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Medicare Locals: are they facing death-by-contract?

To be given the best chance of success, the new Medicare Locals need to have as much flexibility and autonomy as possible, and local decision making should be the underlying principle of health reform. These were some themes from a health reform workshop in Canberra this week, as reported in a recent Croakey post.

That’s just a bit of background context for the article below by Paul Smith, from Australian Doctor magazine, which suggests that the Department of Health and Ageing is proposing extremely strict contractual controls on Medicare Locals.

***

Some contractual concerns

Paul Smith writes:

There are serious concerns among many of the brightest and the best tasked with making Medicare Locals work.

There will be 19 Locals in the first wave — due to go live in some form from 1 July onwards. At the time of writing, that’s about 10 days. The hours making up those days must be ticking by for some like a Doomsday Clock.

The big issue causing panic is how you move to become a Medicare Local, with all the governance vexations that involves, while still ensuring that the services provided by divisions continue — the IT support, the education programs and the numerous support systems for general practice that have evolved over the past 15 years.

For the first wave of Medicare Locals, one option is to take the Federal Government funding and subcontract from the existing local divisions.

The divisions don’t have to disappear with the rise of Medicare Locals. They are independent companies and many consider they can continue as service providers in the revamped world. The Medicare Locals would simply purchase their services.

It seems clear enough but there is a big stink about the fine print in the Department of Health and Ageing’s draft contracts now being pored over by the first wave Medicare Locals.

Clause 8 apparently imposes caps on the amount of money from Medicare Locals funding they can spend on subcontracting a service without having to go back to the health department for approval. The cap has been set at a miniscule amount — about $22,000.

The cap, according to the AGPN, applies to Medicare Local’s core funding – although this is hotly contested, with some people Australian Doctor spoke to this week suggesting that the contract wording means Medicare Locals will have to go through approval processes for spending on what is effectively program funding too.

Whatever the details, critics say it will create serious logistical problems because, while the model of each Medicare Local varies, the vast majority are expecting that some kind of subcontracting will be necessary. At the extreme end there are places like Tasmania, where the Medicare Local is being set up on a purchaser model — virtually all services are going to be subcontracted.

A second issue is that any Medicare Local opting to subcontract will apparently become directly responsible for the actions of staff working for the company being hired.

If the Commonwealth is unhappy with a staff member of a community health service, the Commonwealth may request that staff member be removed from activities in relation to the subcontract.

On one level, the clauses appear to be the product of the government’s fear that allowing Medicare Locals to use core funding to subcontract divisions would leave the reforms looking like bureaucracy breeding bureaucracy.

There are enough critics – the AMA, the Federal Opposition and any tabloid hack – willing to make merry with any suggestion that Medicare Locals will be filled with pen-pushers with a new job title on the office door getting paid for paying divisions to do what they are doing already.

But for those now being tasked with implementing the government’s flagship primary care reform, the draft contracts expose the Commonwealth’s struggles to desist from the worse excesses of top-down, micromanagement.

The issues are real. There are claims that the delivery of existing divisions’ core services will disintegrate without an easy mechanism to keep them afloat.

If there is no continuity secured by subcontracting core services, the core services could grind to a halt if Medicare Locals end up having to embark on a clumsy and possibly painful takeover (both in terms of ownership and management) of those services and the staff who run them.

“The government has talked a lot about a smooth takeover by Medicare Locals of the divisions,” one division leader said last week.

“The problem is that divisions are set up as independent companies. You can’t take over their assets, their intellectual property … without getting agreement from their members first. It can become extremely messy … the services could end up falling by the wayside.”

Those divisions on the brink of becoming Medicare Locals, she argued, would be idiotic to put a pen anywhere near the contracts as they are currently written.

Another divisions source said the obstacles restricting Medicare Local spending on divisions was the health department’s way of “demolishing the division network”.

“They are seen as an embarrassment even though their work is essential,” she said.

The health department has stressed the contracts are in draft – that it wants to consult. And apparently that process is now underway.

The AGPN said earlier this week that the contracts don’t have to be signed before 1 July. Technically most of the Medicare Locals will go through a “transition phase” over the coming months. Whatever that actually means, that will come as a relief to many.

But judging by the anguish emanating from the divisions network, Nicola Roxon does risk alienating many of those who have given her the most support over the past four years.

As Medicare Local D-Day looms, some would say there is also a risk botching the very reform itself.

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Australian Health Promotion Association Conference 2013
Closing the Credibility Gap 2013
CRANAplus Conference 2013
FASD Conference 2013
Health Workforce Australia 2013
International Health Literacy Network Conference 2013
NACCHO Summit 2013
National Rural Health Conference 2013
Oceania EcoHealth Symposium 2013
PHAA conference 2013
2014 conferences
#IPCHIV14
AIDA Conference 2014
Congress Lowitja 2014
CRANAplus conference 2014
Cultural Solutions - Healing Foundation forum 2014
Lowitja Institute Continuous Quality Improvement conference 2014
National Suicide Prevention Conference 2014
Racism and children/youth health symposium 2014
Rural & Remote Health Scientific Symposium 2014
2015 conferences
#CPHCEforum
#CRANAplus15
#HSR15
#NRHC15
#OTCC15
Population Health Congress 2015