Learning from others: devolved governance in the Australian state of Victoria

I spent a week working in Australia earlier this month and it made me reflect on similarities and differences with the NHS in England.

The funding context feels quite different with health care spending in Australia having risen by 5 per cent per year in real terms over the past decade. On the day I departed, a report in The Australian warned that this level of spending increase was unsustainable at a time of reduced economic growth and falling government revenues (the Chinese downturn being a key factor here). A summit organised by the Business Council of Australia discussed various options for reform, including moving away from fee-for-service payments for doctors, empowering consumers, making better use of technology and achieving greater co-ordination of care.

Reform in Australia is being debated in a context that is much more complex than in England. Not only is responsibility for health care split between the commonwealth and state governments, but also the private sector plays a much bigger part in the funding and provision of care. Divided responsibilities in government and the public–private mix create obvious challenges in migrating towards the integrated care models seen by many as holding the key to delivering better value for the population.

Another big difference is that devolution is a concept in England but a reality in Australia where state governments enjoy considerable discretion in deciding how to organise the health services for which they have responsibility. The result can be seen in variations in the degree of delegated decision-making within states and in how services are funded and managed. Devolution is accompanied by healthy competition between states to demonstrate innovations in organisation and care delivery and superior performance for their populations.

My visit was prompted in part by work the Fund has been commissioned to do by the health department in the state of Victoria, involving an independent assessment of the state’s model of devolved governance in health care which is similar in some respects to the ‘earned autonomy’ regime used in England in the 2000s. Nick Timmins and I have spent the past few months interviewing key stakeholders, analysing documentary evidence, and using available data to understand health service performance in the state and how it compares with the rest of Australia.

Our analysis shows that Victoria delivers good results in comparison with other parts of Australia, being on, close to and sometimes above the average on many indicators. Underpinning Victoria’s performance is a well-understood governance model that gives the boards running health services at a local level considerable autonomy within a state-wide framework of priorities.

Also important has been a high degree of organisational stability (unusual and enviable from an English perspective), continuity among senior leaders, and the pioneering use of case-mix funding that has contributed to the costs of care being lower than in other states. Devolved governance has contributed to a number of innovations in care, including the Hospital in the Home programme that on a typical day is responsible for around 550 patients who might otherwise be occupying a hospital bed.

Recognising these achievements, our report concludes that there are several areas where Victoria could make improvements. These include reviewing the number of boards – there are more than 80 for a population of around 6 million – and bringing greater independence into the appointment of board members to ensure they are selected on the basis of skills and experience.

There is also a compelling case for greater collaboration between boards. This is particularly important in the case of boards responsible for regional and rural health services where isolation from other health services creates risks in relation to the safety and quality of patient care, as illustrated by recent failures of perinatal care at Djerriwarrh Health Service where a recent report found seven of the ten stillbirths and neonatal deaths that occurred there in 2013 and 2014 could have been avoided.

The transparent reporting of data on performance could help to avoid failures like this in future. Not only would transparency strengthen accountability to the public, but it would also support health care providers to compare their performance with others and identify areas in which they can improve. New South Wales does this through its Bureau of Health Information and I met with the Bureau’s staff in Sydney to learn about their work in that state.

Victoria’s experience will be presented at our annual conference by Frances Diver, Deputy Secretary at the Department of Health and Human Services, who will share learning on devolved governance and current efforts to develop it further. We will also be joined by Mark Smith and Don Berwick from the United States who will talk about how to deliver better outcomes at lower cost. More than 350 participants will hear these and other speakers as we seek to borrow the best ideas, wherever they come from, at a time of huge and growing challenges in the NHS.

• Read the report, Managing health services through devolved governance