Primary Health Care Reform in Australia - Report to Support Australia’s First National Primary Health Care Strategy

3. Primary Health Care in Australia - History


In considering the current status of health care in Australia and what changes may be required, it is useful to understand how the primary health care sector has developed in recent years - its role and function, component parts, how they perform and interact, and the role that primary health care has played in the broader health system.

Primary health care in Australia is delivered through a mix of Commonwealth, state and territory government funding and private funding, and publicly and privately delivered services. While many primary health care services are delivered through privately provided general practice, supported by patient access to Medicare rebates, it is recognised that a range of other programs have developed to address some service gaps as they have emerged.

In considering the recent history of primary and community health care arrangements in Australia, the starting point is Medicare.

Medicare was introduced in October 1984 with the intent to provide a simple, fair and affordable insurance system that provided basic health cover to all Australians, building on the existing fee-for-service billing arrangements. The then Health Minister, Dr Neal Blewett, outlined the four key attributes of the Medicare insurance scheme:
  • Simplicity: “…the simpler we make a health scheme the more chance it has of delivering the services to those who need the most.”
  • Affordability: “…everyone will contribute towards the nation's health costs according to his or her ability to pay. Under Medicare people will not have to worry about falling behind in their payments and being caught with substantial bills.”
  • Universality: “…Medicare will provide the same entitlement to basic medical benefits, and treatment in a public hospital to every Australian resident regardless of income. In a society as wealthy as ours there should not be people putting off treatment because they cannot afford the bills. Basic health care should be the right of every Australian.”
  • Efficiency: “…one of the Government's major objectives through the Medicare program is having the maximum number of health dollars spent on delivering health services rather than administering them.”

A fifth attribute, Access, was subsequently articulated with reference to public hospital care in the Medicare Agreements Act 1992, and was explicitly applied to primary health care services in the 2008 National Healthcare Agreement.

Under Medicare, which applied to in- and out-of-hospital services, privately practising doctors were able to elect to take the Medicare benefit as full payment for a service from a patient (a practice known as bulk-billing), and those patients who wanted to receive private treatment in a public or private hospital were able to insure against such costs – but there was no requirement, compulsion or incentive for anyone to take out private health insurance. Private health insurance cover has not generally been available for treatment covered by Medicare.

Medicare was seen as:
  • providing universal access to a set rebate;
  • being well suited to episodic care of illness and ill-health; and
  • enabling patient choice of health provider.

Since its introduction the Medicare Benefits Schedule (MBS) as applied in general practice has been highly successful in meeting the original Medicare aims of affordability (with almost 80% of GP services being provided free of charge to patients in 2009) and universality (with the same basic rebates available to all patients). Under Medicare there is no compulsion for doctors to charge the schedule fee. In practice around 20% of GP services and 30% of non-GP services are billed at or above the schedule fee.

At the same time however, the profile of care in both the primary health care and the acute care sector has changed, and the boundary between the sectors has blurred.

Related Commonwealth initiatives

Commencing in the early 1990s Medicare, a universal scheme to provide a rebate for episodic health care, has been used to address particular health issues and policy objectives and to overcome perceived problems in service access. This has raised tensions between the original design of Medicare and the MBS as a universal patient insurance scheme providing rebates for episodic health care and the different needs of newer services focussed on ongoing care, care for specific population groups and care involving other health professionals.

These amendments have been introduced with the best of intentions, albeit at times in an ad-hoc manner, and have generally had good results in meeting some of the gaps facing patients in accessing primary health care services – but may have come at a cost, in reducing efficiency, affordability and accessibility. They have also introduced significant complexity in Medicare arrangements for providers and patients, have somewhat distorted the original principles of Medicare (including universality), and have compromised the design of newer models of care in order to fit them into a Medicare framework. It should also be noted that the MBS (and Medicare more widely) is not the only tool available to achieve behaviour change and improve patient outcomes and service delivery.

The Australian Government introduced the General Practice Reform Strategy in 1991 to overcome problems in the primary health care system which had arisen as the Commonwealth retained responsibility for primary health care services via Medicare GP funding and the states and territories retained responsibility for community health care with funding coming via the Medicare block grants. The Strategy aimed to address some specific issues facing general practice in Australia, focusing on workforce initiatives; the development of a primary care accreditation system; and remuneration strategies to more appropriately reward quality care in general practice.

In 1992-93, the Australian Government committed funding for the establishment of the Divisions of General Practice to support GPs to work with each other and with other health professionals to improve the quality of service delivery at a local level. Over the last decade the role of Divisions has evolved to a focus on achieving program and policy outcomes through a move to outcomes-based funding. The introduction of the More Allied Health Services (MAHS) program in 2000 and the Access to Allied Psychological Services (ATAPS) Program in 2006 have also broadened the role of Divisions to include fund-holding and provision of allied health services. Support for allied health and other health professionals has now developed to be a core role for some Divisions.

Commencing in 1996, alternatives to MBS funding for GPs were introduced in an effort to mitigate the key shortcomings of the MBS through a shift towards a ‘blended payments’ model of funding. Initially introduced as the Better Practice Program (1996), and subsequently the Practice Incentives Program (PIP) (1998) and the General Practice Immunisation Incentives Scheme (1998), these were intended to allow the Government to ‘purchase’ particular quality improvement activities and reduce overall financial risk by increasing the share of GP funding which was capped rather than demand driven.

The PIP has evolved since its inception to include a range of new incentives including several outcome-based incentives, disease-specific incentives and an incentive to support practices to employ practice nurses and allied health workers. More recently, incentives have been introduced for rural and remote general practices which provide procedural services and act as a referral point for domestic violence services.

The introduction of these types of targeted funding streams has resulted in significant gains within the health sector, and has complemented and enhanced the original attributes of Medicare (universality, affordability, simplicity and efficiency). However, over recent years these types of approaches have been comparatively neglected in favour of increased investment in MBS fee-for-service approaches to the provision of health services.
  • The Enhanced Primary Care (EPC) MBS items were introduced in 1999-2000 to improve the health and quality of life of older Australians, people with chronic conditions and those with multi-disciplinary care needs. The EPC items provided a Medicare rebate for GPs to undertake or participate in health assessments for older people, and care planning and case-conferencing services for patients with chronic conditions and complex needs. Since that time additional health assessment items have been implemented incrementally to cover additional targeted populations including Indigenous people, aged care residents, refugees, people with intellectual disabilities and 45 year olds at risk of developing chronic disease.
  • In 2004 MBS items were introduced for a limited range of services provided by practice nurses when acting for, and on behalf of, a GP.
  • In 2004 MBS rebates for a range of allied health and dental services were also introduced for patients with chronic conditions and complex care needs being managed by their GP under a multi-disciplinary care plan. Patients were eligible for up to 5 allied health services and 3 dental services every 12 months. A more extensive schedule of rebates for dental services was subsequently introduced along with a cap on the Medicare benefits received for dental care in any two-year period.
  • Chronic Disease Management (CDM) items were introduced in 2005 to replace the existing EPC care planning items. The CDM items were developed to better enable GPs to manage the health care of patients with chronic medical conditions, including patients who need multi-disciplinary care. The capacity for referral to MBS eligible allied health services was maintained under these items.
  • A range of bulk billing incentive items were introduced in 2004 to encourage GPs to bulk bill concession card holders and children aged under 16. Higher incentives were available for rural and remote areas and certain eligible urban areas. In 2005 the rebate for most GP services was increased from 85% to 100% of the Medicare schedule fee. Collectively these initiatives increased rebates for GP services and reversed what had been a long term decline in bulk billing rates for GP services, particularly in rural and remote areas.
  • In 2006 MBS items for GP mental health plans and associated psychological therapy items were introduced as part of the Better Access to Psychiatrists, Psychologists and GPs program through the MBS to improve consumers’ access to high quality primary mental health care.

Alongside changes to general practice funding and the introduction of the Divisions Network, a range of targeted programs to address specific service gaps, for example in Indigenous health and rural health, were also introduced.

In Indigenous health, Aboriginal Community Controlled Health Organisations (ACCHOs) have played a significant role in the delivery of primary health care. ACCHOs are primary health care services initiated and operated by the local Aboriginal community to deliver holistic, comprehensive and culturally appropriate health care to the community through a locally elected Board of Management.

Services to rural and remote areas are provided through the Regional Health Services (RHS) and MAHS programs. In addition, the 2009-10 Budget announced that, from January 2010, a new Rural Primary Health Services Program (RPHS) would be established to consolidate a range of existing programs and introduce greater flexibility into primary health care service provision in rural and remote communities.

State and territory government services

State and territory governments are also important in the funding and delivery of primary health care services in Australia. In addition to general practice services, some primary health care has always been delivered through states and territories through other arrangements.

In 1973 the Australian Government established the Community Health Program.30 The Program aimed to develop a coordinated national network of facilities and services for primary health care, designed as locally managed health centres operating on a social model of health and comprising multi-disciplinary teams that would respond to all types of community health problems. Primary medical care was one aspect of the program, provided by just over one third of the 161 main community health centres across Australia.

From 1976 to 1983 the government introduced a less centralised model and by 1981 had rolled up community health funding into block health grants to the states and territories, ending Commonwealth involvement in the Program. The role played by some community health centres providing access to primary medical care for low income people was made redundant in 1984 with the establishment of Medicare and bulk billing for GP services.

Medicare Agreements with states and territories have been premised on states and territories maintaining their primary health care service levels. This requirement has been made more explicit in the National Healthcare Agreement (November 2008) which recognises that primary health care involves both Commonwealth and state/territory responsibilities but depends on the significant role of private providers and community organisations. Under the NHA the Commonwealth will:
  • seek to ensure equitable and timely access to affordable primary health care services, predominantly through general practice;
  • assist in reducing pressure on hospital emergency departments through the provision of funding for primary health care services; and
  • seek to ensure equitable and timely access to affordable specialist services.

Under the Agreement states and territories will provide public health, community health, Home and Community Care (HACC), and public dental services, deliver vaccines purchased by the Commonwealth under national immunisation arrangements and provide health promotion programs.

States and territories provide a range of community health services including maternal and child community health services, parenting support, early childhood nursing programs, disease prevention programs, women’s health services and men’s health education programs.31 The Report on Government Services (RoGS) defines community health services as multi-disciplinary teams of salaried health and allied health professionals who aim to protect and promote the health of particular communities. The services may be provided directly by governments (including local governments) or indirectly through a local health service or community organisation funded by government. State and territory governments are responsible for most community health services. The Australian Government’s main role in community health services is in health services for Indigenous people, as well as providing support to improve access to community health services in rural and remote areas. The RoGS has found that there is no national strategy for community health and there is considerable variation in the services provided.32

The range of available community health services varies across Australia. States and territories fund, or deliver for the Commonwealth, community health programs that include:
  • primary health care programs targeted at Indigenous people, men, women, schoolchildren, youth, homeless people, people living in remote areas, people born overseas, refugees, prisoners and people in residential aged care facilities;
  • mental health assessment, treatment and rehabilitation;
  • aged care assessments;
  • HACC services (40% state and territory funded, 60% Australian Government funded);
  • cancer screening programs;
  • community nursing;
  • school dental and oral health programs; and
  • community midwifery programs.33

State and territory governments are also increasingly focussed on funding a range of programs targeted towards improved primary health care and hospital avoidance. These include programs such as the Hospitals Admission Risk Program (HARP) in Victoria. An important focus of programs such as Primary Care Partnerships (PCPs) in Victoria and the Connecting Healthcare in Communities (CHIC) initiative in Queensland is to improve integration between jurisdictional services, to reduce fragmentation and improve the patient journey. Other state programs focussed on integrated primary health care service delivery models include the NSW HealthOne initiative and South Australia’s GP Plus initiative.

State data suggests that between 45% and 51% of regional emergency department presentations in Victoria could be classified as ‘primary health care’ presentations. This is of particular concern when it is noted that Victoria has reported an 18% increase in these types of presentations over the last five years.34 Amongst these presentations is a high proportion of young people driving the growth in primary health care service delivery through emergency departments,35 with anecdotal reports that these patients do not have a connection to, or are comfortable with, accessing general practice services.36


The complex, fragmented and often uncoordinated delivery systems that operate across primary health care have implications for the services individuals receive, how they pay for them, and how care providers interact and provide care. These relationships are further developed in this Report in the context of the 10 Elements.

While the primary health care sector delivers services that meet the needs of most people requiring treatment for isolated episodes of ill-health, it is less successful at dealing with the needs of people with more complex conditions or in enabling access to specific population groups that are ‘hard to reach’.

Over recent years, primary health care reform has attempted to meet these more specialised needs using a case-by-case approach, largely through existing financing and organisational frameworks. These frameworks have not always been well suited to certain models of care and the result of ad-hoc changes over time has been to create a complex system for patients and providers. The primary health care sector has also proven to be relatively inflexible, not able to readily adapt to changing demands, opportunities and pressures nor to reflect on its own performance and engender change. As a consequence, primary health care tends to operate as a disparate set of services rather than an integrated system.

In meeting the ongoing and future needs of the Australian population, the Draft National Primary Health Care Strategy aims to build on the undertakings agreed through the National Healthcare Agreement to improve the level of cooperation, coordination and integration of service delivery across Commonwealth and state and territory governments and to refocus the primary health care system on meeting the needs of individual patients, being responsive to changing population needs, and operating effectively in a broader social system.

30 Information on community health centres was taken from two sources: Paul Laris and Associates, 2002. Community Health Centres in South Australia: A Brief History and Literature Review, report commissioned by the Generational health review, available from: (accessed June 2009); and Australian Academy of Medicine & Surgery, 2000. Health Funding and Medical Professionalism - A short historical survey of the relationship between government and the medical profession in Australia, available from: (accessed June 2009).
31 Australian Institute of Health and Welfare, 2008. Australia’s health 2008, Cat. no. AUS 99, AIHW, Canberra, p. 342.
32 Steering Committee for the Review of Government Service Provision, 2009. Report on Government Services 2009, Australian Government Productivity Commission, Canberra, pp 11-4.
33 Steering Committee for the Review of Government Service Provision, 2009. Report on Government Services 2009, Australian Government Productivity Commission, Canberra, ch. 11A.52 to 11A.60, 12 and 13.
34 Victorian Government Department of Human Services, 2009. Primary Health Care in Victoria: A discussion paper. p. 4, available from: (accessed June 2009).
35 NSW Government Department of Health, 2007. Key Drivers of Demand in the Emergency Department, p. 49, available from: (accessed June 2009).
36 Northern Rivers General Practice Network, 2007. Youth Health, available from (accessed June 2009).

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Page last updated 31 August, 2009