Horvath review calls for massive realignment of Medicare Locals

The government should reduce the number of Medicare Locals to a minimum of 13 and change their name and scope, according to a review of the primary healthcare organisations conducted by former chief medical officer John Horvath.

Professor Horvath has also recommended that MLs cease providing direct healthcare services except where there is a "demonstrable market failure" and that GPs form clinical councils to provide advice to the new organisations to generate “broader and deeper” GP involvement.

Arguing that the name Medicare Locals is “confusing and without contextual meaning”, he instead recommends they be called Primary Health Organisations (PHOs). (This may prove a stumbling block, as medical centre chain Primary Health Care has in the past taken legal action to block an attempt by eight divisions of general practice from using a similar name.)

He writes that the exact number of PHOs should be decided following discussions with state and territory governments to ensure effective alignment with Local Health Networks (LHNs).

“It would be expected that most states would have at least one metropolitan and one rural PHO, with the potential for single PHOs in Tasmania, the ACT and Northern Territory,” he writes. “The end result is that there would be far fewer PHOs compared to the current network of 61 Medicare Locals.”

Professor Horvath recommends that the federal government cease funding the Australian Medicare Local Alliance (AMLA), leaving it up to the PHOs themselves to run a national organisation paid for by membership fees if they see fit, and that more alignment with LHNs and state and territory jurisdictions be a priority.

“I found that Medicare Locals, having been established as 61 separate organisations, lacked the power and moral authority to effectively engage and negotiate with LHNs, let alone jurisdictions,” he writes.

Little is said about eHealth, apart from a recommendation that PHOs should continue to provide practice support to assist general practice with the adoption of electronic health records.

The review also mentions complaints by MLs about the volume of reporting they are required to do, which Professor Horvath says could be improved by an enterprise technology solution that he has been advised is being developed by the Department of Health.

This may be a reference to the $100 million enterprise data warehouse that Accenture is building as recommended as part of the national health reform.

“The rollout of eHealth across primary health care and other sectors and the use of population data in cooperation with LHNs and state health authorities in the long term, should provide more meaningful tools to measure health improvements and performance more generally,” he writes.

“This would further benefit from developing a national primary health care data strategy that includes indicators of integration.

“There are some great examples of shared information or linked data, but these only occur in pockets and are often constrained by administrative, collaborative and/or legislative factors. The eHealth agenda will have the potential to harness practice information resources and improve service planning thereby contributing to a more robust primary health care data set.

“PHOs need to be at the forefront of enabling the eHealth agenda, supporting professional adoption needs, applying clinical pathways and demonstrating the power of information for care coordination.”

He criticises the corporate overheads that a 61-organisation structure entails, saying larger, more regional groupings would achieve economies of scale in back-office functions.

“[I] found a disproportionate number of staff were involved in corporate and reporting functions in each of the 61 incorporated entities.

“Some Medicare Locals have achieved a great deal, however as a national network, they have failed to present a compelling argument to continue in their current form. PHOs will build on the strengths of Medicare Locals, but by avoiding unnecessary corporate bureaucracy and duplication – a greater proportion of funding should be targeted to frontline services.”

Another main problem he found was a lack of clarity in the purpose of some Medicare Locals, and that the fraught transfer of responsibility for the after hours program was an example of where some MLs have struggled.

“I consider the timing of the transition of this program to Medicare Locals to be a significant issue, with the majority of Medicare Locals enmeshed in establishment activities while at the same time attempting to implement a complex and controversial reform,” he writes.

“For many Medicare Locals this was their first significant attempt at purchasing and, with the benefit of hindsight, given the sensitivities attached to the issue it was probably not an ideal starting point. The outcome for some catchments appears to have been further damage to GP goodwill, something that organisations tasked with strengthening primary health care cannot afford.”

As reported recently, funding for each Medicare Local's program schedule is assured for the coming financial year, except for eHealth, which presumably will become clear once a decision is made on the future of the PCEHR program.


Recommendation 1: The government should establish organisations tasked to integrate the care of patients across the entire health system in order to improve patient outcomes.

Recommendation 2: The government should consider calling these organisations Primary Health Organisations (PHOs).

Recommendation 3: The government should reinforce general practice as the cornerstone of integrated primary health care, to ensure patient care is optimal.

Recommendation 4: The principles for the establishment of PHOs should include:

  • contestable processes for their establishment;
  • strong skills based regional boards, each advised by a number of clinical councils, responsible for developing and monitoring clinical care pathways, and community advisory committees;
  • flexibility of structure to reflect the differing characteristics of regions;
  • engagement with jurisdictions to develop PHO structures most appropriate for each region;
  • broad and meaningful engagement across the health system, including public, private, indigenous, aged care and NGO sectors; and
  • clear performance expectations.

Recommendation 5: PHOs must engage with established local and national clinical bodies.

Recommendation 6: Government should not fund a national alliance for PHOs.

Recommendation 7: The government should establish a limited number of high performing regional PHOs whose operational units, comprising pairs of clinical councils and community advisory committees, are aligned to LHNs. These organisations would replace and enhance the role of Medicare Locals.

Recommendation 8: Government should review the current Medicare Locals’ after hours program to determine how it can be effectively administered. The government should also consider how PHOs, once they are fully established, would be best able to administer a range of additional Commonwealth funded programmes.

Recommendation 9: PHOs should only provide services where there is demonstrable market failure, significant economies of scale or absence of services.

Recommendation 10: PHO performance indicators should reflect outcomes that are aligned with national priorities and contribute to a broader primary health care data strategy.

Posted in Australian eHealth

You need to log in to post comments. If you don't have a Pulse+IT website account, click here to subscribe.

Sign up for Pulse+IT eNewsletters

Sign up for Pulse+IT website access

For more information, click here.

Copyright © 2022 Pulse+IT Communications Pty Ltd
No content published on this website can be reproduced by any person for any reason without the prior written permission of the publisher.
Supported by Social Media Agency | pepperit