The health, aged care and disability services sectors are simultaneously undergoing fundamental reform. Common elements include greater consumer empowerment and individual choice, changes to government funding models and new governance structures.

While the reforms share these common factors, they are not always consistent and coherent, creating complexity and mixed incentives for service users and providers.

In response, service providers are transforming themselves to adapt to the new and evolving operating environment, including by:

• Establishing more consumer-oriented systems and processes, building workforce capability and driving cultural change
• Strengthening commercial viability by driving cost reductions and funincreasing scale, including through mergers and acquisitions
• Developing new service offerings, innovating in service design and investing in marketing to be successful in a competitive environment.

Changes to the way health, aged care and disability services interact create risks and opportunities

The reforms are not just changing the internal logic of each service system; they fundamentally change the way the systems interact. System boundaries and intersections have changed, eligibility and referral processes are evolving and new system stewards are emerging.

The disconnected nature of the various reform agendas creates some risks, including:

• A complex and evolving mixture of Commonwealth and State funding; based on individual, activity and program funding creates perverse incentives for providers and unintended consequences for the system
• System navigation becomes more complex, potentially leading to high risk cohorts falling between the service systems cracks
• Provider sustainability is an increasing issue, especially in remote and rural areas, as providers adapt from the security of a block funding model to a consumer choice model.

The reforms also present major opportunities to create value and improve outcomes through integration across service systems, including:

• Improving the consumer experience within and between service systems
• Improving quality by reducing variation in practice via collaboratively designed and agreed clinical pathways
• Managing unnecessary and inappropriate demands in one service system through targeted interventions in another system.

Realising these opportunities requires collaborative and practical action

The focus should be on building integrated service systems at local and individual level

System integration cannot be driven from the top down. “Big bang” reform to align services and funding across health, aged care and disability services is unlikely. Centralised or programmatic approaches to integration are not consistent with the move towards consumer empowerment and individual choice.

Collaboration at local level can result in integrated services that are responsive to local needs. Consumer-centric funding provides opportunities for commercially viable integration. Service providers, either individually or collectively, can combine funding from different sources to create seamless and tailored services for individuals and mitigate the impact of disjointed funding models and reforms.

Organisations can build connections between services (including through shared data, care coordinators, and physical co-location) to facilitate system navigation and to drive efficiencies. Close connections between local communities and service providers can foster informal community supports for vulnerable people, reducing pressure on formal services.

Local collaborative action is not without its challenges. It requires service providers to find a way to cooperate in an increasingly competitive landscape, and must enable new and innovative approaches through a culture where it is safe to fail.

System stewardship is the key enabler for system integration  

System integration is not simple, especially with a mixed Commonwealth and State funding model. It will require the acknowledgement and alignment of goals, incentives and information between the service systems; whilst retaining the unique factors that make each system distinct and successful. The need for system stewardship is critical and timely with:

• The National Health Reform Agreement 2011 seeing State Department’s of Health evolve to take on the role of system manager
• The establishment of the Primary Health Networks in 2015 forcing the separation of commissioning and provision in Primary Care
• The roll-out of NDIS bringing the introduction of system stewardship into the disability system.

Service systems have tended to operate in silos; but as consumers are more empowered and informed, it is unlikely they will tolerate disjointed and disconnected services. It will be the responsibility of the respective system stewards to ensure their individual systems are integrated to the extent that individuals can move between systems seamlessly.

Local action must be supported by a state-wide enabling environment  

Locally integrated services require an enabling environment at state level. Currently, there is limited understanding of the impacts of reform within and across sectors. Creating a more conducive environment for integration involves:

• Leadership from across the public, not-for-profit and private sectors
• Building a vibrant and sustainable community of providers
• Establishing common principles and vocabulary
• Targeted facilitation by the State Government.

This work must be focused on enabling practical action rather than on prolonged theoretical discussion.

Get in touch to find out more about Nous’ experience working with public, private and not-for-profit health and ageing organisations.