Medicare Locals - the old and the new
Recently, a review of Medicare Locals was undertaken by Professor John Horvath AO. Professor Horvath produced a report to the Minister of Health and Minister for Sport, released on 4 March 2014 (The Report). The Report stated that there was a need for an organisation to connect parts of the health system to improve outcomes and to reduce fragmentation of health services.
The Report expressed concern that some Medicare Locals had set up as direct service providers in competition with existing services. However, it was thought that Medicare Locals should complement not compete, that is, fill gaps in service. The Report recommended replacing Medicare Locals with a smaller number of Primary Health Networks (PHNs).
The Commonwealth funding for Medicare Locals will cease on 30 June 2015. PHNs are to commence operating from 1 July 2015. P
HNs are expected to develop collaborative working relationships with Local Health Districts along with public and private hospitals, to reduce duplication of effort and resources. PHNs will only be health services providers when there is demonstrable market failure, where services do not exist or where there is insufficient access to services. The difficulty will be in defining market failure.
The Invitation to Apply for selection of PHN operators closed on 27 January 2015. PHNs will be selected via a tender process. It is currently uncertain as to when the PHNs will be announced but are to be operative from 1 July 2015.
Scott Chapman, Partner
Megan Priestley, Senior Associate