Divisions of General Practice: will they transform, or die?

As noted above, there are many similarities between the functions currently undertaken by Divisions and those envisaged for MLs. Accordingly, there may be opportunities for better-performing Divisions to transform into MLs. That does not, however, mean that existing Divisions can simply be “rebadged” as MLs.

MLs will, on average, be larger than Divisions. The AGPN, in its blueprint for primary health care organisations (PHCOs — the precursors of MLs), suggests there could be “up to 60” such bodies.5 The NHHRC proposed PHCO catchment populations of about 250 000 to 500 000 “to provide efficient and effective coordination”,6 which translates to between 45 and 90 MLs. The populations served by Divisions currently range from 16 000 to more than 600 000, with 87 Divisions (80%) serving fewer than 250 000 people.7 In many parts of the country, Divisions would need to merge to establish MLs of the size envisaged by the AGPN and NHHRC.

Changes to governance arrangements may also be required. The National Health and Hospitals Network agreement, recently established by the Council of Australian Governments, indicates that PHCOs should have “strong local governance, including broad community and health professional representation, as well as business and management expertise”;8 and the Australian Government’s first National Primary Health Care Strategy states that governance of MLs “will include people with clinical expertise that reflect the broad health professions that work within the primary health care system”.9 There is clearly an expectation that the proportion of non-GP Directors will continue to grow.

The theme of accountability to local communities runs strongly through the rhetoric surrounding MLs, and this will have implications for their ownership. Divisions are currently companies that are owned by their members. The Australian Institute of Company Directors’ Code of Conduct explains that a Director’s “primary responsibility is to the company as a whole”.10 That means, when the chips are down, Division Directors are expected to put their members’ interests first. If ML members were to be “primary health care providers or provider organisations” as the AGPN blueprint suggests is a possibility,5 where would that leave consumers’ and communities’ interests?

Indeed, the issue of MLs’ accountability to the public is brought into sharper focus by the suggestion in both the National Health and Hospitals Network agreement8 and the National Primary Health Care Strategy9 that PHCOs or MLs should also “undertake population level planning and potential fund-holding roles in areas of market failure”.

Governments commonly use private companies to deliver services, but it is rare for planning and funding decisions that directly impact on citizens’ access to publicly funded services to be assigned to private-sector bodies. Where that does occur (for example, in some European social health insurance schemes), the citizens concerned can generally exercise either “voice” (by selecting members to serve on the Board of their insurer) or “exit” (by moving to an alternative insurer) as a means of ensuring accountability.11,12 Ownership and governance arrangements for MLs need to offer similar opportunities.

Divisions could choose to remain as independent companies with predominantly GP membership, while at the same time seeking to exert influence over their ML. This could be achieved by continuing in their present form and taking an ownership stake in a separate ML company, possibly appointing or electing one or more members of its Board. Other primary care providers or provider organisations (as envisaged by the AGPN blueprint5), or even local citizens, could also have a stake in the ownership or governance of the ML.

This option reconciles the need for broader-based MLs with the Divisions’ desire for retaining strong GP engagement, but it has some significant weaknesses:

• Divisions would lose access to any of their current “core” government funding and any other income streams that were redirected to MLs.

• Directors chosen by Divisions to serve on the Boards of MLs might struggle to reconcile their responsibilities to the Division and their obligations to the ML company.

• In common with Option 1, this option could be viewed as placing too much decision-making power in the hands of MLs that have, at best, limited accountability to the communities they serve.

Some Divisions might play no part in the establishment or operation of MLs. Reasons for this could include a desire to retain existing ownership and governance arrangements; an ideological dislike for, or distrust of, the ML concept; an unwillingness to merge with one or more nearby Divisions to form a body of sufficient size to become an ML; or an unsuccessful bid to fulfil the ML role in the face of competition from other Divisions.

Divisions following this course of action would face the prospect of losing their current government funding to MLs. They might, therefore, seek to recoup lost income by providing, for example, direct patient care, GP support, or management services to one or more MLs. Similar arrangements have emerged in New Zealand, where the government’s move to establish primary health organisations (PHOs) with broad community governance has led some more GP-centric independent practitioner associations to redefine their role as being to “support both general practice and in many cases perform a management services function for PHOs”.13

Divisions choosing to follow this course of action would, in common with those choosing Option 2, be better able to retain their existing corporate form and GP focus, but may lose income in the process.

Under this approach, the Australian Government would contract with one or more organisations to deliver a defined range of ML services to a specified community for an agreed period of time. Thus, they would be franchises held by Divisions or other organisations. Details of services to be delivered (eg, quality standards) and the sums payable to the franchisee would be encapsulated in a formal time-limited contract. Input from consumers and health professionals would be by means of advisory structures rather than through ownership or governance arrangements.

While this option is at odds with the view of the government and others that MLs should be organisations, it offers significant advantages to all key stakeholders:

• In their role as franchisees, Divisions could retain existing ownership and governance arrangements, while continuing to receive government funding. The nature of the contract for delivery of ML services would focus primarily on outputs rather than the details of the franchisee organisation.

• The government would be able to select the most appropriate provider of ML services independently of current Divisional structures or capabilities. Formal contracts would increase transparency in funding and monitoring, and poorly performing franchisees could be refused renewal or extension once the initial contract term ended.

• The public would have both voice, through mandated advisory structures, and the possibility of exit, by pressuring for non-renewal of contracts in the event of poor performance.