Author: Dr Rhonda Kerr - Co-Chair AAHP

In a report released on 15 August 2025 the Australian Productivity Commission recommended major changes to the way healthcare is planned, delivered and evaluated. Importantly the Report also recommends the Australian government should fund planning and collaborative commissioning. Funding will be dependent on achieving agreed outcomes.

The Productivity commission Interim Report on Delivering quality care more efficiently recommendation says “Governments should embed collaborative commissioning, with an initial focus on reducing fragmentation in health care to foster innovation, improve care outcomes and generate savings.

In the next addendum to the National Health Reform Agreement, governments should agree to governance and funding arrangements that support better collaboration between Local Hospital Networks (LHNs), Primary Health Networks (PHNs) and Aboriginal Community Controlled Health Organisations (ACCHOs). New joint governance arrangements to support collaboration are needed.

• LHNs and PHNs should be required to plan together to identify areas for collaboration, including joint needs assessments, agreed plans of work and joint monitoring and reporting of outcomes.
• LHNs and PHNs must work in partnership with ACCHOs and other organisations to inform planning and shared decision making. Partnering with ACCHOs should be consistent with the principles set out in the National Agreement on Closing the Gap to ensure relevant needs are appropriately and respectfully assessed and key decisions are shared.
• There needs to be stronger requirements for formal joint collaborative commissioning committees and the development of data-sharing arrangements to underpin joint needs assessments and evaluation of outcomes. Changes to funding arrangements are also needed to embed collaborative commissioning.
• Barriers to pooling funding or other forms of joint commissioning should be removed. The Australian Government should make funding for PHNs more flexible. State and territory governments need to ensure that service agreements provide flexibility in the services and programs that LHNs can fund.
• LHNs, PHNs and ACCHOs should be sufficiently resourced to undertake comprehensive joint governance.

The Australian Government should provide LHNs and PHNs with sufficient dedicated funding to embed collaborative commissioning programs once they submit a joint plan. The joint plan should clearly link agreed shared outcomes to enhanced productivity in the form of quality improvements or more services that lower potential future costs. Initially, the focus should be on reducing potentially preventable hospitalisations. Future funding should be adjusted based on whether agreed shared outcomes have been achieved at the local level.’’

Identifying that Australia’s care system is fragmented, ‘’care services is siloed, and complex governance and disconnected funding arrangements produce inefficiencies, cost shifting and discontinuity of care ‘’ the commissioners hold that Collaborative commissioning can support more integrated care by helping to align the planning and provision of services between different organisations and types of care, contributing to a more seamless experience for care users, particularly people with chronic or complex conditions. ‘’

There are systemic barriers they found including the difficulty in moving beyond trials, rigid and short-term funding, capability constraints, a lack of formal joint governance architecture, misaligned incentives and data an evaluation constraint. These are the challenges.

Health planners have a role to play in navigating the collaborative environment.

If you would like read more about the findings or to comment on the Productivity Commission draft recommendations go to https://www.pc.gov.au/inquiries/current/quality-care/interim/quality-care-interim.pdf

Alternatively, you can forward your advice to the admin@aahp.online for inclusion in our AAHP Submission to the Productivity Commission.