National Health Reform Agreement: Objectives, Critical Analysis and Recommendations

This report discusses the National Health Reform Agreement (NHRA) in Australia, its objectives, critical analysis, and recommendations for improvement. It covers the funding and management provisions of public hospitals, the role of Commonwealth and states, and the need for transparency and accountability in the healthcare system.

A report on National Health
Reform

Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................3
Objectives of the National Health Reform Agreement....................................................................4
Critical Analysis..............................................................................................................................5
Recommendations............................................................................................................................8
Conclusion.......................................................................................................................................9
References........................................................................................................................................9

Executive Summary
In spite of a robust healthcare system in Australia, the nation needed to prepare itself for the
challenges of the future. Federal government works on the recommendations of the National
Health and Hospital Reform Commission to build structural reforms in order to remove the
impediments in the Australian health system (Donato & Segal, 2010). The health care system
have been facing increasing demands because of the introduction of novel treatments, growing
number of elderly population, augmented charges of chronic disorders, and increasing health
expenses. This led to the creation of the National Health Reform Agreement (NHRA) which
makes sure that the states and territories are financed suitably to fulfil the increasing cost of
health service provision. To strengthen the sustainability of the public health system of Australia,
the Commonwealth and all the states and territories signed the NHRA for funding and
management provisions of public hospitals in 2011.
Introduction
National Health Reform Agreement (NHRA) is an agreement that specifies steps to enhance the
clarity, governance and funding of the health care system of Australia. In addition, by
implementing the stipulations of the agreement, the states and territories lowered their
centralized health administrations and decentralized financing, planning and provision
responsibilities to local level. (NSW, 2012) Government of Australia has given an assurance of
$16.4 billion of extra financing for public hospitals for 2014-2015 and 2019-2020. NHRA has
also pledged to enhance its role to effective growth financing for hospitals to 45% in 2014-2015,
raising to 50% from 2017-2018. The NHRA lays down that the all the parties involved are
collaboratively in charge for offering activity-based funding or block funding to the public

hospitals (CFFR). Activity-based funding is based on the amount and charges of the services
offered to the service users. Block funding is offered for educational and research purposes
( NHFB, 2016). NHRA will develop a collaboration between Commonwealth, and the states and
territories. It acknowledges that the duty for the supervision of public hospitals is of the states
and territories. NHRA further ensures effective costs and improving the patient access to
accomplish the sustainability and transparency of public hospitals’ financing, along with their
responsibility and approach to requirements of the local communities. So it be said that NHRA
works on improving the performance of public hospitals in Australia to gain better health
outcomes. This report will discu ( NHFB, 2016)ss the NHRA along with focus on the Aged Care
reform. It will also provide a critical analysis of the NHRA and based on the analysis certain
recommendations to improve the reform are also proposed.
Objectives of the National Health Reform Agreement
The objectives of the NHRA include increasing the quality of the performance reporting by
establishing the National Health Performance Authority and improving the accountability by the
Performance and Accountability Framework. The Framework supports the improvement of local
level performance assessment to contribute towards the attainment of the objectives. The
fundamental objective of the Agreement is to induce a safe, high quality Australian health
system, by improving on the aspects of transparency and accountability. The Agreement will be
based on three different domains – equity, effectiveness and efficiency of service delivery in
health care system. The parties who signed the Agreement are focused in offering coordinated
care reforms particularly for service users with chronic and complex conditions as this is the

basis of a strong and sustainable health system. Apart from that flexibility and sustainability are
also the driving factors (Lost about health-care reform? Here’s where we got to in 2011, 2011).
Critical Analysis
NHRA came into being after an autonomous inquiry of a year and a half into the health system, a
Prime Ministerial listening tour of the hospitals throughout Australia, numerous fraught Council
of Australian Governments (COAG) meetings and an ineffective effort. After the series of events
the federal Labor Government was eventually able to make a health reform deal with all states
and territories in the form of NHRA.
The integrated approach of funding was also applicable for primary health care which is mostly
provided by General Practitioners. Private health insurance were accountable for primary health
care and private hospital services and, to a certain scope for public hospitals as well. Over time,
the Government of Australia is to have the most of the financing and policy accountability for
aged care system, including the Home and Community Care program, in every state and territory
except Victoria and Western Australia. It can be concluded that NHRA supports in provision of
improved access to services (Wiese, Jolley, Baum, Freeman, & Kidd, 2011), urges improved
effectiveness enhanced the local accountability and transparency, improved responsiveness to
local communities and a more robust funding structure for the aged care service in the future. In
addition, it increased public information to facilitate comparison of health service delivery
(Shannon, Holden, & Dam, 2012).
Several commentators suggested that the extent of reform has been scaled back over time. Also,
the reforms overviewed in the NHRA are less detailed than those outlined in the National Health

and Hospitals Network (NHHN) Agreement (2010). Western Australia refused to sign up the
NHHN agreement because of the contentious suggestion to keep hold of GST from the states in
order to fund reforms so it was removed from the NHRA. It is also believed by some health
policy experts that NHRA had narrower scope. They viewed it as a reform bundle in financing
terms instead of a system terms which was regarded as a huge weakness of the reform. It was
particularly criticized for this as major portions of the Agreement were dedicated to public
hospital funding and specifically in describing that how the Commonwealth will shift from block
funding to an ABF system. Further the engagement in ABF was also not new as COAG first
dedicated to ABF in 2008. However, the details regarding how ABF will work in practice was
new in NHRA (Boxall, 2011).
However, the NHRA has various strengths. In absence of NHRA, the budget of state and
territory governments would have been exhausted by their increasing health expense duties and
their capability to offer several services would have been substantially constrained. Further,
NHRA offers substantial detail regarding the manner in which funding will flow between the
Commonwealth, state and territory governments and Local Hospital Networks (LHNs). The
fundamental purpose of NHRA is to make the flow of finances at both levels of governments to
LHNs more transparent, so that blame game could be prevented or reduced in the healthcare
system.
NHRA also gives some added specifications on the new governance and performance evaluation
provisions. For example, it was outlined that the National Health Performance Authority
(NHPA) will maintain the MyHopsitals website which was then managed by the Australian
Institute of Health and Welfare (AIHW), and will compare performance data for LHNs and
Medicare Locals to recognize best practice. Principles for data sharing between various

institutions and Governments was also laid down in the agreement because it was regarded as a
deficit in the system. NHRA further stipulated the principles for data exchange between levels of
government and groups. Moreover, it obligated the governments to develop a more official
process of data exchange.
The reform also stated the modifications in governance of public hospitals at local level. A
significant change outlined was that the LHNs will have separate bank accounts and receive
Commonwealth funds directly from the National Health Funding Pool. It confirmed that they had
greater funding assurance and more flexibility in budgeting than they had prior to the
implementation of the agreement. But since the state government is still the biggest funder, so it
can move its funds between LHNs according to the needs of the current scenario (Dixit &
Sambasivan, 2018).
After establishment of the national governance organizations and a performance and evaluation
framework, the Commonwealth recommended to be more active in ensuring that the healthcare
providers offer improved delivery of services. However, the function of Commonwealth is still
limited to monitoring and encouraging the care providers which include the states, Medicare
Locals and private hospitals to accomplish the set performance standards as the Commonwealth
itself does not provide hospital services. When the formal process was established, both the
levels of government were able to work on the crucial aspects of health care system. As in
Australia the healthcare services is a shared responsibility among the Commonwealth and the
states, an agreement and understanding between the two levels of governments is essential. The
NHRA is a reform which facilitates cooperation and understanding, it has chances of providing
long-term benefits.

Recommendations
After critically analyzing the reform several recommendations are suggested to reinforce this
agreement. NHRA must link the care adherence systems with quality systems more thoroughly
in order to improve the services. A mandate must be build regarding the data collection of
performance and quality of care services routinely. The data gathered through the routine
collection must be evaluated and made available to public to assist the clients so they can make
informed choices in regards to the services they are seeking. The public accessibility of the data
will further help in driving service competition and quality improvement. The official website
must also publish the Quality indicators that should comprise of relevant information to support
informed decision-making about different aspects of healthcare services. Moreover, the
satisfaction of the clients should be analyzed by conducting surveys and other evaluation
processes. There is a need of strengthening the compliance and complaints procedures to ensure
that the clients and their carers can convey their issues without fear of retribution and a belief of
resolution. The care services standards must include partnership with the clients so that they are
assisted to be engaged in quality improvement. A reliable, strategic and integrated national
approach to care education and training is needed which should include minimum standards for
education and training for those involved in working with the clients (Bartlett, Butler, & Haines,
2016). (Giles, Halbert, Gray, Cameron, & Crotty, 2009). This approach should focus on
leadership and cultural alterations at administrative level, to increase opportunities to translate
the learning into improved practice. The attempts of improvements must be supported by
government and by the health care sector, and emphasize on accomplishing sustainable changes
to practice which result in better outcomes for the population.

Conclusion
The National Health Reform Agreement is a national agreement developed to enhance the
transparency, governance and funding of the health care system of Australia. To strengthen the
sustainability of the public health system of Australia, the Commonwealth and all the states and
territories signed the NHRA for funding and management provisions of public hospitals in 2011.
As per the agreement the Commonwealth funds half the efficient cost of offering public hospital
services. NHRA invested an added $19.8 billion in public hospital services during 2010-2020 to
ensure that all patients receive improved quality of acre and the local communities are given
focus in the provision of local services and reinforce the primary health care services by
development of Medicare Locals. NHRA is better than previous agreements as it provides more
emphasis on even sharing of responsibility for the financing of the growth in costs of public
hospital services in future. NHRA offered more transparent and simpler funding for public
hospital services, on the basis of effective price of offering those services. The aged care reform
supports in provision of improved access to services, urges improved effectiveness enhanced the
local accountability and transparency, improved responsiveness to local communities and a more
robust funding structure for the aged care service in the future. In addition, it increased public
information to facilitate comparison of health service delivery.
References
NHFB. (2016). National health reform payment and funding flows. Retrieved from
http://www.nhfb.gov.au/health-reform/health-reform-payment-flows/

Bartlett, C., Butler, S., & Haines, L. (2016, May 2). Reimagining health reform in Australia:
Taking a systems approach to health and wellness. Retrieved from
https://www.strategyand.pwc.com/au/report/health-reform-australia
Boxall, A.-m. (2011, August 4). National Health Reform Agreement: what might it achieve?
Retrieved from Parliament of Australia:
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/
Parliamentary_Library/FlagPost/2011/August/
National_Health_Reform_Agreement_what_might_it_achieve
CFFR. (n.d.). National Health Reform Agreement. Council of Federal Financial Relations.
Retrieved October 30, 2018, from
http://www.federalfinancialrelations.gov.au/content/npa/health/_archive/national-
agreement.pdf
Dixit, S. K., & Sambasivan, M. (2018). A review of the Australian healthcare system: A policy
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Donato, R., & Segal, L. (2010). The economics of primary healthcare reform in Australia -
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Giles, Halbert, Gray, Cameron, & Crotty. (2009). The distribution of health services for older
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Lost about health-care reform? Here’s where we got to in 2011. (2011, December 19). Retrieved
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NSW. (2012). National Health Reform Public Hospital Funding. NSW.
Shannon, E., Holden, J., & Dam, P. V. (2012). Implementing National Health Reform –Is
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Wiese, M., Jolley, G., Baum, F., Freeman, T., & Kidd, M. (2011). Australia's systems of primary
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