|Implemented in this survey?|
The Public Health Outcome and Funding Agreements (PHOFAs) provide funding from the Australian Government to each of the State and Territory governments for a range of public/population health programs. The first PHOFA commenced in 1997 and the current third round covers the period from 2004 to 2009. This survey reports on the main aims and principles of the PHOFAs as well as a review conducted after the second round.
The primary purpose of bundling public health program funding (so called 'broadbanding') is to give the States and Territories flexibility to manage population health funding in line with local needs and priorities. There is no requirement for the States and Territories to top-up funds received under the PHOFAs but all of them do.
The Agreements relate to three key population health areas:
Key objectives of the policy are to agree on :
Through the Agreement, total Australian Government assistance to States and Territories over the five years is AU$812 million. In order to receive their allocated funding on a year by year basis, the States and Territories must comply with certain aspects set out in the Agreement. There are some penalties for non-compliance. However, these penalties mainly relate to non-compliance of reporting standards rather than failure to meet certain performance targets.
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
Population health programs are often described as being the 'poor cousins' of a country's health funding , despite some evidence that they provide good rates of return on investment. Population health programs have to compete for funding with the curative sector and it would appear that the value of an actual life is greater than that of a statistical life.
The Australian PHOFAs provide the basis for a funding mechanism which attempts to redress some of these funding discrepancies by protecting an amount of funding available for population health programs, creating flexibility on how and which programs are funded and changes focus from inputs to outputs.
The PHOFAs were introduced in a consensual manner with bi-partisan and cross government support - thereby setting the scene for low public visibility.
Whilst the vagaries of the Australian system of government have determined the shape of the PHOFAs, the idea of creating a more flexible, output driven approach to population health funding is a fairly system-neutral endevour.
In Australia, the State and Territory governments are responsible for the direct provision of a number of health services, including many population health programs. The federal government, on the other hand, has few direct provision responsibilities but does control most of the nation's finances. The vast majority of taxes in Australia are collected by the federal government.
This sets the political and economic context of the Agreements; the State and Territory governments seek funding for services from the Federal Government (preferably with no conditions or restrictions ); the Federal Government wants greater control over how the State and Territory governments spends (what it sees as) its money.
The first round of these Agreements was signed in 1996, following a change in Federal Government earlier that year. We are currently in the third round of the 5-year agreements.
|Implemented in this survey?|
Prior to the introduction of the PHOFAS, the federal government provided state and territory governments funds through what are termed Specific Purpose Payments. As the name implies, these were detailed agreements between federal and state/territory governments that tied funding to specific programs. The decision to broadband the Specific Purpose Payments for public health was taken by Government in 1996 and reflects the broader directions agreed by Health and Community Services Ministers for health system reform.
In the years leading up to the PHOFAS, some government agencies had expressed concern over the Australian Government's administration of payments to States and Territories. In particular, its focus on inputs and processes rather than on outcomes for clients. This focus, they suggested, led to uncertainty about whether the Australian Government's policy objectives were being met. In addition, the federal government was being critisised for using the Specific Purpose Payments to micro-manage what were essentially state and territory responsibilities.
Consequently, the PHOFAs are outcomes based agreements, focusing on the achievement of agreed outcomes and do not generally tie the States and Territories to specific activities, or to match funding.
In June 1996, the Council of Australian Governments (COAG) agreed to explore reforms designed to build a better health system. COAG is the primary political architecture for the heads of the Federal, State and Territory Government to set priorities and coordinate government activities that span both levels of Government. The 1996 meeting was the first since the election of the newly elected Federal Coalition Government - which gave it the political will and capital to drive a new agenda.
As one of its first reforms, the Federal, State and Territory governments agreed on long term "broadbanded" bilateral funding agreements. A subsequent Australian Health Ministers' Council meeting (the COAG equivalent for health ministers) established:
The National Public Health Partnership established a shared vision of what constitutes a modern and comprehensive national public health effort, and clarified the responsibilities and roles of the Federal, State and Territory Governments.
The bilateral agremments (termed Public Health Outcomes and Funding Agreements, or PHOFAs) focus on the achievement of agreed outcomes but do not tie the States and Territories to specific activities within each program. They were intended to allow States and Territories more flexibility and prioritise expenditures to local priorities within the confines of agreed national priorities. In this sense they also shift focus from program inputs to outputs.
These Agreements were fairly low key at the time of their implementation and non-controversial because they enjoyed support from government leaders from both major political parties. At the time of first Agreement, the Federal Government was formed by the right of centre Liberal/National parties, whereas a number (albeit a minority) of State and Territory Governments were formed by the left of centre Labor Party.
|Prime minister||very supportive||strongly opposed|
|State and Territory Premiers||very supportive||strongly opposed|
|Minister for Health (federal)||very supportive||strongly opposed|
|Ministers for Health (State and Territory)||very supportive||strongly opposed|
The Agreements fall outside of the legislative process.
|Prime minister||very strong||none|
|State and Territory Premiers||very strong||none|
|Minister for Health (federal)||very strong||none|
|Ministers for Health (State and Territory)||very strong||none|
The implementation of the first PHOFA was fairly straight forward. This was primarily because the Agreements covered existing programs. No new services were added - making the policy in many ways a simple administrative matter. Thus, instead of being funded by grants on a program by program basis, state and territory governments were now given funds for a number of population health programs bundled together over a number of years.
The performance monitoring data provide the major source of information under the PHOFAs and are intended to make the state and territory governments more accountable to the federal government and the public. States and Territories have also agreed to provide statements of revenue, expenditure and compliance for the expenditure of funding provided by the Australian Government, within five months of the end of each financial year.
Information exchanges under the performance monitoring and financial accountability initiatives, together with the results of the National Public Health Expenditure Project, provide a solid basis on which to review achievements.
In part, the PHOFAs have delivered a more comprehensive, high quality and consistent national approach to data collection and monitoring of trends and arising issues. The evaluation report of the second PHOFA round indicated that significant improvements had been made across a number of public health fields including:
Of course, it is not possible to determine, on the basis of the evidence provided, whether any of these achievements were as a result of the PHOFAs, or whether PHOFAs had any significant impact on program administration, efficiency or flexibility.
The Australian Institute of Health and Welfare reports that between 1999 and 2004, funding of population health programs increased by 4.8% per annum in real terms. Population health activities accounted for a steady 2.5% of total public health expenditure over the same period.
A joint Government Review (2003) of the second round PHOFAs found that:
As reported by Bennet (2003), population health interventions, by nature, are complex, making them difficult to evaluate. This can make it difficult to establish the worthiness of some programs in terms of their return on investment. For example, due to the long lead times involved in any demonstration of a positive outcome in population health, there are few examples of where government investment reaps rewards within the period of a three-year government term.
In many countries, including Australia, there are vast differences between the funding of medical health care services and population health interventions, with the former being largely funded on the basis of individual demand through while there is often no mechanism to determine appropriate level of funding for the latter. The implication of this is that there are 'natural' resource allocation processes in curative services. If, for example, demand for GP services increases, funding automatically follows patient demand. On the other hand, population health programs are given fixed budgets, regardless of relative demand or value.
The PHOFAS are an attempt to redress some of these discrepancies:
In some ways the PHOFAS do represent a step in the right direction for population health funding. However, as discussed below, it would seem that in many ways the potential benefits are yet to be realised.
|Quality of Health Care Services||marginal||fundamental|
|Level of Equity||system less equitable||system more equitable|
|Cost Efficiency||very low||very high|
After nearly ten years, the impact of the policy is not well researched or understood. As far as we know, no attempt has been made to measure the impact of the policy against its stated objectives, apart from a joint government review of the 2nd round PHOFAS published in November 2003. The review did highlight some concerns raised by jurisdictions:
Based on the comments of the joint review, the PHOFA's foreshadowed benefits for improving allocative efficiency do not appear to be realised. The initial conservative approach to limit broadbanding to existing programs probably ensured that the agreements were accepted by all levels of government. The challenge for future PHOFA rounds is to ensure that the funding mechanism is more dynamic and able to respond to needs and evidence within an evolving set of national priorities.
Australian Institute of Health and Welfare (AIHW) (2006). National public health expenditure report 2001-02 to 2003-04. Health and Welfare's Expenditure Series No. 26, AIHW Cat. No. HWE 33. Canberra: AIHW.
Bennett, J (2003)., Investment in Population Health in Five OECD Countries, OECD Health Working Papers No 3. Organisation for Economic Cooperation and Development, Paris
Department of Health and Ageing .Joint Government Review of the Public Health Outcome Funding Agreements (PHOFAs) 1999-2000 to 2001-2002 (2003), Canberra. Available at: http://www.health.gov.au/internet/wcms/publishing.nsf/content/health-pubhlth-about-phofa-cwlthwide.htm/$FILE/phofa_review03.pdf
Department of Health and Ageing website: www.health.gov.au/internet/wcms/publishing.nsf/content/health-pubhlth-about-phofa-phofa.htm
National Public Health Partnership website: www.nphp.gov.au
van Gool, Kees