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Application to establish a Medicare Local in 2011.pdf


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									      greater brisbane south medicare local

2011 Medicare Locals # 248/1011
Catchment Area: Qld Metro South ML034

Application to establish a
Medicare Local in 2011

Prepared for the Greater Business South Medicare Local for the
Commonwealth of Australia
as represented by the Department of Health and Ageing

Response to Criteria 3

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                                   SELECTION CRITERION 3
The financial viability of the Medicare Local including:
   i. Demonstrated record in efficient and effective use of funds of each organisation
       covered by the proposal;
       manage substantial public funds appropriately;
 iii.  Current contractual arrangements.

Note that attachments are required for the completion of the application for Selection Criterion 3.

Evidence to substantiate the response to this criterion should be provided.
For example:
     Audited Statement of Financial Performance (Profit and Loss Statement) and detailed Statement

        report for the past three years; or
       Accounts for the past three years certified by a Certified Practising Accountant or Chartered
        Accountant as being prepared in accordance with Australian Accounting Standards.

Insert the response to Selection Criterion 3 by typing directly into the application form below this
point. There is no page limit and attachments are required for this criterion.

Key outcomes in terms of strategic objectives

 Improved patient journey
 Funding models within Greater Brisbane South Medicare Local (GBSML) will be efficiently and
 effectively allocated to support objectives that improve the patient journey.

 Increased clinical support
 Program funding will continue to be allocated to support multidisciplinary clinical support in a
 seamless transition.

 Local needs addressed
 GBSML will apply for and effectively manage flexible funding pools that address local needs
 linked to GBSML local health planning proposals. Frontline and infrastructure plans will be
 efficiently managed to support right care, in right place at right time.

 Increased performance
 Funding will be efficiently channelled to support systems that measure and assist to monitor and
 evaluate the performance of the coordinated care to be provided in GBSML geographic area.

 Strengthened accountability
 GBSML will ensure financial viability and accountability to their stakeholders and drive efficient
 resource utilisation in a flexible funding environment.

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The founding Divisions of General Practice (DGP), being SouthEast Primary HealthCare Network Ltd
(SPHN) and the South East Alliance of General Practice Brisbane Ltd (SEA-GP) have an outstanding track
record in the efficient and effective use of funds from the Commonwealth and Queensland Governments
and from other sources. With highly experienced and professionally qualified executive management
teams that will oversee the transition from the DGP, the Greater Brisbane South Medicare Local (GBSML)
                                                           unding from DOHA from July 1, 2011.


In 5 yrs GBSML will be:
      Planning collaborative, flexible funding models for provision of primary health care services to
         successfully meet local needs and achieve the local health plan
      Reducing fragmentation of service delivery and funding arrangement to increase equity in
         access in the GBSML area
      Allocating funding for primary health care service provision based on health outcomes,
         performance, clinical evidence and evidence of comparative effectiveness of services.
      Utilising financial modelling together with clinical outcomes, patient experience and population
         health data to inform the preferred patient journey pathways to achieve the GBSML health
      Providing fiscally sustainable, efficient and cost effective primary health care services in the
         local area

First Steps:

GBSML will:
    Map primary health care service and program provision
    Map duplication, gaps and possible efficiency gains to be channelled to identified need
    Collaborate with the Local Health and Hospital Network (LHHN) to establish total contract
      analysis for primary health care services provided by State as well as Commonwealth funded
      providers in the area
    Share existing successful cost modelling

Foundation ready:

GBSML foundation primary health care organisations are already:
    Demonstrating records of efficient and effective use of funds
    Managing multiple complex contracts effectively
    Utilising effective governance and management of risks, legislative compliance and finance to
      ensure agreements are well executed
    Collaborating and mentoring local organisations to achieve compliance

                                   2011 Medicare Locals # 248/1011 Application Form
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3(i) Demonstrated record in efficient and effective use of funds of
each organisation covered by the proposal

  SEA-GP & SPHN currently manage over $7M in revenue:
      Through strong governance structures including Board finance and audit committees
      With well established management reporting systems.
      Maintaining a healthy liquidity ratio with no debt burden or long term liabilities.

Financial history and retained surpluses
Both SouthEast Primary HealthCare Network (SPHN) and South East Alliance of General Practice Brisbane
Ltd (SEA-GP) can demonstrate a sound financial history. The income of both organisations has grown
steadily since they were originally founded in 1993 and 2005 (SEA-GP was formed from the merger of
Bayside DGP and Bisdiv DGP established in 1993) and is budgeted at $4.03 million for SPHN and $3.1
million for SEA-GP in 2010/11. Graph 3.1.1 below shows this increase.
                                                                                        GRAPH 3.1.1
SPHN and SEA-GP have recorded operating                                          SPHN & SEAGP Actual Income
                                                                                     2005/6 to 2009/10
surpluses, and the figures for the last three                       4.5
years are shown in the Table 3.1.2 below. The                         4
two organisations had a combined retained
surplus of $959K at 30 June 2010,                                   2.5

representing 13% of their total income. This                          2
equity is to provide a buffer for annual                                                                                          SPHN
variations in non core funding. The figures in                      0.5                                                           SEAGP
the table also show that SPHN and SEA-GP                              0




have consistently maintained a healthy
current (liquidity) ratio and their debts were
tightly controlled in 2009/10.

Both SPHN and SEA-GP have no debt burden or long term liabilities and have positive cash
balances at 30 June 2010.
TABLE 3.1.2                               SPHN                                                    SEA-GP
                         2007/08         2008/09          2009/10         2007/08                 2008/09                    2009/10

Current ratio                 0.89            0.95            1.02            1.48                    1.37                       1.54
Equity                          $0        $140,688        $220,956        $573,837                $663,851                   $738,371

The financial reports highlight that both organisations have effectively utilised available financial
and other resources to deliver programs and services whilst maintaining financial prudence.
Drawing upon the experience in sound management of financial and other resources within SPHN
and SEA-GP, we envisage opportunities for more effective utilisation of resources in the delivery of
future programs as GBSML.

                                     2011 Medicare Locals # 248/1011 Application Form
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There will be opportunities to achieve economies of scale with operations including those related
to the delivery of support services and other overhead costs. We also envisage benefits in resource
utilisation from the perspective of program performance of a large organisation.

Grant funding and other income
Chart 3.1.3 below shows the combined income split between Commonwealth Government grants,
and other income of SPHN and SEA-GP for 2010/11. The Commonwealth Government grants
comprise funding for programs such as Core, General Practice Immunisation Incentives, Closing
the Gap, Better Outcomes in Mental Health and Suicide Prevention whilst the State Government
grant funding has been received to deliver
programs such as the Chronic Disease
                                                                      Chart 3.1.3
Prevention and Management Placed Based
                                                        SPHN & SEA-GP Combined Income 2010-11
Initiative, Healthy Lifestyles and CHIC Diabetes.
SPHN and SEA-GP have also generated other
income from membership fees, sponsorship,                $0.9m                      Federal Government
course delivery, advertising, sales and cash                                        Grants
deposits.                                                        $4.2m
                                                                                    State Government
The financial statements for SPHN and SEA-GP
                                                                                        Other Income
for the last three years are attached as
Appendices 3.1.1 and 3.1.2

Financial governance and management systems
SPHN and SEA-GP have well established financial governance processes and management
reporting systems in place. The SPHN and SEA-GP Boards receive six-weekly and bi-monthly
finance reports respectively through their Finance Committees. These committees have formal
terms of reference and include representative members from the Board and Executives Team of
each organisation. The finance reports presented to the Boards include detailed commentary and
analysis on annual budgets, monthly and year-to-date and year end forecasts variances, risks and
other key issues impacting on strategic and operations goals and objectives.

The reporting is also supported by well documented policies and procedures to ensure effective
control procedures are in place to mitigate risk. Such policies and procedure include the adoption
and use of finance manuals, delegations of authority and cash investment policies.

Both organisations also have robust internal management systems for recording, processing,
monitoring and reporting on financial contracts, income and payments. Contract registers, asset
registers, complex spreadsheet modules, databases and the Mind Your Own Business (MYOB)
Premium accounting software is currently used to perform these tasks.

During the first year of transition, the GBSML will review each system against the likely growth
projections and reporting requirements. The current business systems will be viewed as interim
systems. Each system will be assessed to determine its scalability to handle the larger workloads
envisaged by the GBSML, the current effectiveness of the system, any ongoing maintenance costs.
Where different systems are used by each of the Divisions of General Practice both systems will be
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reviewed in this manner. The result will be either to go with an existing system, upgrade an
existing system or search out/develop a new system. However while all this happens the GBSML
has the benefit of an existing system on which to rely.

The efficiency and effectiveness of the financial reporting and managements systems in place in
the two organisations can be evidenced by the external auditor and ISO reports. Both SPHN and
SEA-GP have received unqualified audit reports, including audit management letters that have
raised no significant issues of concern and ISO accreditation approving systems and processes in
place. The last three years of each organisations financial statements are shown in Appendices
3.1.1 and 3.1.2, the last three years of each organisations audit management letters are shown in
Appendices 3.1.3 and 3.1.4, and the 2010 ISO audit reports for each organisation are shown in
Appendices 3.1.5 and 3.1.6. No material findings or recommendations were contained in these
management letters.

proposed executive team to manage substantial public funds

      The current management team of SEA-GP & SPHN are highly experienced executives
       experienced in creation and merging of corporate entities.
      These executives will oversee the establishment and transition to the GBSML.
      With a breadth of qualifications and experience in management of government and non-
       government organisations of up to $115M, the GBSML Executives are highly skilled and
       capable of managing substantial public funded contracts appropriately.

Proposed ML Executive Team requirements
The proposed executive team of the new GBSML will be required to have the skills, professional
qualifications and experience to manage large public funds. The present executive officers
responsible for the operational leadership and management of the SPHN and SEA-GP programs
and finances are well qualified to manage substantial publicly funded contracts.

Current Exe
                                                                Medicare Local, our Transition Plan
(see Section 2.5) envisages the two sponsoring Divisions of General Practice (SEA-GP and SPHN)
assigning staff and assets within the first 100 days of operation. Among the many benefits of this
approach, this transition plan means that we are able to call upon the DGP experienced executive
management teams in the first instance to assist in getting the GBSML operational from July 1,
2011. The current executives working in both DGP bring a wealth of management and primary
                                                                            in Appendix 3.2.1.

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With the GBSML entity ready to be established upon successful notification of our ITA in May, and
functioning ready to receive funding directly from DOHA on July 1, 2011, our transition plan
outlines our intent to transfer the staff and programs into the new entity. A suitably qualified
Acting CEO will be appointed to lead this transition whilst recruitment for a permanent CEO is

Consequently, the large majority of the existing executive management and administrative staff of
the two DGP will be available to the Medicare Local as well as being able to continue overseeing
programs and activities of the DGP.

This demonstrates that we have personnel on the ground who can get the Medicare Local up and
running in the shortest practical time period. Current Executive members working in the transition
to become a Medicare Local include:

Gaylene Coulton, Transitional Executive Director GBSML Joint Venture
    Experienced CEO in health and NFP sector, who has led the executive during the period of
    transition, enacting the objectives of the GBSML Joint Venture in response to the health
    reform agenda. This has involved supporting representatives from the DGP Boards to
    establish and progress a joint venture, developing a comprehensive business plan and
    transition plan as well as managing the response to the ITA. As CEO of SouthEast Primary
    HealthCare Network, managing a $4M budget, Gaylene also led the 2009 development of a
    GPSuperclinic tender for Brisbane Southside within a six week timeframe, bringing together
    a range of stakeholders to form partnerships across the region.
    Previous experience includes leading the merger of community care, residential aged care
    and social services within three organisations in to a new umbrella organisation. The new
    organisation had a combined revenue of $115M, and 2300 personnel. Gaylene has held
                                                                 sed in business establishment,
    development and transformation. She holds a Graduate Diploma in Nursing, and has a
    strong background in tertiary education sector, including post graduate curriculum
    development and a Masters in Leadership [Education].

John Torpy, Chief Executive Officer South East Alliance of General Practice
    Experienced CEO in health and local government who has previously led the amalgamation
    of three local councils to establish a new local authority. With a B.Commerce and MBA and
    membership of the Institute of Chartered Accountants, he brings strong financial and
    executive management skills to the organisations, with over 20 years experience managing
    budgets of up to $60M of public funds.
    John has driven major systems reviews and new developments, including implementing
    quality assurance systems to achieve ISO 9001 accreditation; implementation of large
    capital works projects, amalgamation projects, organisational change management
    programs; strategic plan development and performance program budgeting systems. His
    HR reforms have included the successful development of an Enterprise Bargaining
    Agreements and workforce health and safety policy and system development. He brings
    extensive experience in policy development and negotiation.

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Amanda Adams, A/Chief Executive Officer SouthEast Primary HealthCare Network
    Coming from a strong clinical leadership history, Amanda has held the position of Acting
    CEO for the past 12 months. As an experienced manager in the community care sector,
    Amanda has a strong history in business setup and growth, building a community care
    business from start up to a turnover of $7M, two sub branches and over 80 personnel.
    With a strong passion for development of people and the processes and systems to support
    their work, Amanda has qualifications in nursing, management and quality auditing. Her
    accomplishments include development and implementation of multiple chronic disease
    prevention and management programs, leading organisations through external
    accreditations, and leading teams through challenging change.

Jay Samra, Finance Manager SouthEast Primary HealthCare Network
    Experienced finance executive both in the Australian health system and in the establishment
    of the UK Primary Care Trusts. As a Certified Practicing Accountant (CPA), with a CPA Public
    Practice Certificate (License), Registered BAS (Tax) Agent; and a BA (Hons) Economics, Jay
    brings achievements in managing the finance teams of Primary Care Trusts with budgets of
    up to £510m, including holding responsibility for commissioning with local hospitals and
    performance management and negotiation of all primary care contracts.
    Jay also brings strong Divisions of General Practice finance management experience, project
    management achievements, and experience in provision of specialist advice to general
    practices on issues such as capital grants, practice incentive schemes, superannuation
    reporting and income maximisation and generation.

Denise Upshall, Operations Manager SouthEast Primary Health Care Network
    Experienced senior manager in the health and community sector across Government and
    non-Government sector including mental health, disability, aged care, Aboriginal and Torres
    Strait Islander & Youth areas. Currently responsible for business development, policy and
    contract management, HR, quality risk and compliance, in addition to mental health and
    indigenous health programs.
    Previous extensive experience and achievements in compliance and risk system
    development & implementation, budget development & monitoring (excess of $17m),
    change management including leading teams through transition of organisational mergers,
    and project management. Denise holds qualifications in Quality, Auditing, Risk
    Management, HR, Workplace Training and Assessment, Mental Health, Disabilities and
    Indigenous Health.

In summary, both organisations employ professional accountants that hold full membership of
CPA Australia and the Institute of Chartered Accountants (Australia) and have extensive
experience in managing sizable public budgets. Both employ executives with significant
experience in all aspects of general and health management including the creation and merger of
corporate entities.

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3(iii) Current contractual arrangements

  SEA-GP & SPHN currently:
      Hold over 70 service delivery contracts.
      Under a robust and comprehensive contract management system.
      Easily transferable to the GBSML from July 2011.

The execution and management of contracts will be an integral part of the Medical Local business

The current contracting activity for SPHN and SEA-GP ranges from straightforward procurements
that can be made, for example, using a purchase order through to more complex service delivery
contracts for programs, that may involve a number of contracting and/or subcontracting

Contracts and agreements may only be executed by the Board Chair, the Chief Executive Officer or
their nominated delegates as provided for under the Delegation of Authority. Contracts are
managed as per the contract Flowchart 3.3.2 following on pg.13.

SPHN and SEA-GP have some 70 service delivery contracts that range in value from $1000 to over
$4m as per the spreadsheet at Table 3.3.3 following on pg.14. The SPHN and SEA-GP Contract
Registers are shown in Appendices 3.3.1 and 3.3.2.

The two organisations have in place a number of policies and associated processes that set out the
framework for these contracts.

In addition to the policy and framework, there are a number of factors that are important at all
stages of the contracting process. These include:
         Managing risks
         Managing relationships
         Managing resources
         Specifying responsibilities
         Behaving ethically, and
         Keeping appropriate and accurate records.

Ensuring that contracts and agreements are executed appropriately supports the mitigation of the
following identified risks:
         Legislative or regulatory breaches
         Contract validity
         Reputational damage
         Financial or operational loss

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Risks associated with contract management and contractual obligations are identified, assessed
and reviewed through a web based system, called Tickit Risk Management System.
The two organisations have a number of contracts and agreements which support business
functions and corporate operations and outline the objectives, obligations and key performance
indicators of programs and projects. These are outlined in the contract/supplier registers.
All contracts are managed diligently,
completion. As an example contract oversight, key activities, requirements and performance
indicators for all contracts are included in Program Based Operational Plans which are monitored
through operational work plans, monthly reports and compliance checks through senior
management meetings.

Business Decision Making Framework
Proposals for new contracts/areas of business are tabled for approval with the Board using the
submission impact statement or summary, which contain relevant details of the proposal to inform
decision making processes and are reflective of the identified factors for consideration, operational
and organisational risks and potential business impacts.

When providing services by way of agreement (contract), the company is acting in the role of
contractor. In the normal course of establishing a contract for services, the company considers a
range of matters which inform the decision on whether or not the services sought are or can be
appropriately provided. Some of these are obvious commercial matters (e.g. competence and
capability) whilst other matters to be considered go more to questions of vision, mission and
organisational philosophy. These matters are significant for the immediate question and are
considered under the following headings:
             Relevance to our Vision and Values
             Enhancing value to our membership base
             Internal capacity and capability and
             Stewardship of scarce resources.

Each of these items contains a consideration or factor of value to the company upon which the
new service proposition would impact. Assessing the new service proposition proceeds by asking
the question: What impact does the service have on each of these factors? The answer is provided
in either a positive, neutral or negative sense.

Contract Development and Review
                                         nt and review procedures. To illustrate, the Diagram 3.3.1
following on pg.11 is a flowcharted system used by SPHN.

The company also maintains a contractor/subcontractor register which includes:
        Allied Health Professionals
        Goods and Services Suppliers
        Consultants and Employment Services
        A register of preferred providers and suppliers, detailing local businesses and services
         engaged by the company

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Diagram 3.3.1 Contract Development and Review

  Operations Manager responsible for development &/or review of contracts,
      in consultation with the CEO, Senior Mgt and where necessary the
                 company’s nominated legal representatives.

  Contracts and Agreements for review/renewal are reviewed initially by the
  Line Manager and forwarded to the Operations Manager for cross checking
         prior to execution by the appropriately authorised delegate.

       The Operations Manager in consultation with the Line Manager is
  responsible for identifying errors, omissions and anomalies in Contracts and

              Contracts are reviewed against the required criteria:
   a]Original submission including budget and Contract Checklist where the
                          company is the Contractor.
           b]Contract Checklist where the company is the Principle.

 The completed Contract Checklist is endorsed by both the Line Manager and
      Operations Manager and attached to the front of each Contract or
       Agreement in preparation for execution by designated authority.

   Following execution the contracts are systematically filed, distributed to
  relevant officers and entered into a contracts register. (see Flowchart 3.3.2)

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To support effective contract management the company has as components of the contracting
framework a number of standardised templates which are used to support business functions,
            Team Member Employment Contract
            Service Agreement (contractors/sub-contractors)
            Memorandum of Understanding
            Service Contract (individual consultant)
            Contract Approval Checklist
            Submission Impact Statement & Summary

Performance management of service delivery contracts
All service delivery contracts are reviewed and monitored for key reporting requirements and
reporting deadlines. The key information such as funding, service and finance reporting dates,
payments and invoicing dates and key contacts pertaining to these contracts is detailed in a
Contracts Register.

The Contract Registers are regularly monitored by the program staff and senior managers to
ensure all contractual obligations are met.

All contractual obligations have been met to-date by SPHN and SEA-GP.

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Contract Management Flowchart 3.3.2

 Contract is received by                     Received by                           Contract cross checked by
    Administration                       Designated Manager                        Manager against funding

Clarification as required            Budget cross checked by                           Issues identified are
        by funder                       Finance Manager                             followed up by Manager

                                       Attachments identified                        Attachments identified

                                     Contract authorised by
                                                                                   Clarification as required by
                                     CEO or Board Chair as

                                       Contract returned to
                                        Administration for
                                      including attachments
                                          and processing

                                      Contract copy kept for
                                          interim record                             Interim copy filed in safe as
                                      two copies returned to
                                                                                          temporary record.
                                     funder with any required

When Contract is returned Administration will enact the following:

  Contract copied                      Original placed in safe                         One copy to
                                        and temporary copy                         designated Manager
                                       removed & destroyed
                                                                                   One copy to Finance
                                         Contract details                             One copy filed
                                       entered onto register                          electronically

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Contract Funding Register Overview Table 3.3.3
                                                                         CURRENT FUNDING CONTRACTS
Contract Party               Program                           Purpose                                                                 Annual Funding Amount
                                                                                                                                        SEA-GP           SPHN
Dept Health & Ageing         Divisions of General Practice     Education, support & information to general practice                      992,880       823,596
General Practice Qld         Activate Mind & Body              Promotion of new mental health initiative                                   5,909
General Practice Qld         Nursing in General Practice       Promoting uptake of nursing services, education skill development          14,479        14,479
Pharmacy Guild               National Prescribing Service      General practice education medications prescribed by condition            105,840       103,952
Dept Health & Ageing         General Practice Immunisation     Promote uptake of immunisation initiatives to community, general           33,152        36,445
                             Initiative                        practice and primary health care
General Practice Qld         Lifestyle Modification program    Self Management Chronic Disease                                           115,000       126,029
Dept Health & Ageing         ATAPS Tier 1                      Support to access appropriate psychological services                      425,220       284,546
Dept Health & Ageing         ATAPS Tier2                       Intensive support Including Perinatal Initiative & Suicide Prevention      68,059       136,818
General Practice Qld         Aged Care Access Initiative       Allied Health services to Residential Aged Care Facilities                 80,860        81,228
General Practice Qld         Partners in Mind                  Mental Health                                                              15,000        89,618
Improvement Foundation       Australian Primary Care           Quality Improvement Program to support improved health outcomes and        26,405       112,965
Australia                    Collaboratives                    data management
Dept Health & Ageing         Closing the Gap Project Officer   Aboriginal and Torres Strait islander Chronic Disease Management          132,000       158,645
Dept Health & Ageing         Closing the Gap Outreach          Aboriginal and Torres Strait islander Chronic Disease Management           80,170       101,684
Queensland Health            Southside Partnership Council     Chronic Disease Management Programs                                       223,900       333,981
Queensland Health            Healthy Lifestyle Program         Healthier Options Programs Lighten Up & Living Strong Programs                          105,122
Queensland Health            Placed Based Initiative           Optimal Health Program Chronic Disease & Self Management                                791,777
Pharmacy Guild               Prescribing Data in General       Data Management project medication prescribing                                           10,646
                             Practice Program
RANCZP                       Specialist Training Program       Support Psychiatric Registrars to include General Practice Rotation                     100,000
Dept Health & Ageing         ATAPS Flood Assistance            Support those affected by flood and cyclone in Qld                                       61,000

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                                                                          Criteria 3 - Page 14 of 14

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