Ways for primary health networks to deal with embarrassing underspends

A colleague from overseas recently said that the most damning indictment of a health service commissioner is ongoing year-on-year underspends. This is fair criticism, but it requires analysis. Commissioners are tasked to deploy their limited funds to help those who are underserved but spending money wisely and fast is challenging. Sometimes, we don’t understand the needs well enough, or we don’t know what service interventions will make a difference, or we are yet to understand the provider market. This all takes time and thoughtful consideration including appreciating regional variation. Political urgency and posturing by interest groups ramps up the pressure! Australia has not had a long-term tradition of health commissioning and many are yet to come to terms with what it means. This post examines some of the reasons for underspends and then discusses ways of dealing with them.

Many PHNs in Australia are yet to ‘find their feet’

• With 31 PHNs nationally, some and are yet to acquire and retain a stable staff. Turnover in some PHNs seems high and accessing specialist expertise can be problematic
• Commissioning remains a relatively new concept in Australia, so providers and our potential strategic partners continue to grapple with understanding our remit and role
• Significant year-on-year underspends feature with some PHNs

Australia seems to be in a capacity building phase while we understand commissioning as a discipline, comprehend its potential, build internal capacity, and then grow the partnerships needed to exploit this potential.

PHNs are often asked to do the hard-yards!

PHNs look after people that are underserved by mainstream arrangements. There are reasons that these people are missing out and correcting them isn’t easy and require consideration of:

The community of concern and understanding their needs

• Some groups are hard-to-treat due to their innate characteristics or personal circumstances. Their needs extend beyond the usual health service interventions. They may experience things like housing insecurity, trauma, racism, etc. and some of these social determinants need to be addressed concurrently if a PHN hopes to improve their health outcomes
• Needs data is sometimes insufficient to fully inform program design, including qualitative information from those with a lived experience
• Consumer input may be insufficient to satisfy co-design principles (particularly challenging for PHNs covering large geographies with different social demography)

The providers

• The service provider market may not be mapped well enough
• Regional provider workforce and capacity may be deficient
• Some clinicians prefer to treat patients that are less demanding or less threatening
• Prevailing business and revenue models encourage providers to service groups that are easier to treat, incentivising patient throughput over outcomes for at-risk groups
• Some providers attempt to de-legitimise the role of PHNs; they feel that they should be directly funded by the Commonwealth

The funders and their expectations

• Funders including Commonwealth Departments don’t have an agreed understanding of what commissioning is. This can create tension and confusion.   
• National priorities can shift quickly; the COVID pandemic being a case in point
• Funders may be reticent to adequately fund services for groups that they consider to be less deserving or of a lower priority (refer to the ageism identified in the Aged Care Royal Commission report). This means that the funds available to PHNs for commissioning for certain groups are too small to be taken seriously by strategic partners and sector providers

Our strategic partners

• Unresolved competitive tensions between sectors may exist which makes the necessary collaboration difficult
• Relationship difficulties which arose at the transition of the Medicare Locals to the PHNs continue to play out in some parts of the country
• Some may not understand or wish to legitimise the role of the PHN as a local purchaser/ system integrator
• Dysfunction between State and Commonwealth governments will often play out on the ground

The PHN itself

• There can be competing internal priorities/ politics, Board members, executives, finance teams, corporate teams, operational commissioners, etc.
• Operational bottlenecks may exist resulting in delays in getting executive approvals, backlogs in tender releases, etc.
• Staff turnover in key roles
• The overarching commissioning strategy may not be clear resulting in confusion and re-work

dealING with underspends

While health service commissioning is inherently challenging, the reality is that PHNs need to work out ways to function efficiently (quickly) and effectively.  The following are some pragmatic suggestions to clear underspends and avoid them in the future:

1. Convene a workshop with the Board and Executives to revise the PHN’s overarching commissioning strategy to inject the necessary level of pragmatism:

• On-fund some programs even if you are dubious about them; but queue them for re-commissioning attention as time and resources permit.  Existing providers need to be made aware that changes will ensue in future and that no-one should feel entitled or complacent.
• Prefer commissioning initiatives that can be implemented quickly and at-scale benefiting as many sub-regions as possible. PHNs need to be seen to be benefitting communities across your entire catchment. Make sure that you have access to good SME input for initiatives you select for priority attention and do a risk analysis to mitigate the potential for major unintended consequences.
• Avoid the temptation of small grants programs if they are going to create an unmanageable contracting or performance management burden in future years; this will just make things harder.
• Use co-design selectively; so that is seen to be meaningful. There are a range of approaches that can be applied some of which can be deployed very quickly.
• Partner initially with the ‘coalition of the willing’; side-step Local Hospital Districts (LHDs) and other organisations that need more time to accept the role assigned to PHNs.
• Fund the enabling capabilities and infrastructure to turbocharge future commissioning e.g.  service mapping tools, provider engagement tools, CRMs, contract templates, program logic templates, etc.
• Help commissioners accept that moving at pace will often mean making decisions without all the data and the insights that ideally should be brought to bear; this is at the heart of pragmatism.
• Have commissioners continue to use all parts of the commissioning cycle even if time constraints means that some steps will necessarily need to be fast and therefore cursory.  Commissioning is an iterative process with gradual improvements made over multiple contract cycles.
• .Develop regional specialisms if it makes sense to do so. This way the success of one region can expedite improvements in the other regions.
• Ensure that Board Members, executives, and managers share the same understanding of commissioning and how the overarching strategy is going to be implemented.
• Prioritise the staffing needed to deliver on your agreed signature, high-impact initiatives.  This means deprioritising other initiatives that are to be addressed in future as lower order priorities.

2. Sort out your internal processes; these need to be streamlined and everyone needs to buy-in to the agreed priorities.  If pragmatism is required, then everyone needs to act accordingly, no blockers citing professional sensibilities. 

3. Sort out internal regional competitive tensions across your PHN’s offices and regions

4. Sort out internal professional / sector competition.  People will naturally bring their passions to the PHN, but this can be counter-productive when staff choose to compete with colleagues for their preferred ‘pet’ initiatives. 

5. Calibrate your PHN to be able to work at the same pace across all departments. If commissioners are told that they need to ‘sprint’ to achieve the agreed priorities, then all parts of the organisation need to comply

6. Purposefully reach out to peer PHNs and formalise the sharing of tools and expertise esp. Program Logics

7. Consider formalising resource and specialist expertise sharing with peer PHNs to reduce the risks associated with key dependency staff

8. Avoid the temptation to do showy but low impact things (e.g., holding conferences) that while enhancing the profile of the PHN ultimately degrade internal capacity to deliver the core commissioning initiatives.  There will be time to promote reputations later, when the PHN has got ‘runs on the scoreboard’.

A controversial thought to end on:

Perhaps a new orthodoxy is needed that sees commissioners return funds if they are not sure that the funds they hold can deliver the outcomes that patients need. This is controversial, and Boards will find this problematic, but it acknowledges the serious challenges that health service commissioners face.  Sometimes it is extremely hard to know what will make a difference over the longer term.

Let’s hear your thoughts! I know that I don’t have all the answers.