Bills

Health Care (Governance) Amendment Bill

Introduction and First Reading

The Hon. S.G. WADE (Minister for Health and Wellbeing) (15:23): Obtained leave and introduced a bill for an act to amend the Health Care Act 2008. Read a first time.

Second Reading

The Hon. S.G. WADE (Minister for Health and Wellbeing) (15:24): I move:

That this bill be now read a second time.

Today, I rise to introduce the Health Care (Governance) Amendment Bill 2018. This bill is the first step of the government delivering on its election commitment to establish a new governance and accountability framework for the public health system. These changes will devolve decision-making in the public health system through the establishment of metropolitan and regional governing boards; put responsibility and accountability at the local level, with strengthened oversight; and improve patient safety and hold governing boards accountable for delivering real progress.

This framework will provide a greater focus on accountability and transparency within the public health system. It is my view that, with an expenditure budget of more than $6 billion in 2017-18, with approximately 38,600 employees as at June 2017 and with around 77 hospitals and health services in a large and diverse state, the South Australian health system is too large and too complex for it to be optimally operated with all authority and accountability resting on one person—that being the chief executive of the Department for Health and Wellbeing. But that is the situation since the former Labor government abolished the boards with the introduction of the Health Care Act in 2008.

In my time as shadow minister and now as Minister for Health and Wellbeing, communities and clinicians have repeatedly told me how disengaged from decisions about their local services they feel. The devolution of decision-making about health services will empower both communities and clinicians. Devolving decision-making in the public health system recognises that healthcare needs and challenges vary between areas within metropolitan Adelaide and across regional South Australia. I believe the decisions made as close as possible to the area and people affected and with the full and effective involvement of local health professionals will be better decisions.

The election commitment will be implemented in two stages. The first stage is this amendment bill to establish governing boards, which is now before parliament. It will allow governing board chairs to be appointed by 31 July to 2018 in the lead-up to the governing boards becoming fully operational by 1 July 2019.

The second stage is to establish a new governance and accountability framework for the public health system, which will be reflected in new legislation to be introduced into parliament later this year or early next year. This bill will allow for incorporated hospitals, known as local health networks, established under the Health Care Act, to be governed by a board.

To summarise the functions, governing boards will be responsible for the delivery of their local health services within their geographic area. The governing boards will consult with local service providers and the community to ensure that the services are reflective of local needs and priorities and are able to be provided within the resources available. Of course, governing boards will be required to operate within a clinical governance framework to ensure that their services are safe, of high quality and accessible.

The governing boards will also be responsible for the oversight of local health network budgets. The governing boards will appoint their chief executive officer, who will be responsible for managing the operations and affairs of the local health network health services and be accountable to and subject to direction of the governing board.

The governing board will be accountable to me for the oversight of the delivery of health services in accordance with a service level agreement negotiated between the local health network and the Department for Health and Wellbeing. The governing boards will also be required to comply with any policy frameworks issued by the department and any directions given by me.

I will expect that the governing boards will demonstrate, through the annual report of the local health network, their progress against the key performance indicators outlined in the service level agreement and what measures they have instituted to ensure the engagement of communities and health professionals in service delivery.

Since the announcement of the election commitment, I have received a number of representations on the number of boards that there should be and their membership. Governing boards will be established for each of the local health networks as they are currently constituted, except for Country Health SA. The currently constituted boards are the Central Adelaide Local Health Network, the Northern Adelaide Local Health Network, the Southern Adelaide Local Health Network and the Women's and Children's Health Network.

In country SA, six new regional incorporated hospitals will be established, based on the current regional boundaries operated by the Country Health SA Local Health Network. Those six regions are: Barossa Hills Fleurieu Local Health Network, Eyre and Far North Local Health Network, Flinders and Upper North Local Health Network, Riverland Mallee Coorong Local Health Network, South-East Local Health Network and Yorke and Northern Local Health Network. They will take over the functions of providing health services for their particular areas from Country Health SA Local Health Network from 1 July 2019.

The governing boards themselves will be small in number, consisting of between six and eight members, and will be chosen through a merit-based process. Governing board members will be positions of significant leadership and responsibility in the health system and between them will have knowledge, experience and expertise across health management, commercial management, financial management, the practice of law, the provision of health services, clinical governance and any other experience or expertise that will enable their effective performance.

At least two members of each governing board will be clinicians to ensure clinical input into health service decisions. In order to maintain independence, a local health network employee cannot apply for that network's governing board. Employees of the department will not be eligible. Governing boards will be able to establish committees to assist them in performing their functions, such as engagement with local clinicians and the community to ensure inclusive and representative advice to their governing boards. They will be required to develop clinician and community engagement strategies.

Should there be issues with the governing board's performance or local health network under the control of the governing board, the minister will have the ability to appoint an adviser for a period of time. The adviser's role will be to work with the governing board to improve its performance or that of the local health network. The minister may also appoint an inspector to inspect, investigate and assess the administration, operation and governance of local health networks. I would envisage that this power will only ever be used where it is demonstrated that, for some reason, the governing board or local health network has failed to cooperate with the direction given by me or the chief executive of the department.

In the event that a governing board has failed to perform its functions effectively, meet a provision of the act or comply with the direction given by me or the chief executive of the department, I have the ability to dismiss the governing board and appoint an administrator. Where the governing board is dismissed, I must table this action before both houses of parliament within 12 sitting days of the dismissal. Such action would be used as a last resort. Measures such as appointing an adviser to assist the governing board I hope would be able to turn things around before this action was necessary.

This bill is the first of two pieces of legislation that will be brought before this parliament in relation to governance of the public health system. Another bill will be introduced to replace the Health Care Act to ensure that the governance and accountability framework for the public health system is relevant for today. That bill will ensure that the provisions governing the public health system acknowledge appropriate frameworks for matters such as risk management, clinical safety and quality and policy and legislative governance. This will require a thorough review of the roles and functions of the public health system within the context of the governing boards.

This is expected to include consideration of the role of the department as a system manager of the South Australian public health system, devolution of functions and resources to local health networks to support local decision-making and service delivery, reviews of services provided on a statewide basis, regional support services across the new regional local health networks and consideration of how the 39 country health advisory councils can best operate in the new governance framework. There will also be consideration of the need for statewide performance monitoring, which currently occurs through the Health Performance Council, which was a council that was established when the former governing boards were abolished.

The framework will ensure that the roles of the minister, the chief executive of the department and the governing boards are clear, and it is expected to inform the service level agreements for the governing boards under which they operate from 1 July 2019. The system changes in governance are wideranging and of such significance that an oversight committee will be established, chaired by the chief executive of the Department for Health and Wellbeing, and include independent advisers with experience in health reform in interstate jurisdictions.

An expression of interest process, including a public advertising strategy and executive search, is also scheduled for June 2018 to facilitate the appointment of high calibre individuals to governing board chairs by 31 July 2018. A further process for the appointment of governing board members will be undertaken by the end of the year in the lead-up to the full operation of governing boards by 1 July 2019.

The bill introduced today is the first step to reform the governance of the public health system. The introduction of governing boards is to ensure that services provided by local health networks better meet the health service needs of the population within their geographic area. This does not mean that boards have to provide all services to serve their population. In fact, it would not be sustainable for hospitals to do so. However, the devolution of decision-making in relation to health services will provide opportunities for governing boards to work cooperatively with governing boards of other local health networks on local and state initiatives for the provision of health services.

This bill is the fulfilment of a clear commitment of the Marshall Liberal government. We look forward to working with communities, clinicians and stakeholders to deliver strengthened governance and better health services for all South Australians. I commend the bill to the council. I seek leave to have the explanation of clauses inserted in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Health Care Act 2008

4—Amendment of section 3—Interpretation

This clause provides a definition of governing board to insert for the purposes of the measure. The definition of Department is also updated.

5—Amendment of section 4—Objects of Act

This clause proposes to amend section 4 of the Act by adding an object of the Act to facilitate the efficient and effective governance and oversight of incorporated hospitals through the establishment of governing boards.

6—Amendment of section 5—Principles

This clause proposes to amend section 5 of the Act to provide that health services should be provided as part of an integrated system that achieves an effective balance between local decision-making in relation to incorporated hospitals and health system planning, integration and management.

7—Amendment of section 7—Chief Executive

This clause proposes to amend the functions of the Chief Executive of the Department in section 7 of the Act consequentially on the transfer of direct responsibility for the administration of incorporated hospitals from the Chief Executive to the governing boards and hospital chief executive officers. This amendment removes reference to the Chief Executive being directly responsible for the administration of incorporated hospitals. This clause also then inserts an additional function of the Chief Executive to contribute to and implement statewide service plans that apply to incorporated hospitals.

8—Amendment of section 11—Functions of HPC

This clause proposes to amend the functions of the Health Performance Council (HPC) in section 11 of the Act to include reference to governing boards of incorporated hospitals such that the HPC should, in the performance of its functions, seek to obtain, to such extent as is reasonable and relevant in the circumstances, the views of governing boards. The amendment also proposes to include governing boards in the group of entities that cannot be directed by the HPC.

9—Amendment of section 18—Functions

This clause proposes to amend the functions of a Health Advisory Council in section 18 of the Act such that those functions may include the provision of advice to the governing board of an incorporated hospital about any matter referred to it by the board.

10—Amendment of section 30—Hospital to serve the community

This clause proposes to amend section 30 of the Act to include the governing board for an incorporated hospital among the entities that may determine that an incorporated hospital, in addressing the health needs of the community by providing health services, may focus on 1 or more areas or sections of the community.

11—Substitution of section 33

This clause proposes to replace section 33 of the Act to make provision for each incorporated hospital to be governed by a board (a governing board). Proposed new section 33 specifies that an incorporated hospital is to be governed by a governing board and outlines a number of specified functions of governing boards. A governing board for an incorporated hospital must comply with any directions of the Minister and any directions of the Chief Executive in governing the incorporated hospital.

Proposed section 33A requires the governing board for an incorporated hospital to develop and publish a clinician engagement strategy to promote consultation with health professionals working in the incorporated hospital and also a consumer and community engagement strategy to promote consultation with health consumers and members of the community about the provision of health services by the incorporated hospital.

Proposed section 33B provides for the composition of the members of governing boards (appointed by the Minister) to be 6-8 persons who collectively have, in the opinion of the Minister, knowledge, skills and experience necessary to enable the board to carry out its functions effectively. Proposed section 33B(2) specifies relevant types of experience that should be included in board appointments.

Proposed section 33C provides for the appointment of a chief executive officer for each incorporated hospital by the governing board of the hospital after consultation with the Chief Executive of the Department. The chief executive officer of an incorporated hospital is responsible for managing the operations and affairs of the hospital and is accountable to, and subject to the direction of, the governing board for the hospital.

Schedule 3 also makes provision in relation to governing boards.

12—Insertion of Part 5 Division 10

This clause proposes to insert a new Division 10 into Part 5 of the Act. This Division will make provision for inspectors for the purposes of inspecting, investigating and assessing the administration, operations and governance of incorporated hospitals. The clause provides that inspectors may, at any reasonable time, enter the premises of an incorporated hospital (including the premises of the governing board of an incorporated hospital) and, while on the premises, may—

(a) inspect the premises or any equipment or other thing on the premises; and

(b) require any person to answer any questions, orally or in writing; and

(c) require any person to produce any documents or records; and

(d) examine any documents or records and take extracts from, or make copies of, any of them; and

(e) seize any documents or records that, in the opinion of the inspector, constitute evidence of a breach of a provision of the Act.

The clause provides offences for a refusal or failure to comply with a requirement of an inspector and also for hindering or obstructing an inspector, or a person assisting an inspector, in the exercise of the powers conferred by this section.

13—Amendment of section 93—Confidentiality

This clause proposes to amend section 93 of the Act so that the confidentiality requirements of that section apply in respect of a member of a governing board.

14—Substitution of Schedule 3

This clause proposes to substitute Schedule 3 of the Act. New Schedule 3 will make a number of provisions in respect of governing boards for incorporated hospitals.

Clause 1 provides for the appointments of the Chairperson and Deputy Chairperson of each governing board by the Minister.

Clause 2 provides that a term of office of a member of a governing board will be fixed in the instrument of appointment up to a maximum of 3 years. A member may be reappointed for additional terms but may not hold office for more than 9 consecutive years.

Clause 3 provides that a member of a governing board is entitled to remuneration, allowances and expenses determined by the Minister.

Clause 4 provides that the Minister may remove a member of a governing board from office—

(a) for breach of, or non-compliance with, a condition of appointment; or

(b) for misconduct; or

(c) for failure or incapacity to carry out official duties satisfactorily.

Clause 5 provides that the office of a member of a governing board becomes vacant if the member—

(a) dies; or

(b) completes a term of office and is not reappointed; or

(c) resigns by written notice to the Minister; or

(d) becomes an insolvent under administration within the meaning of the Corporations Act 2001 of the Commonwealth; or

(e) is convicted in South Australia of an offence that is punishable by imprisonment for a term of 12 months or more, or is convicted elsewhere than in South Australia of an offence that, if committed in South Australia, would be an offence so punishable; or

(f) is removed from office under Schedule 3 clause 4.

Clause 6 provides that an act or proceeding of a governing board is not invalid by reason only of a vacancy in its membership or a defect in the appointment of a member.

Clause 7 provides that a member of a governing board will not be taken to have a direct or indirect interest in a matter for the purposes of the Public Sector (Honesty and Accountability) Act 1995 by reason only of the fact that the member has an interest in a matter that is shared in common with health practitioners generally or those engaged in or associated with the provision of health services generally, or a substantial section of health practitioners or those engaged in or associated with the provision of health services.

Clause 8 makes provision in relation to the procedures of a governing board.

Clause 9 provides that a governing board may establish committees or subcommittees as the board thinks fit to advise the board on any aspect of its functions, or to assist the board in the performance of its functions.

Clause 10 provides that the Minister may appoint a person to be an adviser to a governing board if the Minister considers that the adviser may assist the board to improve the performance of the board or the incorporated hospital governed by the board.

Clause 11 provides that an adviser appointed to a governing board is to provide advice to, and otherwise assist, the board in the performance of its functions. An advisor is entitled to receive notice of board meetings and copies of the papers of the board and may also attend and participate in any meeting of the board (without entitlement to vote or be present at the time that a vote is taken).

Clause 12 provides that the Minister may, at any time, dismiss all the members of a governing board if satisfied that—

(a) the board has failed to perform its functions effectively; or

(b) the board has failed to comply with a provision of the Act; or

(c) the board has failed to comply with a direction of the Minister or the Chief Executive of the Department.

Clause 13 provides that, if the members of a governing board are dismissed under clause 12 or for some other reason there are no members of a governing board at any time, the Minister may appoint the Chief Executive or other qualified person to administer and perform the functions of the board subject to any conditions specified in the instrument of appointment.

Clause 14 provides that a governing board may, with the approval of the responsible Minister or, if relevant, a responsible public sector instrumentality, make use of the staff, services or facilities of an administrative unit or another public sector instrumentality.

Debate adjourned on motion of Hon. I.K. Hunter.