, consumer focused primary health care system should however involve a process of citizen engagement/community consultation for the
validation of these principles and to ensure that there is strong support for new models.

Current barriers

Current structures and systems for funding Australia’s primary health care system are inadequate and highly fragmented and prevent the delivery of integrated, comprehensive, primary health care.

The principles barriers to effective primary health care are:

  • A system-wide lack of emphasis on primary health care and prevention and a disproportionate focus on acute care and the hospital system;
  • Inefficient service delivery and use of available funds due to the lack of integration of services and multiplicity of funding sources;
  • Inequitable access to care because funding is directed to providers[1] rather than to areas of need (e.g. rural or low-income areas);
  • Inadequate information on how and where government funds are being spent and where funds are needed most;
  • Lack of validated information on the kind of principles and priorities the
    population feels should govern our system.

Mechanisms for change

The following strategies are proposed to overcome the barriers outlined above:

1. A Needs Audit and Citizen & Consumer engagement

Find out what funds are needed, where they are required, and how the community would
choose to spend them. This requires:

  • A nationwide audit of government spending (federal, state, and local)
  • A nationwide audit of need on a regional basis
  • A conversation with the citizens to determine what principles should underpin Australia’s primary health care system[2]

2. Allocate funds where they are needed. This will require pooling of existing funds to retain the quantum of available funds, but assist in a more equitable distribution to
funds. This requires:

  • Pooling of federal, state, and local government funds while the audit is being
    undertaken to address inequity and inefficiency on a national basis. By itself,
    this pooling will not negatively affect any health care providers. This
    requires Commonwealth and State bureaucrats develop a shared funds pool.The
    Commonwealth contribution to the pool would come from Medicare: GP’s, audiology including Australian Hearing; optometry; non hospital specialist services; CAPS and EACH aged care packages; residential aged care; HACC; home nursing; respite programmes; rehabilitation; alcohol and drug services, disability services, and screening services e.g. breast screen etc. and any other health care services funded through the Commonwealth. The state government contribution to the pool would come from: HACC; allied health; mental health; respite and day care programmes for the elderly and disabled; rehabilitation, sub acute and dental services and any others as appropriate. A committee of Commonwealth and State bureaucrats to be formed to organise progressive integrated distribution of funds to a fund holder at a local level. All new funds to go through the State/ Commonwealth funds pool.
  • The funds then need to be distributed according to need as documented by the audit. Importantly, this does not need to be done immediately in any dramatic way. The devolution of funding to a regional fundholder requires the development of fundholding organisations at the regional level.

3. Regional level fundholding

  • This requires the establishment of Primary Health Organisations (PHOs).The
    establishment of these PHOs needs to recognise the variety of existing
    organisations and structures in different states and territories. Because of
    these differences, the establishment of new organisations to serve this
    function is recommended, rather than coopting current organisations (as
    occurred in New Zealand).
  • All current organisations would become a part of the Board of such PHOs. Thus, where a Division of General Practice is well structured and governance was good, it would almost inevitably be a significant but not controlling interest on the
    Board. Where community health centres are a significant player (as in Victoria) they would be represented on the Board. Where regional health authorities are important providers of primary health care (as in NSW), they would be appropriately represented.
  • A service agreement would need to be developed between the PHO and the state and commonwealth funder. Resources for planning and service development would be provided through the PHO.
  • The Commonwealth and state governments would be partners in the process not
    purchasers of services. Service agreements will exist but will be flexible,
    particularly in the early days.
  • The governance of such Boards would require very careful consideration. Significant citizen representation on such Boards would be paramount.
  • The size of the PHOs must be sufficiently large to avoid generating too much risk
    (for example if needs change over a relatively short period) but sufficiently
    small to enable a cooperative approach to occur.

4. Primary health care service provision

The purpose of the PHO would be to create integrated teams of primary healthcare workers to meet the identified needs of the catchments’ population (ideally between

  • The PHO would be responsible for developing early intervention, health promotion and consumer engagement plan targeting high risk groups within the catchments.
  • Initially the PHO would distribute NEW funds. Current distribution of funds could continue, but any new funds would be directed by the PHO in an accountable and efficient manner according to national criteria modified for regional circumstances by the PHO Board.
  • In areas of significant need there would be a large amount of new funding. In
    addition, the creation of new primary health care centres (capital works) may
    be required in such areas both because of the lack of physical infrastructure
    and as an incentive to attract workforce into the team. In other areas there
    would be little need for new infrastructure.
  • Over time, PHOs would have the option of addressing the use of old funds, for
    example cashing out Medicare and PBS funds, etc, and using them in the most
    efficient manner. For example, it would be possible to pilot the cashing out of
    Medicare items for GP practices and allied health/mental health services i.e. if a medical service gets x million from Medicare they could voluntarily cash it out with extra incentives if they are prepared to sign a three year agreement with the PHO.
  • It would be possible to progressively move to capitation of medical practices i.e.
    patients of GP practices could become enrolled and get access to incentives
    when this occurs
  • Incentives to consider such changes could be introduced, whilst maintaining funding as previously for all providers. No agency should lose funding; however participation in the PHO may be a condition of future funding.

5. A National Health Reform Commission

This whole process would ideally be achieved through the development of a national Health Care Reform Commission with Commonwealth and State co-operation. It could
however, be introduced at an individual state level along the lines suggested by J Menadue in ‘Breaking the Commonwealth/State Impasse in Health: a coalition of the willing‘. Thus, it would not require the co-operation of all states, but those who don’t participate would ultimately lose out.

To realise a health system based on the principles listed, fundamental reforms to the system are required. Although this does not need to happen in a short time period,
incremental change to the system will fail to adequately address the health
needs of all Australians and will continue to result in gross inefficiencies
and inequities throughout the country.

[1] Fee for service
funding at a national level combined with co-payments inevitably result in
inequitable distribution of health spending. Fee for service funding directs
money to areas where providers are located, not where medical need is greatest.
The facility to charge co-payments then encourages providers to go where such
co-payments can be afforded i.e. areas at the higher end of the socio-economic
scale, which are areas of least need.


[2] See the upcoming seminar on the use of
citizen juries in health care reform, jointly hosted by the Centre for Policy
Development and the Australian Health Policy Institute:

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