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Who is going to own Medicare Locals? And what are the options?

In just over five months, the first 15 of the new primary health care organisations to be known as Medicare Locals are due to be up and running.

But there are still many unanswered questions, not just about what they will actually do, but about their fundamental nature, including what sort of organisational structure will they have.

The Government has made it clear that MLs will be independent legal entities and not government bodies.  It seems that the preference is for not-for-profit companies limited by guarantee.

This would ensure they are subject to a tried and tested regulatory regime – the Corporations Act and associated legislation.  It would also avoid the need to pass legislation which would be required to set up MLs as new statutory authorities.

Yet, from what Croakey hears around the traps, there has still been no definitive guidance on that matter.

A company has to have one or more owners, and MLs will be no exception.  The owners sign-off on the company’s constitution dictates how and by whom the company will be governed, and what its objectives should be.  The owners also typically choose the directors, in a manner laid down by the constitution.

Clearly the owners of a ML have the power to shape the way it functions and to influence how it deals with health professionals, with the public and with governments and others who provide its funding.

So the crucial, as yet unanswered, question is, “Who is going to own Medicare Locals?”

Below are some of the options – it would be good to hear what Croakey readers think of these…

What are the options?

1.    MLs as companies owned by GPs

MLs are expected to be responsive to the needs and priorities of the communities they serve.  It has been argued this can be accomplished by simply ‘re-badging’ existing divisions of general practice as MLs and requiring them to increase the representation of non-GPs (eg consumers and other health professionals) on their boards of directors.

The idea of putting the governance of MLs in the hands of more diverse boards is appealing but fails to recognise the fact that, in a corporate setting, it’s ultimately the owners and not the directors who call the tune.

Divisions of general practice, which are commonly seen as evolving into MLs, are owned by their members, and those members are typically GPs.

But is it realistic to expect GP-owned companies to take on the much broader role envisaged for MLs?

How would that be viewed by other primary care providers such as nurses, pharmacists, physios, community development workers and psychologists?

How would a GP-owned ML react if asked to implement a Government policy perceived as prejudicial to the interest of GPs?

2.    MLs as companies owned by a range of primary health care providers

Another possibility might be to have MLs owned by a diverse range of primary care providers, giving each of the main professional groups a stake.  That might go some way towards eliminating inter-professional rivalries.

But there would be many challenges involved in having a diverse mix of professionals functioning effectively in this way.  And other than GPs, few professional groups have formally constituted local representative bodies that could take on the ownership role.

As well, if MLs are supposed to act in the interests of their communities, then would it really be wise to vest their ownership wholly in the hands of the people who deliver those services?

I’m sure that most Croakey readers would not expect the interests of service providers and service users to always be in alignment…

3.    A social enterprise model

This model, which has been used to run some health and welfare services in the UK and elsewhere, seeks to involve the local community as owners by offering them the right to acquire shares.

While that might sound appealing as a way of ensuring MLs are accountable to those they serve, it could create a nightmare when it comes to choosing directors. An obvious risk would be for MLs to be ‘captured’ by unrepresentative interest group/s.

4.    Government-owned companies

It’s difficult to believe the Commonwealth would willingly take on the task of establishing and subsequently overseeing 50 or more new ML companies.

Another option might be for the Feds to set up a single, national, Government-owned company (dare we say a “super ML”) which could then form a series of separate, local MLs as subsidiary companies, each with its own board of (effectively Government-appointed) directors.

That’s not dissimilar to the approach being proposed by the new Health and Social Care Bill in England, which envisages a national network of ‘commissioning consortia’. This would be something like having MLs accountable to a single, National Health Service Commissioning Board.

The bottom line: If there is to be a balance between the requirements for good governance, responsiveness, local accountability and the need to avoid possible conflicts of interest (not to mention the need to balance clinical imperatives with population health perspectives), it seems there’s no easy answer to the question of who should own MLs.

It will be interesting to see what approach the Government chooses to adopt.  For the sake of the 15 pioneering MLs, the sooner things become clear, the better.

Meanwhile, perhaps Croakey readers have some thoughts about what model might work best?

Comments 5

  1. trethowan says:

    Thanks Melissa

    As one Division having the current intent on evolving our company structure (NFP, limited by guarantee), we are taking the issue of governance and membership as the highest priority. One aspect of governance that should not be ignored is the objects outlined in the company’s constitution. The objects outline the reason for the company’s existence and is what guides the Board in the development of their strategies for management to carry out.

    In terms of accountability, a Medicare Local will be not unlike other NFP companies who are accountable to members, funders and stakeholders. The level and type of accountability will vary. I don’t think Australia is ready for an NHS style where there was originally 302 statutory PCTs established or indeed their current 300+ GP consortia. Getting that signed off by State governments in any COAG process would be virtually impossible!

    In the end, the value must be evident in the community and consumer drive and influence will be essential. There are many good points in which the Consumer Health Forum puts forward and should be used when planning for Medicare Locals. Additionally, health is an outcome and we all know that other sectors such as transport, education and local government play an important role in influencing the social determinants of health. So when it comes to Medicare Local accountability for improving health outcomes as part of healthy community reports, this will be interesting to see what the KPIs will be. This highlights How a Medicare Local will need to be evident in their openness to genuine partnership. For instance, in our community, if a Medicare Local can improve the health and Wellbeing of our Aboriginal population that will be a big tick. However, the only way to achieve this will be through genuine partnership.

    The company objects will need to reflect the strong links with community.

    Look forward to further discussion. Thanks.

    Jason Trethowan
    CEO, GP Association of Geelong

  2. informed says:

    The question “who is going to own Medicare Locals?” is flawed and lacks a basic and fundamental understanding of companies limited by guarantee (CLBG). CLBG do not have a share capital like all private and most public companies do. That is members do not have any sort of financial ‘stake’ in the equity of the CLBG because there are no shares. Boards of CLBG need to act in the best interests of members but the answer to who owns a Medicare Local is – no one. A better question is why would anyone want to become a member of a Medicare Local? What benefits are there? Those involved in setting up ML’s would do well to have a good answer to this – and there would be some good ones.

  3. Topender says:

    This is a crucial question. As stated, the existing Divisions are pseudo-GP interest groups being asked to move into the 21st Century by considering the consumer as their primary concern. Old governance models may not suffice. Our local Network has ‘open’ membership (free) with 40% GPs with a GP dominated Board. The future ML is likely to amend membership to ‘organisations’ rather than individuals but who knows. As you rightly state, there is precious little detail and the Invitation to Tender is not even out yet (fat chance of starting by July 1!).
    I think the structure should be defined in the Contract and should allow for Equal representation on the Board of consumers, provider organisations and practitioners. It would be sooo encouraging to see the consumer have a genuine voice in proceedings rather than the thinly-veiled concessions to self-interest that we usually see.

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Pregnancy and childbirth
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Acknowledgement
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Croakey Conference News Service 2013 – 2019
2013 conferences
Australian Centre for Health Services Innovation Forum 2013
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
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Population Health Congress 2015
2016 conferences
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#ATSISPEP
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#cphce2016
#CPHCEforum16
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