The objective of the audit was to assess the effectiveness of Health's management of the MPSP and the RHSP. To achieve the audit's objective, the ANAO examined whether Health; had an effective approach to planning the programs; had an effective approach to delivering the programs; effectively used performance information to manage the programs; and effectively managed its relationship with all stakeholders of the programs.

Summary

Rural health in Australia

Over six million Australians (34 per cent of the total population) lived in rural or remote areas in 2001.1 Typically, the health of those people is worse than for people living in metropolitan areas. For example, life expectancy is higher in metropolitan areas, and death rates increase with remoteness. They are 10 per cent higher in regional and remote areas compared with major cities, and 50 per cent higher in very remote areas.2

Rates of hospitalisation are also higher for remote Australians compared to those living in capital cities, while general practitioner consultations are lower. In general, health workers and pharmacists are under-represented in rural and remote areas. 3,4,5,6,7 Therefore, access to health services is likely to be more limited for people living in rural and remote areas compared to people living in major cities. 8

Additional contributors to poor health and higher mortality in rural and remote areas include lower socio-economic status; higher risk of injury as a result of the types of work and conditions experienced; low quality roads; indigenous health needs; physical inactivity; overweight and obesity; smoking; hazardous or harmful alcohol consumption; and poor diet. 9,10

Rural health policy and programs

Health services across Australia are provided by a combination of public, private and not-forprofit organisations. State Governments, partially funded by the Commonwealth via the Australian Health Care Agreements (AHCAs)11, are responsible for the provision of health services through the public hospital system. The Department of Health and Ageing (Health) is responsible for implementing the Australian Government's rural health policies.

Health funds the various rural health programs under a number of Health and Ageing Portfolio Outcomes. The 2003–04 Federal Budget lists over 30 key Commonwealth funded rural health programs and initiatives. Outcome 5: Rural Health, provides the umbrella for targeted rural and remote health programs funded by Health. The objective of Outcome 5 is to improve health outcomes for Australians living in regional, rural and remote locations. The total appropriation allocated in the 2003–04 Federal Budget for the administered expenses of Outcome 5 is $110.3 million.12

Health funds two rural health programs of particular importance to the communities they serve—the Multipurpose Services Program (MPSP) and the Regional Health Services Program (RHSP).

The MPSP is a joint program with the State Governments that aims to provide a flexible and integrated approach to the delivery of health and aged care services to small rural communities. Services provided by a Multipurpose Service (MPS) vary, but may include residential aged care, acute care, community and allied health, rehabilitation, and health education. The Commonwealth funds the aged care portion of a MPS and the State Governments fund other identified health needs. The Commonwealth is the minority funder of the program, providing around $45 million a year. Commonwealth funding of an individual MPS is contingent on the commitment of the relevant State Government to provide recurrent funding, and capital funding where necessary. Total Commonwealth and State Government funding to the 86 MPSs operational at August 2003 amounts to approximately $188 million a year.

The RHSP is a Commonwealth program that aims to help small rural communities expand their local primary health care services. Services provided by a Regional Health Service (RHS) may include allied health care, health promotion and prevention, and general practitioner services. The Commonwealth allocates around $42 million to the RHSP, funding 152 RHS projects as at 31 August 2003.

Audit objective

The objective of the audit was to assess the effectiveness of Health's management of the MPSP and the RHSP. To achieve the audit's objective, the ANAO examined whether Health:

  • had an effective approach to planning the programs;
  • had an effective approach to delivering the programs;
  • effectively used performance information to manage the programs; and
  • effectively managed its relationship with all stakeholders of the programs.

To form an opinion against the audit objective, the audit team interviewed relevant personnel at Health's Central Office and a selection of State Offices, in three State Governments, and in key stakeholder groups. The audit team also reviewed a selection of Health's files, data and other relevant documentation and reports. The team attended the 7th National Rural Health Conference and visited a selection of services.

Key Findings

Program objectives and indicators

Program objectives and performance indicators are consistent.

The objectives of the MPSP and RHSP, which are clearly defined and documented, are aligned with Health's overall objective and the objective for Portfolio Outcome 5: Rural Health. The ANAO also found that performance indicators developed for the two programs are consistent with the programs' objectives.

Health staff do not have confidence in the integrity of data held by the central rural health database.

Health's State Office staff have independently developed effective systems to monitor services. These systems shadow the centrally developed rural health database, resulting in inconsistencies between the data held in the database and by the State Offices. Due to the data inconsistencies, as well as limited access to the database, the database does not meet the needs of State Office staff. Also, Health's Central Office staff do not have confidence in the integrity of the data held by the database.

Performance information is not used effectively.

The ANAO found that performance data on individual services is not collated or analysed systematically. Health is not using service performance data to identify good practice or to identify potential improvements to the programs. In addition, Health does not have baseline information on health service provision or health outcomes and, consequently, is not able to measure the progress of the two programs against their respective objectives.

Health has developed a risk management plan for the RHSP but not for the MPSP.

There is no risk management plan for the MPSP as a whole. In contrast, Health manages risk in the RHSP via a risk management plan developed for the program as a whole, and by requiring risk management plans for individual RHSs.

Selecting and funding services

Health's approaches to selecting and assessing potential MPS sites are consistent with the program's objectives and are effective.

Health's State Offices have developed clear and systematic approaches to identifying potential MPS sites. Once identified, these sites are assessed against selection criteria that are consistent with the program's objectives. The ANAO found that Health's staff apply these selection criteria, and operational MPSs meet the criteria. The principle of flexible, pooled funding that forms the basis of the MPSP funding model is also consistent with the objectives of the MPSP.

One-third of MPS funding agreements have been extended and, therefore, MPSs may be implementing out of date service delivery plans.

The ANAO found that one-third of MPSs are operating with extended funding agreements, with almost half of the extended agreements originally expiring in or before 2001. Service delivery plans are developed prior to signing funding agreements. Therefore, MPSs operating with extended agreements may be implementing service delivery plans that are not current or relevant to current community needs.

Targets in MPS funding agreements are indicative only, and, in the opinion of the ANAO, are not an adequate measure of outputs and outcomes.

In the opinion of the ANAO, targets included in MPS funding agreements (bed numbers and budget figures) are input measures that guide funding levels, not an adequate measure of outputs or outcomes. In addition, bed numbers are indicative only. Applying the principle of flexible funding, funding provided to MPSs may be used to provide any appropriate aged care services. Therefore, as bed numbers are not an accurate description of the actual services provided, they are not a useful target.

Health's approaches to selecting, assessing and funding RHSs are consistent with the program's objectives and are effective.

The selection criteria Health uses to assess potential RHS projects are consistent with the program's objectives and Health's State Offices have developed effective approaches to selecting and assessing RHS projects. The funding formula for the distribution of RHSP funds, developed in 1999, is also broadly consistent with the objectives of the program. The funding formula is based on the Rural, Remote and Metropolitan Areas (RRMA) geographical classification system and does not take into account relative health needs across and within States. However, estimates of unmet health service need are incorporated into the approaches used by the State Offices to identify priority areas.

Financial management

MPSP financial controls are sound.

Financial management of the MPSP is straightforward. MPS payments are made according to a payment schedule calculated using the MPS funding formula. Financial controls, which include the separation of duties and accuracy checks, are effective in ensuring that payments are accurate and made in accordance with Health guidance and relevant legislation.

Health's knowledge of State Government contributions to MPSs is limited.

In the past, Health has not required or kept data on State recurrent and capital contributions to MPSs. However, the Commonwealth and State Governments recently agreed to changes to reporting requirements. Under these changes, to be implemented over the next six to twelve months, States Governments will provide Health with data on recurrent and capital funding contributions.

Underspent funding is a significant issue in the RHSP.

The ANAO found that Health has effective mechanisms to control the accuracy of payments made under the RHSP. However, a significant financial issue in the RHSP is the level of underspent RHSP funds. This level has increased by 9.6 per cent from 2001–02 to 2002–03, with $6.6 million not spent by RHSs during this two-year period. The ANAO found that Health has not identified and systematically analysed the reasons RHSs are not using all available Commonwealth funds.

Relationship management

Generally, the delineation of internal roles and responsibilities is effective.

The guidelines for both programs outline the roles and responsibilities of Health's Central and State Office staff. The ANAO found that, while there was some duplication of roles, overall the arrangements work well.

Guidelines for the MPSP are effective, but guidance for the RHSP is currently inadequate.

Health developed and released the Multipurpose Services Program Guidelines for State and Territory Offices (MPSP Guidelines) in 2002. The ANAO found that the MPSP Guidelines are clear and useful, and that Health's managers and staff comply with them. In contrast, while the Regional Health Services Program State Office Guide (RHSP Guide) was developed within the first year of the program, it does not assist health staff with program management, as it is out-of-date and contains inaccuracies. As a result, the RHSP Guide is not used by staff.

Health has developed constructive working relationships with the State Governments.

Health uses a number of strategies to manage its relationship with the State Governments. These include protocols and joint consultative groups. The ANAO found that these strategies are working well and that Health has overcome some initial tensions to develop and maintain constructive working relationships with the State Governments.

Under the MPSP, activity reporting to Health has been variable.

MPSP funding agreements between the Commonwealth and a MPS require that services report to Health regularly. This reporting has been inconsistent, with some services not providing activity reports to Health for a significant period. The ANAO expects that the new reporting requirements, to be implemented over the next six to twelve months, will improve reporting from MPSs. Reporting by RHSs is effective, with services providing reports of an acceptable quality.

Health provides some support to services, although its relationship with services could be improved.

Health holds forums and workshops for service staff, has produced two editions of a newsletter for the MPSP, and conducts site visits to services. While the forums have been generally well received, production of the newsletter has been ad hoc and site visits limited. As a result, many of the services visited by the ANAO did not consider the guidance that they receive from Health is adequate. Health's relationship with services could be improved by more effective communication and the identification and promotion of better practice to MPSs and RHSs.

Overall audit conclusion

The ANAO recognises that, when managing the MPSP and RHSP, Health must manage the difficult job of balancing available resources with existing and emerging health service needs in rural and remote Australia. In general, the ANAO concludes that Health's management of the MPSP and RHSP is effective. Health has developed an effective approach to planning and delivering the programs, and manages its relationships with stakeholders of the programs.

The ANAO has identified a number of areas where Health could further improve its management of the programs. These are addressed by the recommendations.

Recommendations

The ANAO made seven recommendations to Health.

Health's comments

Health agrees with the ANAO recommendations and has already introduced measures to improve management of the programs in line with these recommendations.

Footnotes

1 Based on the Australian Standard Geographical Classification Remoteness Structure. Australian Bureau of Statistics 2003, Australian Social Trends, Population—Population distribution: Population characteristics and remoteness, Australian Bureau of Statistics, Canberra, <www.abs.gov.au/Ausstats>, viewed 10 December 2003.

2 Figures for death rates between 1997–99. Australian Institute of Health and Welfare. Rural, regional and remote health, a study on mortality, summary of findings, Australian Institute of Health and Welfare, Canberra, October 2003, pp.5-6, 11 & 18.

3 Australian Institute of Health and Welfare, National Hospital Morbidity Database—hospital separation rates for 1995–96. Hospital separation rates provide a measure of the number of hospital care episodes per person. id., Health in rural and remote Australia, 1998, p.93.

4 Medicare utilisation rates for GP consultations, 1995–96. ibid., 1998, p.98.

5 Australian Bureau of Statistics 2003, Australian Social Trends, Population – Population distribution: Population characteristics and remoteness, and Australian Social Trends, Health—Health services: Medical Practitioners, <www.abs.gov.au/Ausstats/abs@.nsf>, viewed 10 December 2003.

6 Australian Institute of Health and Welfare, <www.aihw.gov.au/labourforce/health.html>, viewed 10 December 2003.

7 Based on Australian Institute of Health and Welfare data ‘employed pharmacists characteristics by geographic location (RRMA) of main job, 1996'. id., Australia's Health 2002, Australian Institute of Health and Welfare, Canberra, July 2002, p.273.

8 id., Australia's Health 2002, July 2002, p.215.

9 id., Health in rural and remote Australia, 1998, p.1.

10 id., Australia's Health 2002, July 2002, p.215.

11 The AHCAs are bilateral agreements between the Commonwealth and each State Government for the provision and joint funding of health services, especially hospital funding.

12 Administered expenses are managed by Health on behalf of the Commonwealth. They include grants, subsidies and benefits.