News Review
11 APRIL 2025 ausdoc. com. au
A failure to connect?
PHOTO: ABC NEWS / PIIA WIRSU
Rachel Carter Chief of staff at Australian Doctor.
The closure of a PHN’ s $ 2 million charity venture raises new questions about the network.
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PRIMARY Health Network has shut down a charity it established to support GP practices at risk of collapse, having spent $ 2 million on the venture that apparently delivered no services.
The story of Western NSW Primary Health Network( PHN), one of the largest PHNs in the country, with a budget of over $ 45 million a year, has raised a new debate about the impact of the networks and whether they are value for money.
In 2023, it started discussions with the Department of Health of Aged Care with the idea of setting up a not-for-profit that would provide direct support to practices in the region at risk of closure.
At no point was funding approved, but despite that, in September of that year, the PHN’ s parent company, Western Health Alliance Limited( WHAL), established the Priority Red Health Foundation using reserve cash.
Two months later, it asked the department for“ retrospective approval” of $ 10.1 million to fund the charity for three years, according to a letter from the department seen by Australian Doctor.
In the letter, dated February 2024, the department told WHAL to“ cease all activity by the subsidiary”, warning that it would not approve the funding because it breached the PHN’ s funding agreement.
This included subcontracting GP services and setting up a subsidiary using repurposed grant funds.
“ Given the severity of the situation, the department seeks to work with WHAL to resolve these issues as quickly as possible, noting the department reserves all rights under the funding agreement,” the letter concluded.
The foundation was wound up the following month.
According to the Central Western Daily, the charity had provided no services to any GP practice at risk of closure.
At the time it was wound up, the Western NSW PHN issued a statement saying it was a result of“ changing environmental conditions”.
But according to WHAL’ s own financial reports, some $ 750,000 had been spent on employee expenses, $ 370,000 on consultants, $ 240,000 on recruitment costs, $ 100,000 on travel expenses and $ 180,000 on legal costs.
The total bill was some $ 2.2 million.
The PHN refused to answer Australian Doctor’ s questions, aside from confirming the foundation was established with WHAL’ s“ retained earnings”.
Nor did it answer whether the foundation had provided services to GP practices during the six months of its existence, saying it would“ not be elaborating on the [ foundation’ s ] operational activities”.
The department also declined to comment beyond acknowledging that the PHN had been subject to an audit last year, with the findings yet to be made public.
A costly bureaucracy?
It is now nearly 10 years since the 31 PHNs were created under then health minister Peter Dutton, who had made an election pledge to dismantle Medicare Locals.
With a collective budget of around $ 1.2 billion a year, PHNs are tasked with filling the gaps in primary care services, particularly after hours, aged care and mental health, as well as bridging the disconnects with hospitals.
They also have a role in identifying healthcare needs.
But there have been long-running concerns about whether the network has become a costly bureaucracy that has little impact on healthcare access.
In a submission to the Federal Government in January, the RACGP stressed that some PHNs were held in high regard but that others had become“ mired with controversy” owing to unclear decisionmaking and conflicts of interest.
Accountability
“ Everybody who is receiving funding from public sources needs to be accountable, and no industry involved in that space has ever been completely clean,” said Dr Emil Djakic, a member of the RACGP’ s Expert Committee on Funding and Health System Reform.
He told Australian Doctor that the college had previously held“ grave concern” over an alleged conflict of interest between the Northern Queensland PHN and the state’ s pharmacy prescribing pilot, which prompted the Federal Government to launch an investigation.
It emerged that the PHN’ s then chair, Nick Loukas, had sat on the expert steering committee overseeing the pharmacy prescribing trial’ s rollout while co-owning a local pharmacy chain in the pilot’ s planned area.
Last year, an Australian National Audit Office report found that the
‘ Everybody receiving funding from public sources needs to be accountable.’
— Dr Emil Djakic department was failing to monitor the network’ s performance to the point where it could not demonstrate if it was meeting the department’ s objectives.
The college has said it wants to see external, independent assessment of PHNs going forward.
“ General practice is not spared that; it clearly has a very robust accountability framework built into it through the Professional Services Review process,” Dr Djakic said.
“ But there does not appear to be an external accountability process or a nationally agreed evaluation plan to determine whether PHNs are achieving their objectives.”
He added that“ the Holy Grail” would be to see whether their efforts and the funding led to a productive outcome rather than just evidence of activity.
The college has also been concerned that the PHNs are struggling to engage with GPs despite general practice being the backbone of the primary care system.
When the networks were set up, the department said GPs would have a direct say in how they did business and made it a requirement for PHNs to develop a GP-led clinical council.
But the college said these councils had received“ insufficient prominence”.
A 30-year journey
Dr Djakic said the 30-year journey from the Divisions of General Practice to Medicare Locals to PHNs had failed to realise their shared aspiration of joining up healthcare services.
“ I have never seen a bigger gap between our hospitals, our communities and our general practice environment, which is very sad to see after 30 years,” he said.
He said the GP practices in his own region had never felt“ more disparate”.
“ I know fewer of the names of my GP colleagues in north-west Tasmania now than I did when I arrived here as a registrar in 1996,” he said.
“ At the moment, we are in a divided and conquered space, and we are not doing the conquering.”
He added that the college was not calling to“ stop the clock”.
But it wanted to see GPs included in PHNs in a“ fundamental, not token, way” to re-establish connections with general practice.
“ The college is not saying this is a complete waste of money,” Dr Djakic said.
“ It is just saying there needs to be accountability.”