3. Primary Healthcare Grants under the Indigenous Australians' Health Program

3.1
Chapter 3 sets out the Committee’s findings from its inquiry into Australian Government Funding, based on Audit Report No. 50 (2017-18) – Primary Healthcare Grants under the Indigenous Australians’ Health Program.1 The Department of Health (Health) was the audited entity. The chapter comprises:
Committee conclusions and recommendations
Review of evidence
Implementation of planned funding allocation model
Awarding grants
Monitoring and reporting

Committee conclusions and recommendations

3.2
The Committee considers that, in the critical area of health, government funding should be administered in a way that is transparent and accountable.
3.3
A recurring theme throughout the Committee inquiry was the importance of supporting connections with Indigenous Australians’ communities and the culturally appropriate delivery of program services.
3.4
Of concern to the Committee is Health’s delay in implementing an appropriate funding allocation model for the Indigenous Australians’ Health Program (IAHP). The Committee recognises the challenging nature of establishing an appropriate funding allocation model given the diversities in service delivery and the availability of data, but regards the model as critical to ensuring the effective administration of program objectives.

Recommendation 8

3.5
The Committee recommends that the Department of Health report back to the Committee in July 2019 with an update on the status of the implementation of the planned funding allocation model under the Indigenous Australians’ Health Program.
3.6
The Committee considers that the development of suitable national Key Performance Indicators (nKPI) and effective use of data are critical to the appropriate assessment of performance targets, to ensure program outcomes and objectives under the IAHP.
3.7
The Committee notes the evidence presented by Health that the development of nKPI is being undertaken in alignment with the implementation of the new funding allocation model, ongoing stakeholder engagement and the review being conducted by the Australian Institute of Health and Welfare (AIHW).2
3.8
To support the transparent evaluation, monitoring and reporting of program performance, the Committee maintains that Health should develop a revised nKPI framework, with improved measures and indicators, to enable the effective delivery of primary healthcare grants under the IAHP. The new nKPI framework should focus on achieving outcomes that demonstrate improved health.

Recommendation 9

3.9
The Committee recommends that the Department of Health report back to the Committee on the development and implementation of measurable national Key Performance Indicators for the Indigenous Australians’ Health Program.
3.10
The Committee noted that, whilst there have been issues around delay, the implementation of program objectives and deliverables under the IAHP are now progressing well. The Committee recognises Health’s commitment to delivering all implementation deliverables by their respective 2018-19 milestones, and remains interested in monitoring progress on this matter.

Recommendation 10

3.11
The Committee recommends that the Department of Health report back to the Committee with an update on the status of the implementation deliverables under the Indigenous Australians’ Health Program.
3.12
The Committee considers the targeted evaluation of data sources critical to informing program assessment and achievement. Where the Australian National Audit Office (ANAO) has indicated issues with Health’s existing approach to broader public reporting, the Committee considers that the department should improve data analysis to support evaluation mechanisms.

Recommendation 11

3.13
The Committee recommends that the Department of Health review its approach to using public reporting to monitor the achievement of program outcomes under the Indigenous Australians’ Health Program, and implement a targeted framework in its application of wider statistics to inform program evaluation mechanisms.
3.14
The Committee recognises the efforts of Health to implement a number of initiatives to provide better assessment and mitigation of the risks of multiple software systems, and maintains there would be value in Health conducting an evaluation of this implementation.

Recommendation 12

3.15
The Committee recommends that the Department of Health conduct an evaluation of the initiatives implemented to support the assessment and mitigation of risk of multiple software systems for the Indigenous Australians’ Health Program.
3.16
The Committee regards the assessment of funding and grant proposals in accordance with the Commonwealth Grants Rules and Guidelines (CGRGs) and IAHP guidelines as fundamental to transparent program delivery. The Committee notes that development of the national funding model by Health for the IAHP will include related value-for-money assessments and templates, and remains interested in monitoring progress on this matter.

Recommendation 13

3.17
The Committee recommends that the Department of Health report back to the Committee with a detailed outline of the transition from the historical grants paradigm to that of the value-for-money considerations to be included within the proposed national funding model for the Indigenous Australians’ Health Program.

Review of Evidence

Implementation of planned funding allocation model

3.18
The ANAO report found that Health had ‘not implemented the planned funding allocation model’ for the Indigenous Australians’ Health Program (IAHP) and that the objective of allocating primary healthcare grant funding on a more transparent needs basis was due to be fully achieved in 2019–20 — four years behind the timetable agreed by Government.3
3.19
In response, Health informed the Committee at the public hearing that the four year delay was the result of consultation with the sector on the implementation of the model. This consultation revealed that ‘significant data improvement’ would be required to ensure that any funding model would be appropriately allocated.4
3.20
Health advised that the data improvement required related primarily to data availability. In identifying these issues, and following the 2014-15 Australian Government budget announcement to develop a funding methodology, Health commissioned several consultancies to ‘have a look at what the development of a funding methodology might look like’.5
3.21
The Committee heard that the consultancy reports concluded diversities in service delivery rendered it difficult to identify themes and therefore develop a funding methodology and model. Health provided several examples of such ‘diversities’, including the number of services, geographical locations and differences in clinical posts.6
3.22
In response, Health reviewed the data sets, drawing on statistical and analytical expertise, and commenced the modelling of all available data sets in 2015-16. In establishing a ‘suitable and appropriate’ draft funding model, Health began stakeholder engagement, developing a Funding Model Advisory Committee (FMAC) in November 2016.7
3.23
The FMAC consists of representatives from Health, the National Aboriginal Community Controlled Health Organisation and affiliate organisations,8 the Department of Finance and the Department of the Prime Minister and Cabinet.9
3.24
The FMAC is considered by Health as the primary stakeholder engagement mechanism to ‘assess all of the available funding options’ and support the development of a funding model to be efficiently administered nationally ‘across all of the diversities that exist in Aboriginal health.’10
3.25
Health outlined that in the 2018 Federal Budget the Australian Government agreed to the parameters of the funding model — with implementation to be achieved by 1 July 2019.11 The Committee heard that the Health funding methodology advisory group had met seven times since the announcement, establishing a Funding Model Working Group to access expert advice from stakeholders on technical aspects of the model and to continue its refinement.12
3.26
Health confirmed that the implementation of the funding model was on track for its delivery timeframe of 1 July 2019, in partnership with the Aboriginal Community Controlled Health Services.13
3.27
Health further elaborated on this milestone, noting that it did not anticipate any significant changes to the amount of funding to be received by the Aboriginal community controlled health organisations. The First Assistant Secretary of the Indigenous Health Division observed that:
Part of the announcement was that funding would be grandfathered for anyone for whom the model showed that their funding would be going backwards. That’s guaranteed for the five years of the funding model. That is particularly important.14

Savings Measures

3.28
The IHAP design included savings of $41 million over four years.15 As to whether the program had achieved the designated savings, Health noted that:
All savings identified to the IAHP in the 2014-15 Budget were achieved by the Department…through a reduction in activities under the Tackling Indigenous Smoking program. 16
3.29
When asked by the Committee to provide a further breakdown of the areas where the savings had been achieved, Health noted that with regards to the Indigenous Smoking Program:
Budget savings were achieved through a reduction in the number of available grants…offering new funding agreements to the highest performing activities from 2015-16 onwards.17
3.30
Health outlined that the Budget Save of $40.7 million from the 2013-14 Budget, was sourced from:
Aboriginal and Torres Strait Islander Chronic Disease Fund - $20 million;
Primary health care funding - $15 million; and
Stronger Futures in the Northern Territory - $5.7 million.18
3.31
Health further outlined that the 2014-15 budget saving of $37.3 million was sourced from:
Strong Fathers Strong Families measure – $ 2.16 million (funding ceased on 30 June 2014);
Chronic Disease Self-Management initiative – $4.68 million (funding agreement expired on 30 June 2014); and
Primary health care funding – $30.47 million (funding was sourced from unallocated funds).19

Awarding grants

Value-for-money assessments

3.32
The ANAO report found that, whilst most aspects of the assessment of funding proposals were undertaken consistently with the Commonwealth Grants Rules and Guidelines (CGRGs) and IAHP guidelines, the exception was assessment of value for money.20 The ANAO therefore recommended that Health:
Improve the quality of IAHP primary healthcare value for money assessments, including ensuring their consistency with the new funding allocation model.21
3.33
At the public hearing, Health acknowledged the ANAO audit findings and informed the Committee that future value-for-money considerations and risk assessments would be determined and allocated against the proposed national funding model, to assist in providing transparency in relation to funding distribution.22
3.34
Furthermore, Health advised that grant process templates would also include ‘embedded value-for-money considerations’.23

Non-competitive grants processes

3.35
The ANAO report found that the majority of healthcare grants funding was allocated through a non-competitive process (98 per cent), and to ‘organisations already receiving Commonwealth funding under the IHAP’s predecessor program’.24
3.36
When asked about the ANAO’s finding, Health advised that such processes are considered appropriate,25 in consideration of the ‘context’26 and policy area.
3.37
Health further maintained that the techniques used to drive value-for-money, inclusive of the substantial use of non-competitive processes, were reflective of the public management task of improving performance within the limited availability of service providers.27
3.38
The Committee was advised that account of culturally appropriate services and Aboriginal control is taken as part of the grant assessment processes – a component described by the department as a ‘strength of the Aboriginal Community Controlled sector’.28
3.39
Health advised that one reason for a ‘lack of competitive approach’ was the decision to continue investing in ‘historical investments’, and ‘build capacity’ in community controlled services.29
3.40
The Acting Deputy Secretary of Health Systems Policy and Primary Care noted that:
The way in which the program is managed, which in broad terms is to nurture these organisations to provide culturally appropriate care, we think is the best process to getting improved health outcomes for Aboriginal people…
I don't see a competitive round for Aboriginal controlled health services as the best mechanism to drive improved value for money and improved health outcomes.30
3.41
In response, the ANAO advised the Committee that:
I wouldn’t take the view that a competitive approach doesn’t require competition as such…the objective in the procurement process, in value for money terms, is to try and get as much of a perception of competition as you can, even when there’s a limited amount of competition in the market The funding model that I understand [the department] are talking about building is about having the information bases available to you so [the department] can put that sort of competitive pressure into an environment even when there is only one likely provider.31

Monitoring and reporting

Performance framework for primary healthcare component of IAHP

3.42
The ANAO report found that Health, at a program level, ‘had not developed a performance framework’ setting out how it measures the contribution of the primary healthcare component of the IAHP.32 The ANAO therefore recommended that Health:
Ensure that new IAHP funding agreements for primary healthcare services include measurable performance targets that are aligned with program outcomes and that it monitors grant recipient performance against these targets.33
3.43
In response to the recommendation, Health stated it was improving measureable performance targets — with the department ‘working to develop KPIs as part of the program.’34
3.44
On the matter of the effective progress of the implementation plan, Health advised that the 106 deliverables of the plan are being monitored by an advisory group with representatives across the sector, where the deliverables represent target areas of departmental funding through the IAHP.35
3.45
Health advised that deliverables are tracked and publically reported, stating that, ‘as of 3 August 2018, 51 were complete, 35 ongoing and 20 progressed to meet 2018 milestones’.36 The Committee was further informed that the deliverables are assessed against ‘a range of evidence’, including commissioned evaluations and the ongoing monitoring of wider statistics.37

Use of data

3.46
Where Health is ‘reliant’ on broader public reporting, the ANAO report found that the department was ‘unable to demonstrate’ how it used public reporting to assess the extent to which IAHP funded services are contributing to achieving programme outcomes’, or informing future policy directions.38
3.47
The audit highlighted that, whilst extensive public reporting on Indigenous health provides a high level of transparency on the extent to which the Australian Government’s objectives in Indigenous health are being achieved, this is ‘not specific enough’ to measure the extent to which IAHP program outcomes were being achieved.39
3.48
At the public hearing, Health acknowledged the limitations of the current approach to using program statistics to monitor performance targets.40 In its submission, Health stated that it is developing primary healthcare funding agreement schedules that would include enhanced measureable performance targets and monitor grant recipients contributions against outcomes, in consultation with stakeholders.41
3.49
In the audit report, the ANAO recommended that Health assess the risks involved in IAHP-funded healthcare services, using various clinical information software systems to support the Online Service Reporting (OSR) and national Key Performance Indicators (nKPI) reporting process, and appropriately mitigate any significant identified risks.42
3.50
When asked by the Committee to provide assurance about the use of available data to inform policy design and program administration, Health stated that the department is committed to a ‘coordinated’ approach in using data to drive ‘continuous improvement’.43
3.51
Health further outlined that it would ‘continue to improve’ the data by revising and adjusting the data as it is fed into the funding model over time.44
3.52
In response to the ANAO recommendation, Health stated that the department had implemented a number of initiatives to provide better assessment and mitigation of the risks of multiple software systems.45
3.53
These initiatives included:
developing processes to identify errors before reporting and to revalidate data after software updates are released by vendors
enhancing data validation processes, to more quickly identify errors in data before submission
supporting better, ongoing communication between health service providers and software vendors to resolve individual data collection issues 46
3.54
In its submission, Health advised that these initiatives will support direct OSR and nKPI reporting processes, whilst providing further benefits, including improving data quality, streamlining and reducing future reporting burdens.47 Milestones associated with these initiatives are due to be delivered between March and June 2019.48
3.55
Health further outlined that it is undergoing a review of the nKPI and OSR collection, due to be completed in 2018. The review is being conducted by the Australian Institute of Health and Welfare and will focus on the improvement of assessment indicators and data resourcing, collection and governance (including the extended use of the Health Services Data Portal).49
Senator Dean Smith
Chair
12 February 2019

  • 1
    This report refers to ‘Indigenous Australians’, consistent with ANAO Audit Report No. 50 (2017-18) – Primary Healthcare Grants under the Indigenous Australians’ Health Program.
  • 2
    The AIHW review will focus on the improvement of assessment indicators and data resourcing, collection and governance (including the extended use of the Health Services Data Portal), and is due to be completed in 2018. See: Health, Submission 2, p. 5.
  • 3
    ANAO Report No. 50 (2017-18), p. 8.
  • 4
    Mr Mark Roddam, First Assistant Secretary, Indigenous Health Division, Health, Committee Hansard, Canberra, 15 August 2018, p. 12.
  • 5
    Ms Kate Thomann, Assistant Secretary, Primary Health Data and Evidence Branch, Indigenous Health Division, Health, Committee Hansard, Canberra, 15 August 2018, p. 12-13.
  • 6
    Ms Thomann, Health, Committee Hansard, Canberra, 15 August 2018, p. 13.
  • 7
    Ms Thomann, Health, Committee Hansard, Canberra, 15 August 2018, p. 13.
  • 8
    Health, Submission 2, p. 3.
  • 9
    Ms Thomann, Health, Committee Hansard, Canberra, 15 August 2018, p. 13.
  • 10
    Ms Thomann, Health, Committee Hansard, Canberra, 15 August 2018, p. 13.
  • 11
    Health, Submission 2, p. 2.
  • 12
    Ms Thomann, Health, Committee Hansard, Canberra, 15 August 2018, p. 13.
  • 13
    Mr Roddam, Health, Committee Hansard, Canberra, 14 August 2018, p. 14.
  • 14
    Mr Roddam, Health, Committee Hansard, Canberra, 15 August 2018, p. 14.
  • 15
    Savings implementation was not part of the audit criteria. See: ANAO Report No. 50 (2017-18), p. 21.
  • 16
    Health, Submission 2.2, p. 1.
  • 17
    Health, Submission 2.3, p. 2
  • 18
    Health, Submission 2.3, p.2. See: Senate Finance and Public Administration Committee, Additional Estimates 2014-2015, 24 October 2014, (SQ14-001191).
  • 19
    Health, Submission 2.3, p.2. See: Senate Finance and Public Administration Committee, Additional Estimates 2014-2015, 27 February 2015, (SQ15-000262).
  • 20
    ANAO Report No. 50 (2017-18), p. 9.
  • 21
    ANAO Report No. 50 (2017-18), p. 10.
  • 22
    Ms Thomann, Health, Committee Hansard, Canberra, 15 August, p. 14.
  • 23
    Mr Roddam, Health, Committee Hansard, Canberra, 15 August 2018, p. 14.
  • 24
    ANAO Report No. 50 (2017-18), p. 28.
  • 25
    Mr Roddam, Health, Committee Hansard, Canberra, 15 August 2018, p. 15.
  • 26
    Dr Nicholas Hartland, Acting Deputy Secretary, Health Systems Policy and Primary Care, Department of Health, Committee Hansard, Canberra, 15 August 2018, p. 15.
  • 27
    Mr Hartland, Health, Committee Hansard, Canberra, 15 August 2018, p. 15.
  • 28
    Mr Roddam, Health, Committee Hansard, Canberra, 15 August 2018, p. 12.
  • 29
    Ms Thomann, Health, Committee Hansard, Canberra, 15 August, p. 16.
  • 30
    Dr Hartland, Health, Committee Hansard, Canberra, 15 August 2018, p. 16.
  • 31
    Mr Grant Hehir, Auditor-General, Australian National Audit Office, Committee Hansard, Canberra, 15 August 2018, p. 15.
  • 32
    ANAO Report No. 50 (2017-18), p. 37.
  • 33
    ANAO Report No. 50 (2017-18), p. 10.
  • 34
    Dr Hartland, Health, Committee Hansard, Canberra 15 August 2018, p. 12.
  • 35
    Mr Roddam, Health, Committee Hansard, Canberra, 15 August 2018, p. 12.
  • 36
    Dr Hartland, Health, Committee Hansard, Canberra 15 August 2018, p. 12.
  • 37
    Dr Hartland, Health, Committee Hansard, Canberra 15 August 2018, p. 12.
  • 38
    ANAO Report No. 50 (2017-18), pp. 8-9.
  • 39
    ANAO Report No. 50 (2017-18), p. 37.
  • 40
    Dr Hartland, Health, Committee Hansard, Canberra, 15 August 2018, p. 12.
  • 41
    Health, Submission 2, p. 4.
  • 42
    ANAO Report No. 50 (2017-18), p. 40.
  • 43
    Mr Roddam, Health, Committee Hansard, Canberra, 15 August 2018, p. 13.
  • 44
    Mr Roddam, Health, Committee Hansard, Canberra, 15 August 2018, p. 13.
  • 45
    Health, Submission 2, p. 4.
  • 46
    Health, Submission 2, p. 4.
  • 47
    Health, Submission 2, p. 4.
  • 48
    Health, Submission 2, p. 4.
  • 49
    Health, Submission 2, p. 5.

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