Are we there yet? A journey of health reform in Australia

Christine C Bennett
Med J Aust 2013; 199 (4): 251-255. || doi: 10.5694/mja13.10839
Published online: 2 September 2013
The context for reform

In the lead-up to the 2007 federal election, the Australian health system was in crisis. Pressure on public hospitals, quality and safety issues, and poor morale in the health workforce were combined with a “blame game” of finger pointing between federal and state governments. There was public confusion about who was in charge. Community concern was on the rise,2 and the momentum for reform was palpable, with an unprecedented readiness for change across the system and the community.

Enter Kevin Rudd with a bold promise to fix the health system and, “if by the middle of 2009 the State and Territory [governments] have not begun implementing a national reform plan, [to] seek a mandate from the Australian people ... for the Commonwealth to assume full funding responsibility for the nation’s public hospitals”.3 The compelling appeal of this commitment was soon put to the test.

In announcing the establishment of the National Health and Hospitals Reform Commission in February 2008, the new Prime Minister said that Australia’s health system needed reform to meet “the long term challenges in our system: duplication, overlap, cost shift, blame shift, ageing population, the explosion in chronic diseases, not to mention, long term workforce planning”.4 Ten independent Commissioners with diverse expertise, experience and perspectives were appointed, and the work of the Commission began. After 16 months and arguably the most extensive consultation process ever mounted in health policy development in Australia, my colleagues and I delivered our final report.5

The report, released by Prime Minister Rudd in July 2009,6 presented 123 recommendations organised under four themes, each a message of reform:

Reform action update

In March 2010, the Australian Government released its plan for a National Health and Hospitals Network.7 This was followed in April 2010 by the signing of the National Health and Hospitals Network Agreement between the federal government and, except for Western Australia, all state and territory governments.

In a changing political landscape, the Australian Government’s response to the Commission’s blueprint for reform has seen some shifts in direction, particularly in relation to the reshaping of federal and state roles and responsibilities. A centrepiece of the 2010 National Health and Hospitals Network plan was a shift of financing responsibility that would see the federal government take full public funding responsibility for primary health care and majority funding responsibility for public hospitals, paying a 60% share of the cost using an efficient activity-based funding approach. In the subsequent National Health Reform Agreement, ultimately signed by all First Ministers in 2011 and currently being implemented, the federal government does not take responsibility for primary health care. It will, however, provide increasing funding to public hospitals, with a 45% share of the growth using an efficiently priced, activity-based funding approach from the 2014–15 financial year, and a 50% share of growth from 2017–18.1

Overall, the Australian Government’s response to the Commission’s report has been very positive. Of the 123 recommendations, 48 were agreed to, 45 supported, 29 noted, and only one was not supported.8 My review of progress to date suggests that 44 recommendations are being actioned as proposed, 61 have been amended or partly implemented, and 17 have not yet been actioned. Some of the key reforms currently being implemented are described below under the Commission’s reform themes.

Taking responsibility

An important and much anticipated initiative was the establishment in 2011 of the Australian National Preventive Health Agency to target effective prevention of obesity, tobacco use and harmful use of alcohol. This focus on prevention recognises that there is more to good health than health care, and that prevention and health risk management are vital contributors. Further investment and collaborative action are required to promote a healthy Australia.

The development of the MyHospitals website ( in 2011 and publication of Healthy Communities reports9 in 2013 are part of new structures for public reporting on health system performance and health status to inform consumer choices and community action and policy. We are yet to see effective systems that provide feedback to individual clinicians and teams on their practice and outcomes compared with best-practice benchmarks and peers.

Introduction of the personally controlled electronic health record is underway, with registration available to individuals through from 1 July 2012. Further system enablement and increased engagement and participation of medical practitioners are required ahead of a more comprehensive uptake and adoption strategy. Registrations reached 600 000 by 1 August 2013.

Connecting care

Strengthening primary health care has been a reform priority, with the establishment across Australia of 61 primary health care organisations — Medicare Locals — to support preventive action in local communities and more coordinated care for chronic disease, and to connect health care across settings, particularly with hospitals and mental health and aged care services.

Stronger devolution of governance to local hospital networks has been implemented by each state as part of the National Health Reform Agreement. More than 55 substantial local hospital networks have been formed, with some smaller networks in rural areas. Boundaries of Medicare Locals and local hospital networks are generally well aligned in most states, which should assist local planning, service collaboration and sharing of resources.

The Commission described subacute care services as the “missing link” in the continuum of health care. A key reform investment by the federal government has been to support development of subacute care, such as stroke recovery, rehabilitation services and palliative care, as part of a National Partnership Agreement with the states. However, funding is due to expire in June 2014.

End-of-life care and advance care planning initiatives are being explored, and aged care services reforms were the subject of a Productivity Commission inquiry.10 While not embracing some of the fundamental reforms, the government is implementing recommendations to expand community and home-based care options and simplify the assessment process.

Driving quality performance

A new transparent, nationally consistent approach to federal financing of public hospital services by efficient activity-based funding is a major element of the reforms. Greater clarity of the Australian Government contribution to the growing costs of public hospitals is also important to the financial sustainability of state health systems, although it remains unclear whether the ultimate federal government share will adequately address the vertical fiscal imbalance between state and federal governments.

To support the new arrangements, two independent national bodies have been formed: the Independent Hospital Pricing Authority, which is determining the national efficient pricing for public hospital service activity; and the National Health Performance Authority, which reports on around 50 measures across the health care continuum through Hospital Performance and Healthy Communities reports.

Health Workforce Australia has provided a platform for a national, coordinated approach to health workforce planning, training and innovation. Meeting the demands for training places across the system, including postgraduate and advanced training, is a national challenge currently being explored in the public and private sectors and various health settings. Strengthening involvement of universities, vocational training organisations and professional colleges, as well as the private sector, would be valuable.

Knowledge management systems, smart use of health information through data linkage, and analysis of patterns of health service use and unwarranted variation are receiving some limited attention. The Commission’s recommendation to link data from the Medicare Benefits Schedule, Pharmaceutical Benefits Scheme and public and private hospitals5 has still not been implemented. Further investment will be vital to reduce waste and inefficiency and increase quality and equity in health care, and will be greatly aided by health systems research to support local and systemic solutions.

The government’s response to the recent McKeon review on health and medical research13 is pending. More than ever in this era of active reform, it is crucial that research is recognised as an integral element of what our health system produces and not just a bolt-on activity. Active involvement in research across clinical settings requires investment, support systems and a cultural shift. More effectively translating evidence into clinical practice and health policy requires focus, and robust evaluation of the outcomes of reforms and health system performance is a priority.

Challenges ahead

Even with this extensive and complex package of reforms, major challenges remain. Nations around the world are grappling with four issues in particular:

Effective national leadership across the system

National leadership across the system as a whole remains a structural challenge. One idea is to form an expert reference body, independent of jurisdictions and health departments, with members offering clinical, economic and community perspectives to inform, advise, monitor and publicly communicate on progress toward agreed outcomes. This could be a constructive watchdog or advisory health assembly.

Moving to a single national public funder model with a national health authority responsible to the Council of Australian Governments could provide a system-wide approach that builds on the strengths of a national funder and purchaser. This is not to say that the federal government would be the sole funder (federal and state contributions could be pooled), nor that the federal government would manage the public hospital system (state governments would continue to operate public hospitals with transparent activity-based funding, and private hospitals could add competition for funding of public patient care). The independent national body could be an active purchaser across the continuum of services, building on the platform of activity-based funding and exploring more innovative purchasing over time. In the meantime, we could further explore “Medicare Select”, as recommended by the Commission, where greater consumer choice, competition and innovation in purchasing may also enable better use of our mixed system of public and private financing and provision.5


Health needs to be a live issue on the national agenda. While there has been some valuable progress, we have not yet resolved the structural flaws in funding and governance that fragment health care delivery in Australia. We have focused largely on public health financing and public hospitals but have not yet considered innovative approaches, such as Medicare Select, to better use the private sector.

We have a long way yet to go on our reform journey, and we need political leadership and strong engagement with the health sector and community as we continue to move towards a sustainable, high-quality and responsive health system for all Australians.

Provenance: Commissioned; not externally peer reviewed.

  • Christine C Bennett

  • University of Notre Dame Australia, Sydney, NSW.


Competing interests:

I am the Chair of the Australian National Preventive Health Agency Advisory Council.


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