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Managing health services through devolved governance: A review of the Victorian model [Blog]

ID:59300375A recent independent review of Victoria’s model of governance for public health services has highlighted the strengths of local autonomy, and concluded that “the principles of devolved governance are fundamentally sound”.

The review by UK independent charity The King’s Fund examined Victoria’s devolved governance of health services.  Key findings were that:

  • Victoria delivers good results in comparison to other Australian jurisdictions
  • The cost of care is lower in Victoria that other states
  • Victoria’s pioneering use of case mix funding has contributed to this efficiency
  • Victoria’s good performance underpinned by a governance model that gives local boards considerable autonomy.

Devolved governance

The Victorian model, examined in the report, is governance of public hospitals and health services by local boards (appointed by the minister) that operate independently from the state health department.

The report provides context around the history and drivers for development of a devolved model in Victoria, before examining its current effectiveness.

What contributes to a successful devolved governance model?

Based on the review, it is possible to identify some key elements of a successful devolved model of health governance.

  • Clearly articulated priorities. Victoria’s health boards are given a ‘statement of priorities’ from the minister and health department that include a small number of KPIs (largely around finance and access).   Local health services are clear on what really matters.  As one person interviewed by the review put it, boards were keen to understand what they needed to achieve with their autonomy – “don’t tell us everything, tell us what is actually important”.
  • Measured response to performance issues. Failure to meet the KPIs triggers escalating interventions from the health department.  As the report notes, when performance failures arise there can be a temptation to respond by stepping in with central control and oversight.  This is particularly the case where events have a high public profile, such as recent revelations of clinical and governance failures at Victoria’s Djerriwarrh Health Service.  This can undermine a devolved governance model, micromanaging from the centre and demotivating staff.  While there is a need to address performance failures, it needs to be carefully managed so as not to undermine local accountability and devolved governance.
  • Organisational stability. Relative stability of boards and recruitment and retention of experience chief executives has enabled stability that provides a platform for innovation.  The review notes that Victoria has enjoyed a relative stability of governance model and tenure of boards and chief executives.
  • Incremental reform. In recommending continued improvement for the Victorian model, the report cautions rapid change, to avoid “the destabilising and often damaging lurches in governance and reform seen in some other jurisdictions”.
  • Central planning and monitoring. The review explores the role of the health department in a devolved model, concluding that it has a valuable role to play in planning and the oversight of clinical services.  This requires capability in clinical services planning and monitoring to be developed and retained within the department.

Opportunities for improvement

The review also identified a number of opportunities for improvement for the Victorian system, including:

  • Reviewing the number of boards, with a view to possibly reducing the number. Victoria currently has 85 local boards.  (By way of comparison, NSW has 18.)
  • Encouraging greater collaboration between local boards, particularly in remote and regional areas.
  • Increasing the independence of the board appointment process, through an independent appointment commission.
  • Greater transparency in reporting on performance, and an independent agency to publish performance data.

The review provides useful information for policy makers, boards and executives about how to successfully operate in a devolved model of governance.  These insights can be applied across the health sector, and in other areas where greater local autonomy and accountability is sought.

Brodie has a focus on developing governance standards and practices to promote organisational performance. Her interest is in assisting boards and leadership teams to develop and improve frameworks that allow the collective experience of the governance group to be harnessed to achieve better outcomes for the organisation.