The Australian Local Health District Paradox or How Does One Assess LHD Board & CEO Performance

National Health Care Reform, and in fact all of Australian government, is built around the principle of subsidiarity – i.e. that delivery and implementation of services, and decisions concerning services should be made as close to the ‘coalface’ as reasonably possible. This has resulted in the creation of local health districts or LHD. The LHD receive a mixture of State and Federal funding that is predominantly administered through State ministries. The LHD governance consists of a Board and a CEO with his/her executive team.

The remit of the LHD Board is to ensure good management of the district and philosophically the Board must protect, and indeed pursue, the interests of the local community. At inception the CEO were appointed by the States rather than by the Boards and the Chairmanship of the Boards, albeit voluntary, was also essentially at the discretion of the States.

The CEO has in effect two masters – the State Ministry of Health and the Board. The CEO is bound to try and achieve the performance targets set by the State. At the current time these are largely around activity based funding. The CEO and Board and hospitals must bring the budget in on target.

The problem for hospitals and their Boards is that hospitals new improvement, renovation and redevelopment. States tend to do little to cater for recurrent infrastructure related capital expenditure so the LHD must compete politically and make the case why their institutions are more deserving than others (that might be in more politically sensitive electoral seats). The Board has a responsibility to the community it serves to try and advocate for its’ cause. The CEO should support the actions of the Board but must also accommodate the bidding of the State and not cause embarrassment for it.

We must be recognize these issues but also manage them. The Board must not let the the CEO control its’ agenda. The Board must manage the performance of the CEO and be prepared to penalise him/or for failing in either management of the LHD budget or in advocacy for the LHD.

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