Summary of Government Response to
The Health Services Policy Review
Final Report - November 1999
( Updated July 24 2000)

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Recommendation Government Response
1.    The objectives in section 9 of the Health Services Act should be expanded to recognise the differences in delivery of health care in different parts of the State and the critical importance of clinical research and the teaching and training of health professionals. Government agrees to consider changes to legislation
2.    Consideration should be given to the development of measures to enhance the capacity and accountability of boards of all public statutory bodies, including articulation of governance principles. Agreed. This has been implemented for metropolitan health services (the 'successors' to the Health Care Networks) and the same principles will be applied in relation to other statutory bodies.
3.    All agencies receiving a requisite level of funding from the Department of Human Services should be issued with a certificate of registration under the Health Services Act. A central registration unit should be re-established by the Department of Human Services. Government agrees to improve registration processes. However, it would not be efficient to establish a new unit solely for the purposes of managing this registration function.
4.    Sections 83(1)(b) and 71(1)(a)(iii) of the Health Services Act should be repealed. The Secretary of the Department of Human Services should no longer be able to take into account adequacy of health services in an area when considering applications for approval in principle or registration of new private hospital developments. The Department should remove the bed cap by withdrawing the existing Guidelines for the Development of Acute Hospital Beds.

The Government accepts the Review's recommendation to remove the bed cap and will therefore replace the current guidelines with a new guide for assessing applications for registration of both private hospital and day procedure developments under the Act. The new guide will take effect on 22 July 2000. It will introduce new criteria for determining adequacy of services (as required under the Act) and will remove the requirement to source beds from the existing pool.

Many stakeholders consider that the statutory provisions about adequacy of services have the potential to be a useful planning mechanism. It is therefore not proposed to amend the Health Services Act to remove them at this time. Instead, the Government will evaluate the impact of the new criteria for assessing adequacy once they have operated for a sufficient period to enable an assessment of their effectiveness.

5.    This recommendation has several parts:
Building standards for hospitals should be incorporated into the Victorian Building Regulations. Once this occurs, the Department of Human Services should no longer approve the design and construction of private hospital premises.  

Agreed in principle. However, implementation would require a substantial amount of joint work between DHS and the Building Control Commission. The Department is currently reviewing hospital building standards. The Building Control Commission is closely involved in this process. The question of regulation of standards will be considered in the current review regarding the regulations which are to be made under the Health Services Act to replace the Health Services (Private Hospitals and Day Procedure Centres) Regulations 1991.

 

The sole criterion for registration under what are now sections 71 and 83 of the Health Services Act should be whether the applicant is fit and proper person to operate, or be a director of, a private hospital.

 

   

 Government agrees to retain the fitness and propriety criteria and compliance with the Act as the basis for making registration decisions.

The Secretary of the Department of Human Services should retain the power to set conditions under section 85.

 

   Agreed.

Criteria for renewal under section 89 should be fitness and propriety of the principal, conformity with the law and compliance with conditions of registration.

 

   Agreed.
The Department should retain the power to inspect premises pursuant to section 147 to determine compliance with the Act and Regulations.   Agreed.
6.    Exemption from input taxes represents an unfair advantage which not-for-profit private hospitals have over their for-profit counterparts in the private patient market. Government should establish a working party to quantify the benefits of the tax exemption to the public. These benefits could then be made explicit in 'Community Charitable Return' for not-for-profit hospitals. The Community Charitable Return should be equivalent to tax revenue forgone. The issue of input tax exemptions should be re-visited in the light of the working party's conclusions. Such an inquiry is not supported at this time. It would be a major State/Commonwealth exercise and would need to encompass all charitable activity as it could not justifiably be confined only to hospitals. The charitable sector is currently undergoing significant adjustment as a consequence of the capping of FBT and the introduction of GST.
7.    The State Government should no longer prescribe fees for private patients in public hospitals and should not set targets for private patient activity. Targets for public patient activity should be retained. Public hospitals should be required to set fees for private patient services in accordance with normal commercial practices. All private patient fee income received by public hospitals should be retained by them and the State should cease to make WIES payments in connection with those services.

This is a complex issue and implementation is difficult. Policy options are constrained by Commonwealth policy on access by private patients in public hospitals to default benefits and the behaviour of private health insurance funds.

The expansion of the private hospital market has seen declining numbers of private patients being treated in public hospitals over the past 10 years. In view of this and the difficulties associated with implementation, it is questionable whether the costs of moving to a policy of full cost recovery for private patients would outweigh the benefits. It is not proposed to explore the costs and benefits until such time as the Commonwealth takes the necessary first step towards feasibility by making second tier benefits available to private patients in public hospitals.

8.    The State should negotiate with the Commonwealth to ensure that:

private inpatients of public hospitals are not disadvantaged in comparison to private hospital patients in accessing subsidised pharmaceuticals; and

public and private hospitals are treated equivalently for health insurance purposes.

 Agreed.
9.    Input taxes create an unlevel playing field between public and for-profit-hospitals in the private patient market. Given that we have recommended that public hospitals set fees for private patients in accordance with normal commercial practices it is appropriate that this difference be eliminated. However, there are complex interactions involved in implementation and as a first step a levy equivalent to payroll tax should be imputed to reflect private patient and other commercial activity of public hospitals. It is not proposed to move towards implementation of this recommendation at this time. Private patient activity is partly subsidised by the public sector and this provides some public benefits. Care is needed to ensure that any change does not result in private patients treated in public hospitals being out of pocket or actively discourage private patient activity. This change would require substantial change to hospital financing systems at a time when the public hospital sector is also facing adjustment to accommodate GST and FBT changes and major reform of hospital structures in the metropolitan area.
10. The Health Services (Private Hospitals & Day Procedure Centres) Regulations 1991 should be reviewed for relevance and reformulated to also apply to public hospitals.  

Agreed. Regulations are important in setting minimum standards of safety and quality and that they thereby assist in fostering public confidence in private hospitals. A review of the regulations has begun and the regulation review will examine cost effective ways of enhancing safety and quality.

 

Regulatory standards affecting quality of patient care should, as a general principle, be common standards which apply to public and private hospitals.   Agreed in principle. The Government will aim to achieve equivalent minimum standards of safety and quality in both the public and private hospital sectors. This will be examined as part of the review of regulations.
11. Day procedure centres should continue to be registered by the Department of Human Services but the current definition of a day procedure centre should be amended to delete any reference to the volume of activity. Consultation should take place as to the most appropriate manner of determining what procedures should be prescribed. Agreed in principle. However care will be needed to ensure that removing the 'volume of activity' criterion does not result in excessive and unnecessary regulation of medical clinics. This issue is currently being examined as part of the review of the regulations.
12. The bed cap should not apply to day procedure centres. The necessary steps should be taken to remove the bed cap, pending the repeal of sections 71(1)(a)(iii) and 83(1)(b) of the Health Services Act.

The bed cap will not be reimposed for day procedure centres. This recommendation will be adopted by replacing the bed cap and beds to population ratio with new a new guide for assessing adequacy under the Act which will apply to both private hospital beds and day procedure beds. The new guide will take effect on 22 July 2000.

Many stakeholders consider that the statutory provisions about adequacy of services have the potential to be a useful planning mechanism. It is therefore not proposed to amend the Health Services Act to remove them at this time. Instead, the Government will evaluate the impact of the new criteria for assessing adequacy once they have operated for a sufficient period to enable an assessment of their effectiveness.

13. The Department of Human Services should review the proximity requirement in the context of any available data on the number of patients who require emergency transfer from a day procedure centre to a proximate hospital. Agreed. This issue is being examined in the detailed review of regulations.
14. The registration process for day procedure centres should be the same as the process described in Recommendation 5 for private hospitals. Agreed in principle - refer response to recommendation 5.
15. The Department of Human Services should not pursue development of models that involve competitive purchasers at this stage, but should revisit this issue if the scope of services encompassed by a purchaser is expanded to include key primary care services such as MBS and PBS. Agreed. Competitive purchasing would fragment the health service system and introduce another layer of bureaucracy (purchasing bodies) with no evidence to suggest that this would lead to improved patient or budget outcomes. A variation on this approach failed in New Zealand. The US experience indicates that such a system would need to be very heavily regulated in an attempt to prevent inappropriate practices (e.g. 'drive thru maternity'). The costs of such an approach are likely to outweigh the benefits.
16. We have recommended that competitive purchasing models not be introduced at this stage, however, if they are introduced, consideration should be given to whether purchasers should be disallowed from engaging in direct service provision. Agreed in principle, however, this recommendation has little relevance as the introduction of competitive purchasing arrangements is not Government policy.
17. The status quo provides the capacity for a significant level of competition in public patient services between the public and private sectors. Further efficiencies may be achieved by allowing the two sectors to compete for the right to operate existing public hospitals or constellations of services. However, it would be desirable to await evaluation of outcomes at privately operated hospitals before proceeding with further implementation of this model. The Government is opposed to further privatisation of public hospitals.
18. Subject to developing robust measure of quality of training and research (which should be pilot tested in the public sector), Training and Development Grants should be available to the private sector. A review of training and development grants will be undertaken focussing initially on the public sector.
19. The outcomes of the PHACS redevelopment and review processes should be evaluated before any competitive elements are implemented in this area. Primary Care Partnerships will be pursued instead of competition.
20. Consideration should be given to enabling designated agencies funded for provision of public services (including public hospitals, PHACS agencies and other relevant agencies) to establish data integration mechanisms. Such mechanisms should ensure appropriate protection of consumers' rights to privacy and access to services. Agreed in principle subject to the issue of privacy and authorised uses of data being dealt with in relation to any proposals for data integration across a number of health care agencies.
21. A call centre should be established in Victoria on a pilot basis for a 5 year period to assist consumers to be better informed about health care, health care providers and health choices. Measures should be taken to ensure confidentiality of information identifying any consumer. Government supports the concept of a call centre, focussing in the first instance on providing information to assist consumers to navigate the health system. The Centre should be a joint initiative with the Commonwealth to avoid duplication with Commonwealth initiatives such as the Carelink program and GP after hours services. Developmental work is under way.
22. The pilot call centre should receive information from each public hospital waiting list and advise patients of waiting times at alternative locations. The centre should also maintain and release data on accreditation status of public and private hospitals, the private health insurers with whom hospitals have contracts and the relative performance of public and private hospitals on the indicators developed pursuant to Final Recommendation 24. Refer response to recommendation 21. Government is currently developing a web site as the first stage in providing information to the public on elective surgery waiting lists for Victorian public hospitals. Accreditation status of public hospitals is already published in the Hospital Services Report.
23. The pilot call centre should be subject to evaluation. If the pilot is successful and the call centre is established on a non-pilot basis, section 141 of the Health Services Act should be amended to impose a statutory obligation of confidentiality on staff of call centres. Agreed, subject to consideration of legal issues regarding the establishment of a pilot call centre.
24. The Commonwealth and the States should collaborate to develop by 1 July 2001 a set of indicators of organisation and management of care including risk-adjusted clinical performance indicators which are comprehensive, consumer focused and current. Hospitals and day procedure centres should have one year to validate the indicators and review their performance. From 1 July 2002, the Department should publish annually comparative performance information on the indicators for public and private hospitals and day procedure centres. In the absence of an agreed national set of indicators, Victoria should develop and publish its own set. Agreed in principle subject to the development of meaningful indicators. The application of performance indicators to private hospitals and day procedure centres will be considered as part of the review of the Health Services (Private Hospitals and Day Procedure Centres) Regulations 1991.
25. The Health Services Act should be amended to require health providers regulated under the Act to provide information to enable the Department of Human Services to measure performance against the specified indicators. Agreed.
26. Legislation should be enacted to enable consumers of health services to have an enforceable right of access to their health records held by health providers, whether the provider is a private or public sector agency or individual health practitioner (medical or otherwise). The scope of the legislation should be similar to the Health Records (Privacy and Access) Act 1997 ACT. Appeals should lie to VCAT against a refusal to provide access. Agreed. Legislation is being prepared for introduction in the Spring Session of Parliament that will give patients the right of access to their health information held by public and private sector organisations and individual practitioners. The legislation will also establish privacy standards for health information.
27. Legislation should not be introduced to create a legally enforceable patient charter. The Department should review the existing patient charter to take account of the suggestions raised in submissions to this review. The proposed call centre should publicise the existence of the patient charter. Agreed.
28. There should be a formal review of the operation of quality assurance committees declared under s.139 of the Health Services Act, with the reviewer given authority by legislation to examine relevant documents including documents generated by those committees. Not agreed. The operation of section 139 has been examined and it is now considered preferable to focus on developing new proposals to improve the operation of s.139 instead of further reviewing past practice. A discussion paper will be released for public comment soon.

29. Section 139 should be amended to require health agencies which have committees declared under that section to report to a new peak quality committee established by the Department. Reporting details should include:

  • actions arising out of the quality assurance process, both agency-wide and on a unit basis; and
  • information on units or individuals whose performance is below average and the steps taken for improvement.

 

  

Agreed in part. Government will establish a new overarching quality body. The new quality body would have an interest in the systemic issues and mechanisms in place to address them, but this does not require individual practitioner identifying data.

Further work is required to provide a legislative framework for the operation of the new body.

Consideration should also be given to imposing a statutory duty of quality improvement on (at least) public sector health care providers.  

Agreed and implemented in legislation establishing the new metropolitan health services. The Health Services Act now requires boards of metropolitan health services to ensure that effective systems are in place to monitor and improve quality of care and to take action to remedy any identified problems.

 
The Secretary should have the power to direct a specific committee (or specified like classes of committees) to review data or investigate a matter referred by the Secretary and to report to him/her on the outcomes of their deliberations or proposed actions. The Secretary should also be empowered to call on a specific committee or committees to supply data to him/her.   This recommendation is accepted in principle, but requires further consideration to ensure that there is no unnecessary overlap with the role of the new quality body.

 
30. The Government should review the existing regulatory and policy framework to ascertain whether there is an appropriate level of protection for vulnerable people paying for personal care services in supported accommodation. This process should involve some form of public consultation There will be discrete and targeted reviews of regulation governing SRS, the care needs of SRS residents, standards in funded accommodation for people with intellectual disabilities, appropriate State role in relation to nursing homes and hostels and related issues to ensure that regulatory regimes reflect residents needs and Government policy. These reviews will involve stakeholder consultation.
31. The Secretary of the Department of Human Services should not be able to take into account the adequacy of services in an area when considering applications for approval in principle and registration of supported residential services. Sections 71(a)(iii), 71(1)(c)(iii) and s.83(1)(b) of the Health Services Act should therefore not apply to supported residential services. Agreed.
32. Residents of supported residential services are particularly vulnerable (unlike patients of a private hospital or day procedure centre). The criteria set out in sections 71 and 83, other than those specified in Final Recommendation 31, should therefore be retained in relation to applications for approval in principle and registration of supported residential services. Section 89 should be retained in full for supported residential services. Agreed
33. Consideration should be given to developing outcome based controls in relation to the supported accommodation sector to supplement and where appropriate, relace input controls. Agreed.