National Health and Hospitals Network Agreement

On 20 April 2010, COAG agreed, with the exception of Western Australia, to sign the National Health and Hospitals Network Agreement (NHHN). One of the most significant changes will be the requirement that existing health services will become smaller Local Hospital Networks (LHNs).

The NHHN suggests that the aim of the LHN's is to decentralise public hospital management and increase local decision-making to better meet local needs. The agreement states that ideally LHN's are to consist of a single or small group of public hospitals and other health services with a geographical or functional connection.

Each LHN will be run by a Chief Executive Officer and Governing Council. Governing Council members will be appointed under State legislation by State Health Ministers. Each LHN's CEO will be appointed by the Governing Council, with the approval of the State Health Minister or their delegate, and will be accountable to the Governing Council.

LHN's will be responsible for:

  • negotiating and agreeing with the relevant State Government a LHN Service Agreement and any necessary adjustments;
  • managing the LHN's budget as determined by the LHN Service Agreement;
  • developing a strategic plan for the LHN, and implementing an operational plan to guide the delivery of the services, within the agreed budget under the LHN Service Agreement;
  • providing to States sufficient information regarding actual service levels delivered to enable them to inform the Commonwealth of the payments to be made; and
  • receiving Commonwealth funding for delivery of services from the Funding Authority in that State as agreed under the LHN Service Agreement.

LHN's will also be responsible for:

  • employment of LHN staff in line with remuneration and employment terms and conditions established by State governments in workplace relations agreements;
  • local implementation of national clinical standards to be agreed between the Commonwealth and States on the advice of the Australian Commission on Safety and Quality in Health Care;
  • local clinical governance arrangements;
  • providing information to States at their request, for the purpose of enabling the relevant State to provide information and data; and
  • maintaining accountability under and subject to State financial accountability and audit frameworks.

National Health and Hospitals Network Bill 2010 & the Australian Commission on Safety and Quality in Health Care

Under the NHHN new national clinical standards strengthened clinical governance will support clinicians to lead the drive towards continuous improvement in quality and safeguard high standards of care.

The Commonwealth Government has introduced the National Health and Hospitals Network Bill 2010 into Parliament. If passed, the Act will commence on 1 July 2011.

The Bill establishes the Australian Commission on Safety and Quality in Health Care as a body corporate. The Commission is currently part of the Commonwealth Department of Health and Ageing.

Whilst the role, governance and funding arrangements for the Commission will continue, its role will expand.

The Commission has been developing draft National Safety and Quality Healthcare Standards (NSQH Standards).

NSW reform

On 4 August 2010, NSW Health released a Discussion Paper 'Health Reform in NSW' containing its proposals for how LHN's should be distributed throughout NSW.

On 29 September 2010 the NSW Government outlined the future shape of their health system, with the announcement of 18 proposed LHN's to strengthen local decision-making and community involvement in health service delivery. The 18 networks will be as follows:

  • eight will be geographically based and cover the Sydney metropolitan region;
  • seven will be geographically based and cover rural and regional NSW; and
  • three specialty networks will focus on Children's Health, Forensic Mental Health, and services delivered by St Vincent's Health.

The NSW Government has subsequently introduced into NSW Parliament the Health Services Amendment (Local Health Networks) Bill 2010 (NSW).


Potential legal and other issues arising from a National Hospital Network include:

  • legislation throughout the States and Territories will need to be reviewed and amended to enable the new structure;
  • appropriate governance arrangements and dealing with conflicts of interests;
  • potential liability of members of the Governing Council/ Community Boards;
  • the levels of delegation, functions and responsibilities of the Governing Council/Community Boards;
  • measures to deal with non-performance of the Governing Council/Community Boards;
  • measures to deal with disputes within the Governing Council/Community Boards;
  • dealing with existing contractual relationships, including procurement and infrastructure contracts;
  • the role of organisations in the private sector (such as Affiliated Health Organisations) who currently operate public hospitals or provide public health services under contract; and
  • the transition of the employment of staff, particularly staff that are currently deployed across a number of facilities.

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