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$2b health funding program ‘fell short of ethical requirements’: ANAO

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The Australian National Audit Office (ANAO) has released a new report that describes the administration of a nationwide funding program by the Department of Health and Aged Care (DoH) as ‘ineffective’ and ‘short of ethical requirements’.
 
The audit of the Community Health and Hospitals Program (CHHP) found only two of the 63 national partnership agreement projects entered into were assessed as ‘highly suitable’ – a supposed benchmark for being shortlisted – while most approved projects were selected outside of the DoH’s own expression of interest processes.
 
A number of grants were also awarded that had no opportunity guidelines, which in three instances represented a ‘deliberate decision by senior management to not comply with finance law’.
 
‘The [DoH’s] effective administration of the funding arrangements … was undermined by deliberate breaches of the Commonwealth Grants Rules and Guidelines and failure to advise government where there was no legislative authority for grant expenditure,’ the report states.
 
‘Executive oversight, risk and fraud management were deficient.’
 
Other failings, according to the report, include that: 

• the DoH did not seek to advise the Federal Government on whether national partnership agreement project selection was aligned to CHHP objectives
• national partnership agreements were established that did not create a strong basis for robust project monitoring and milestone payment approvals
• projects funded under grant agreements with Primary Health Networks and non-government organisations were designed, assessed, established and managed in a manner that was largely inconsistent with the Commonwealth Grants Rules and Guidelines. 

The program, announced by then-Prime Minister Scott Morrison six months prior to the 2019 Federal Election, was also at one stage announcing so many projects in succession that the DoH began drafting national partnership agreements on the basis of public announcements, which it kept track of via the media.
 
As late as November 2022, more than half the CHHP projects involving infrastructure remained in the preliminary or planning stage, while only $1.05 billion had been expended.
 
Ostensibly established to ‘fund projects and services in every state and territory, supporting patient care while reducing pressure on community and hospital services’, investment was allocated across four key areas:
 

• Specialist hospital services (such as cancer treatment, rural health, and hospital infrastructure)
• Drug and alcohol treatment
• Preventive, primary and chronic disease management
• Mental health 

However, despite the stated aim of easing pressure on community health and hospital services, general practice was largely overlooked, a point not lost on RACGP Expert Committee – Funding and Health System Reform (REC–FHSR) member Dr Emil Djakic.
 
He told newsGP the most important aspects of primary care and preventive health are found within general practice but lamented that ‘none of this speaks to investment in that space’.
 
‘The trouble [with preventive health investment] is it doesn’t come with a ribbon around it that you can open. It doesn’t have a shiny plaque on the wall saying, “Minister Joe Bloggs did this in December 2023”,’ Dr Djakic said.
 
‘It’s not romantic and it doesn’t get a headline. Yet it does all the heavy lifting.’
 
While he did not want to comment on the individual merits of funding recipients, Dr Djakic was disappointed in the way in which projects were selected.
 
‘It’s quite perplexing looking at the breadth and reach of it. Clearly there are some huge deficiencies and breaches in governance over the supervision of public money,’ he said.
 
‘It just looks like someone developed an entire bucket of money to go around and throw where they wanted in the hope that we’re going to patch up some issues, which fundamentally is a pretty abysmal way to try to run a health system.
 
‘We need to look at the fact that a funding process appears to have been so dysfunctional in its ability to target, administer and then validate outcomes that it fails at all levels – it’s really frightening.’
 
For its part, the DoH said it has noted the findings, accepted the recommendations and ‘commenced implementation of improvements’.
 
However, the Federal Health Secretary between 2017 and February 2020, Glenys Beauchamp, still disputes that there were ‘systemic issues of non-compliance’ and argues that the department had ‘strong governance arrangements’ while she was in the role.
 
The official DoH response also said that the department had ‘considered carefully its stewardship obligations’ and ‘acted with honesty, impartiality and transparency’ throughout its administration of the program.
 
But for Dr Djakic, the recent focus on ‘Medicare rorts’ and other compliance programs leaves a bitter taste when compared with the report’s findings.
 
‘It’s very sad to see such a level of dysfunctional funding distribution on an ad hoc basis with no accountability,’ he said.
 
‘We’re held up by our nose hairs while the rest of this industry seems to be able to get on with a freedom and largesse which borderlines on criminal.’
 
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ANAO Australian National Audit Office healthcare funding

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