(This post was updated on May 31 – see bottom of post for additional comments)

No doubt plenty of primary health care reformers are wanting a quiet (or otherwise) word with the Opposition health spokesman Peter Dutton, after his recent promise at an AMA conference that a Coalition Government would abolish Medicare Locals as part of a drive to reverse Labor’s creation of “multiple health bureaucracies”.

According to 6 Minutes, he said Medicare Locals were just another layer of bureaucracy, costing $400 million and the diversion of resources was “a perversion”. As well, Medicare Locals would be prone to “function creep” and he expressed concerns about their move towards fund holding and their role in after hours care.

Croakey wasn’t at the conference so doesn’t know if he went beyond his previous critique of Medicare Locals (as per this statement from February) and presented an alternative vision for strengthening primary health care. But if he did, it doesn’t seem to have grabbed any headlines, not even on his own website).

Croakey contributors were asked what advice they would like to give Peter Dutton about his plan to abolish Medicare Locals (and as you will see from the comments below, the short answer is “plenty“) and to address questions including:

• Is it a good idea?

• If so, why?

• If not, why not?

• If a Coalition Government is determined to do this, then what other options might they consider for strengthening primary healthcare?


Why Medicare Locals Matter

Professor Mark Harris, Centre for Primary Health Care and Equity, UNSW

There is a widespread belief that any activity that seems to potentially divert resources away from frontline services is wasting resources and therefore an easy mark for defunding.

Sadly such thinking fails to appreciate that finding solutions to improving the health of the population and containing costs will not be found in hospitals but in community settings.

The case for reorienting health services was well made in recent government reviews that proposed the strengthening of primary health care services and an emphasis on prevention and early detection. There was recognition that current funding arrangements and fragmentation of service providers led to duplication, lack of co-ordination and a system that was difficult for patients and their carers to navigate.

Current practice also makes it difficult for families to access affordable home support, allied health care and lifestyle programs. Because there are funding and historical differences between states and local regions it will be hard to manage these changes without regional organisation.

Medicare Locals aim to address these challenges by improving access and quality of primary health care and integrating state health services and general practice.  They extend the role of Divisions of General Practice by drawing together the range of other providers especially allied health and pharmacists and providing or brokering allied services to address gaps in access to these services provided by state health departments.

They also have an increased focus on preventive care and targeting health disparities faced by disadvantaged population groups which funding through Medicare has not be able to address.

Bringing about these significant changes will be challenging and no doubt mobilise opposition from those who feel threatened.  More worryingly they may be dismissed by those who do not fully understand what such initiatives contribute to the health care reform we all recognise is needed.


Medicare Locals need to be strengthened, not abolished

Daryl Sadgrove, CEO, Australasian College of Health Service Management

I don’t agree with abolishing Medicare Locals, rather I would support strengthening them.

The only way Medicare Locals will be effective is if they have greater legislative or financial powers, such as a being a fund holder to influence practice and drive new models of care.


Doomed by their name


By calling them ‘Medicare Locals’, (former Federal Health Minister Nicola) Roxon has made them a cheap shot for Dutton.

The Howard Government supported and expanded the Divisons of General Practice introduced by the Hawke Government. The Gillard Government has, sensibly, expanded them to become Divisions of Primary Health Care.

So far, so good policy.

But the communications strategy was to label them ‘Medicare Locals’, a politically charged and inaccurate title.

It was like painting a target on them, and has made it impossible for Dutton to resist promising to abolish them.


Where is the vision?

Statement from Australian Medicare Local Alliance

The Federal Opposition’s determination to dismantle one of the key pillars of the health system, the primary health care system, begs the question: what is the Federal Opposition’s plan for primary health care in this country?

The pledge to scrap Medicare Locals by the Federal Opposition’s health spokesperson Peter Dutton came as a surprise to the Australian Medicare Local Alliance (AML Alliance).

Chair, Dr Arn Sprogis, said it sounds alarm bells for the future of primary health care in this country and would put at risk the very real opportunity for communities to have, for the first time, health services tailored directly to their local needs.

“Mr Dutton’s claim that Medicare Locals are a layer of bureaucracy couldn’t be further from the truth,” Dr Sprogis said.

“Medicare Locals are as far removed from Canberra as you can get and are the result of general practice-led reform following years of advocating for an improved primary health care system.

“The ideas underpinning Medicare Locals are more aligned with Coalition health policy than Mr Dutton might think.

“Medicare Locals are exactly that – local. They are led and governed by local clinicians and community leaders and staffed by health systems experts – not bureaucrats.

“These are the people who know local services and local service needs best and who have the skills to develop the right evidence-based service solutions.

“Medicare Locals are highly accountable to their communities for their decisions, and will be publicly accountable for their outcomes through published plans and reports.

“You could not get a system more directly linked to the grassroots as you have with Medicare Locals,” Dr Sprogis said.

“They have access to health funding closest to where it needs to be spent – in communities which, in turn, are best placed to decide their own needs.

“For a party that encouraged the establishment and growth of primary health care organisations through the Divisions of General Practice, it’s odd that it cannot understand the economies of scale that Medicare Locals provide communities to enhance the primary health care services needed locally.

“Medicare Locals have been designed to deliver real services and outcomes in real time to communities and individuals and are in touch with the socio-economic and equity issues that plague many communities, struggling in many cases for basic services, especially in rural and remote areas,” Dr Sprogis said.


Don’t turn back the clock

Carol Bennett, Consumers Health Forum

The concept of Medicare Locals makes sense. I think over time we can achieve the vision and should aim for that. Some of the Medicare Locals are doing very well, involving the community and developing much better service models.

It’s hard to argue we should turn back time and go back. Many GPs themselves appreciate the importance of multidisciplinary care.

I want to know what the Coalition’s alternative would be. If we just give money to GPs it won’t work and it’s well accepted now that the best form of care for consumers is team based’


Coalition’s plan to abolish Medicare Locals is ill considered and shortsighted

Prue Power, Australian Healthcare and Hospitals Association

Medicare Locals are new organisations, which will bring together primary health care professionals and providers across local areas and regions, to improve primary health care services in these areas. Medicare Locals are not made up of bureaucrats as Mr Dutton suggests: they are organisations of local health professionals, including GPs, allied health professionals and others, working to identify gaps in local services and respond to local health needs.

For example, a Medicare Local might identify a high incidence of diabetes in a particular area, and work with local GP practices to improve the availability of diabetes services in that area, for instance by employing a diabetes educator and a nutritionist to do a few sessions a week in the GP practices whose patients need these services. In doing so, the Medicare Local is filling a gap in existing services, hopefully improving the health outcomes for people in this area, not to mention potentially preventing some of these patients ending up in hospital because of diabetes complications which were not properly managed. The Medicare Local might also work with other service providers in the area, such as Community Health Centres and hospitals, to coordinate and integrate these diabetes services with others available in the area, such as outpatient diabetes services at the local hospital.

This is why the ‘local’ in Medicare Local is so important: because Medicare Locals are responsible for identifying and responding to local and regional health needs. The significance of this can’t be overstated: it is the first time in Australia that there has been any systematic way of identifying what the health needs of a particular local or regional population are, and actually empowering someone to respond to this. For this reason, the creation of Medicare Locals is one of the most important components of the national health reform process. Without Medicare Locals, GPs and primary health care providers will go on working in isolation, with no incentives or structures to support them working together to identify whether the health needs of the communities they are working in are actually being met.

The AHHA believes that Medicare Locals will be most effective if they establish strong and effective partnerships with all other service providers in their region, in particular local hospital networks, community health care centres, and aged care providers. It is only through doing this that the potential for Medicare Locals to improve integration and coordination between all health services in a region will be realised. But to dismantle these organisations before they are properly up and running and have been given a chance to show what they can do would be a seriously retrograde step.


Get rid of the middlemen, and give the money direct to consumer organisations

Vern Hughes, convenor of the National Campaign for Consumer-Centred Health Care

The Coalition Government under John Howard maintained the useless Divisions of General Practice despite the absence of any evidence that they made a significant difference to the quality of health care.

Coalition Government under Tony Abbott may well do the same, despite Peter Dutton’s declaration that he will abolish their successors (Medicare Locals).

A better alternative would be to transfer the budget for Medicare Locals to consumer organizations so that they can design health innovations directly, without going through the Medicare Local middle men.”


Is this a signal of plans for a wider attack on Medicare?

Health economist Professor Gavin Mooney

There was an urgent need to reform Primary Health Care in this country.

For long I was critical of the GP Divisions – all too many and all too small but some good people trying to make an unworkable system work.

So we got Medicare Locals. They ain’t perfect but they are a damned sight better than what went before and allow primary health care some clout in the health care world which has been all too dominated by hospitals.

And they are charged with being community-values driven – which is great. They are also the only formal bodies that can really pursue the social determinants of health and that is desperately needed as Australia is lagging behind on that front.

There is considerable scope for improving Medicare Locals (starting with changing the name!) but the idea of abandoning them seemingly because they are seen as just another layer of bureaucracy is silly.

To do so would be a backward step and shift the power structure in health care back towards the hospitals. Give Medicare Locals a chance to settle and then look to see how they can be made better.

Bureaucracy? Somebody has to do it! I’d much rather have professional bureaucrats running the bureaucracy any day than amateur bureaucrats who are doctors and nurses.

And we need to watch the Coalition on Medicare. “First they came for the Medicare Locals….”

And just think if they were to follow the ‘lead’ of the Cameron Government  in the UK who are hell bent on destroying he NHS.


The autonomy of Medicare Locals is important for innovation

Health policy expert Dr David Briggs, University of New England, Editor of the Asia Pacific Journal of Health Management, and  Chair of the Board of a Medicare Local

(below is his personal view)

The Medicare Local model is putting space between the bureaucracy and primary health care and thereby allowing some autonomy and an ability to innovate.

Medicare Locals are independent companies administered by a board of local health professionals and community members. Certainly get rid of the confusing name and call them something else, but let’s not allow them to be captured and run by the bureaucracy or we will see the same outcome experienced in the acute care sector.

Below is a forthcoming editorial in the Asia Pacific Journal of Health Management by David Briggs

Networks, democracy, innovation, pumpkins and pimples

David Briggs

At a recent seminar held in Sydney and organised by the Australasian College of Health Services, eminent practitioners, managers and academics closely involved in primary healthcare reform in Australia identified the risks and opportunities and challenges of the establishment of Medicare Locals. The reporting of this seminar in the media identifies the range of issues discussed and was replete with and enriched by the metaphors used by presenters to reinforce their views. [1]

In the reporting of that seminar the comment was made that ‘in a sense, they (Medicare Locals) are being asked to do, locally or regionally, what endless meetings of bureaucrats and politicians haven’t achieved nationally’. [1]

This raises the question as to why Government in implementing national health reforms settled on governance and an organisational framework that was distinct from that of the State and Territory led acute care (health district) hierarchical arrangement of direct ownership of services albeit through ministerial appointed Boards created under State health legislation. Medicare Locals distinctively are being established under Australian company law as standalone entities with governance by a Board appointed by the Directors of the company!

The reasons for this difference are likely to be for a range of reasons. It builds on the model of the former Divisions of General Practice so it suggests a focus on building on that foundation and not disrupting a model that seemed to work. The ‘pragmatists’ and the ‘realists’ [2] amongst us might suggest that the space created by this model of ‘direct hands off’ leaves all the risk with the companies not government for potential failures in this reform process.

Some of the metaphors in the reported article [1, p2] describe the primary healthcare sector as ‘a patchwork’ where knitting its disparate elements is core business…but the knitting needles are slippery and the wool is in pieces’. [1, p2] Medicare Locals are further regarded as ‘a type of super-bandaid patching together a fractured health system… roping together the silos within…’ [1,p2]

So these metaphors are suggesting that Medicare Locals are required to be the ‘glue in the system’. So perhaps all these metaphors suggest that the government chose this approach because they felt that independent companies provide the best structure to provide a framework of collaboration in a part of the health sector that mostly ‘comprises largely small independent businesses’. [1, p2]

Perhaps this approach in primary healthcare reform reflects a more global movement by government to ‘move to post-bureaucratic institutional arrangements for public governance and management’. [2,p1253] the intention in this governance movement is to enable public managers to take ‘considerable agency (action) in shaping the institutions through which government interacts with citizens, civil society organisations and business.’ [2, p1253]

This means that Medicare Locals as networked institutions are better placed to negotiate, interpret and realise public policy in a more open and transparent manner through greater ‘interactions with citizens, the public, through the way they format and constitute the composition of their Boards and the structures created to engage both health professionals, communities and special interests. [2, p 1253] This places Medicare Locals in a context where collaborative and ‘public private partnerships, citizen-centred governance and interactive decision making’ will be required. [2, p.1253]

This changed context not only needs to be clearly understood by the Medicare Local governors (the company directors), the PHC professional leadership and the managers that this will require different competencies and capabilities to those used by those engaged in the more traditional, hierarchical and bureaucratic structures of the acute care sector. [3] This contemporary government-society interaction is described as a horizontal form, as opposed to hierarchical forms of governance [4] and will require those engaged to focus more on relationships that encourage participation and flexibility. [5]

Community involvement should be essential and this will require ‘community ownership, local knowledge, relationship building, careful planning and the development of trust’ [6, p.89] Managers will need to understand how to ‘indirectly’ manage networks. [7] Importantly, they will need to understand that ‘innovation increasingly need to occur at the interstices of collaborating groups and organisations’ [8] Therefore, the potential for diffusion of innovation through networks needs to be a major consideration for managers. [9]

Jeffares and Skelcher suggest that little is known about how managers think about democracy but suggests that amongst them there may be pragmatists, realists, adaptors, progressive optimists and radical optimists and go on to suggest that adaptors, progressive and/or radical optimists should be selected for these managerial roles in network forms of governance. These preferred characteristics more readily identify ‘potential for greater inclusiveness’, filling ‘the gap between the theory and practice of representative democracy’ and, potentially ‘enabling direct dialogue.’ [2, p.1253]

So viewing Medicare Locals, their governance, leadership and management in the context of ‘post-bureaucratic institutional arrangements for public governance and management’ [2,p.1253] as networks that extend democracy to greater professional and community engagement may ‘shift the focus’, enabling Medicare Locals to concentrate on ‘innovation rather than managing existing systems.’ [1p.8]

Time and commitment may well demonstrate that PHC is more than the ‘pimple’ on the acute sector ‘pumpkin’ and is in effect the exemplar of healthcare needs to be delivered, that the ‘pumpkin’ needs to emulate. [1]

The author is the Chair of the Board of a Medicare Local.


Sweet M. 2012 Medicare goes local in search of ‘disruptive innovation’ Canberra Times, Inside Story, p.4. ID 13937991. http://readnow.mediamonitors.com.au/Readnow.aspx?1RssQBy24Ks

Jeffares S & Skelcher C. 2011 Democratic subjectivities in network governance: A Q methodology study of English and Dutch public managers. Public Administration 89(4) (/doi/10.1111/padm.2011.89.issue-4/issuetoc) pp. 1253-1273. http://onlinelibrary.wiley.com.ezproxy.une.edu.au/doi/10.1111/j.1467

Briggs DS Isouard G, Kershaw G & May J. 2012. Governance of Medicare locals: A distributed network of practice (DNOP) model. Poster presentation at International Primary Health Care Reform Conference March 2012 Brisbane.

Lewis JM 2011.The future of network governance research: Strength in diversity and synthesis. Public Administration, 89(4):pp.1221-1234.

Rhodes RAW. Policy Network Analysis in M. Moran, M. Rein & R.E Goodin9eds0 The Oxford Handbook of Public Policy. 2006. Oxford University Press, Oxford.

Wakerman J, Humphreys JS, Wells R, Kuipers P, Jones JA, Entwhistle P, Kinsman L. 2009. Features of effective primary health care models in rural and remote Australia: a case study analysis. MJA 191(2): 88-91.

Lewis JM 2005 A network approach for researching partnerships in health. Australian and New Zealand Health Policy. 2:22.doi:10.1186/1743-8462-2-22. Available from http://www.anzhealthpolicy.com/content/pdf/1743-8462-2-22.pdf. Accessed 1st January 2012.

Van den Hooff B, de Leeuw van Weenen, Soekijad, FM & Huysman M. 2010. The value of online networks of practice: the role of embeddedness and media use. Journal of Information Technology. 25, pp.205-215.

Greenhalgh T, Robert g, Mc Farlane F, Bate P, & Kyriakidou O. 2004. Diffusion of innovation in service organisations: Systematic review and recommendations. The Millbank quarterly. 82(4):581-629.


Anonymous (board member of a Medicare Local)

I am concerned that Medicare Locals are little more than Divisions of General Practice writ large. This is disappointing because there was a point at which it looked as thought there might be an opportunity for them to be true primary care organisations which were broader than, but included, general practice.

It is not surprising that they have been captured by the medical model, and, politically, more power to the GPs for being able to manage the system to support their interest in this way. All the Medicare Locals I am aware of remain clearly and firmly controlled by GPs.

If we are really looking for more holistic, patient focused, cost-effective care, we need to look for ways of having a strong presence from all primary care providers. This is not to dismiss general practice, but to say that it should be part of the team, not necessarily the leader or majority,

Given the traditional alignment between medicine and the Liberal Party, I doubt that reform of this kind is what Dutton has in mind!


What does the Coalition really want for health care?

Marilyn Wise, Associate Professor at the Centre for Health Equity Training, Research and Evaluation at the University of NSW

I think the questions you’ve asked are the ones that need to be asked. I don’t have any to add. The only thing I might suggest is a rewording of the question re ‘what would the Coalition do to strengthen primary health care’?  – because I’m not sure that there is any evidence that they are committed to this as a goal? Perhaps a prior question is needed about ‘the health care system’ that they want.


Medicare Locals have value

Dr Rosemary Stanton

You might like to mention that Medicare Locals are not just about doctors, but include other allied health professionals. Access to these people – dietitians, physiotherapists, clinical psychologists and others – is not always easy. Medicare Locals have been valuable for patients who also need to see these people.


Neither of the major parties is on track to deliver the reform that’s really needed

Emeritus Professor John Dwyer

Medicare Locals are poorly designed and unlikely to play a successful role in improving the delivery of primary care in Australia.

Instead of using the COAG reform process to at last integrate in a patient focused way the continuum of health care delivery from doctors office to hospitals, the Gillard government has enshrined a separation of responsibilities for the Commonwealth and the States.

At the very least, Medicare Locals should have the same geographic boundaries as the Local Hospital networks. In fact the local hospital networks (LHN’s) should have been Local Health Districts (as they are called in NSW) with the board of the LHD being responsible for integrating all levels of care in their area. Medicare Locals would be funded by and report to the LHDs.

Many of the rural Medicare Locals are ridiculously large when one considers that they are to be involved in care of individuals!  So I agree that Medicare Locals and the Super GP clinic (co-location) initiatives need revamping.

What Dutton and his coalition colleagues seem unable to grasp is the concept of a funder/provider split model for the delivery of our national health system. His comments about not wanting Canberra bureaucrats running hospitals around the country is disturbingly ill informed.

None of us calling for a single funder (the commonwealth) have ever suggested that Canberra would be the provider. The most commonly preferred model would see Canberra consulting Australians on an acceptable vision for the models of care that meets contemporary needs and then funding that vision.

A single new provider – an “Australian Health Care corporation” – is preferred with that organisation creating regional health districts to overcome the illogicity associated with State boarders and creating districts that would be funded by a resource distribution formula based on local needs not a per capita allocation. Contracts to the public and private sector to deliver integrated hospital, community and primary care services would be provided by the regional authorities.

Instead of Medicare Locals, we need to create a series of Primary Health Care organisations (PHOs) in a region. A PHO would work as the Hub in a “Hub and Spoke” model offering a range of services to autonomous practices in a given region.

These practices should be offering an Integrated Primary Care model wherein doctors, nurses, and allied health professionals should be working in the ONE practice and resourced by Medicare dollars. This is true integrated primary care – much better than the super-GP model where professionals are co-located in a building with the hope that they will integrate their services in a patient focused way.

The PHO hubs would offer sophisticated clinical services especially for area patients with C & C diseases but also offer secondary health services. Many such organizations in NZ run “23 Hour” wards and patents can be seen and treated to determine if they need to go to hospital for care. The Hub supplies affiliated practices with business skills. advanced IT, continuing education, in house training on new drugs, help with measuring health outcomes and reporting same, help with their training of health students etc.

I disagree with Dutton on his continued emphasis that no one should interfere with the traditional fee-for-service payment system for GPs. In NZ “bottom up” modelling has seen 85% of GPs voluntarily moving away from fee-for-service and accepting contracts and salaries for all but “drop in”, one occasion of service, patients. Only 13% of Medical school graduates in Australia are planning a career in primary care and a major disincentive is the concept of being forced to practice turnstile medicine to pay their practice bills.

So we need to completely rethink how we should swing our health system around to one that is less hospitalcentric, more community and prevention focused, and integrated.

At the moment neither the Government nor the opposition has produced an acceptable vision for achieving these goals.


For more background reading

• My piece for Inside Story in April profiling some of the Medicare Locals expected to be high achievers

• Previous Croakey articles on Medicare Locals


Update, 31 May

Who is advising Peter Dutton?

A/ Prof Gawaine Powell Davies, CEO, UNSW Research Centre for Primary Health Care and Equity 
University of NSW

Excellent questions, interesting responses.

An important question is: who does Peter Dutton consult with as he forms his views on health policy; and does he see the issue in terms of some kind of left/right or professional/community split?

The striking thing about Medicare Locals is that they have created some unusual alliances.

It would be useful to find ways of presenting different kinds of united front to him, if not to save Medicare Locals, to make sure that the ideas behind them are not lost.