National Health Reform

Building a 21st Century - Primary Health Care System - Australia’s First National Primary Health Care Strategy

Building Block 5: Financing and system performance

Providing sustainable financing and system performance arrangements, including incentives for providing care in the most appropriate and efficient setting, is a key building block for primary health care reform.

To improve financial accountability and provide a strong foundation for the reform of primary health care services, the Australian Government will:

• become the majority funder of Australian public hospitals, by funding 60 per cent of the efficient price for all public hospital services provided to public patients;
• take full funding and policy responsibility for GP and primary health care services, including over time moving to fund up to 100 per cent of those hospital outpatient services that are better characterised as primary health care; and
• require new, higher national standards and transparent reporting that will provide Australians with more information than ever before about national, state and local performance of the health system.

Having one level of government responsible for the majority of hospital funding and all of primary health care and aged care will create strong incentives to support a healthier community and reduce pressure on hospitals.

This important structural change means that the Australian Government will be responsible and accountable for the strategic direction, planning and public funding of all primary health care.
This change will:

• improve the efficiency of the system;
• reduce cost shifting and blame shifting, as the Australian Government will be clearly accountable for GP and primary health care services;
• provide a platform for making services better coordinated and more responsive to the needs of patients; and
• make it easier for patients to receive the services they need, improving patient outcomes.

These new arrangements will help underwrite the sustainability of the health system, better balance fiscal responsibilities across the federation and lead to economy-wide efficiencies.

As a key part of Australia’s health financing arrangements, Medicare - with its underpinning principle of universal access to a patient rebate for certain health services - remains a fundamental tenet. In the future Medicare rebates will continue to support those things they were designed to support - rebates linked to fee-for-service arrangements for access to specific episodes of care for treatment of illness and ill-health.

For other aspects of care, however, the Medicare Benefits Schedule (MBS) is not always the most appropriate financing tool. Fee-for-service arrangements under Medicare are less effective in providing care and producing better health outcomes for hard-to-reach, at-risk and high needs groups, such as Indigenous Australians, and people with chronic conditions, mental health needs, or those who live in rural and remote areas. In these instances funding and service delivery arrangements are required which can better respond to the needs and priorities of local communities, but which remain wellintegrated with a ‘Medicare core’.

Performance information – including information on the Australian Government’s performance in primary health care – will be publicly released to provide Australians with more information than ever before about the performance of their health system. Over time, the Australian Government will seek to strengthen the link between performance and funding.

Actions – how the Government will implement this reform

From 1 July 2011 the Australian Government will take full funding and policy responsibility for the GP and primary health care services detailed in the National Health and Hospitals Network Agreement.

In addition, the Australian Government will move over time to increase its funding contribution to 100 per cent of the national efficient price for primary health care-equivalent outpatient services provided to public patients.

Achieving the right mix of financial incentives and funding arrangements to deliver effective and flexible service delivery models at the local level is a key focus for Australian Government primary health care initiatives.

The Australian Government has committed $449.2 million over four years for a voluntary program for people with diabetes. This includes a new way of paying for services, by providing a mixture of flexible funding to manage the condition, and rewarding practices for achieving health outcomes.

The Australian Government also commits to further work with the states and territories on consideration of community health promotion and population health programs, including preventive health, drug and alcohol treatment services, child and maternal health services, community palliative care and specialist community mental health services for people with severe mental illness.

The Australian Government and the state and territory governments will work together on system-wide GP and primary health care policies to improve integration and coordination across Australian Government and state and territory funded health care services, including hospital services.

As part of the NHHN reforms, the Australian Government will introduce a new performance and accountability framework, which will include national performance indicators, national clinical quality and safety standards and new Hospital Performance Reports and Healthy Communities Reports (for more information see Key Priority Area 4: Improving quality, safety, performance and accountability).

What this means for patients

The right mix of financial incentives and funding arrangements will help deliver effective and flexible services at the local level. This includes the role of Medicare Locals, new arrangements to support flexible use of practice nurses across the range of primary health activities, and funding of new arrangements for after hours care that support local needs.


back to top