Department of Health Annual Report 2016-17

Chief Operating Officer’s Report

Page last updated: 19 October 2017

This image is of the Chief Operating Officer, Alison Larkins.Continuing to mature organisational capability

At the beginning of the year we received the report of an independent Health Check to look at the extent to which the Department has improved its organisational capability since the Capability Review in 2014. Key capability areas identified for improvement included: leadership and culture; governance and delivery; and risk.

The Health Check found that the Department had made significant progress against all areas. It also emphasised that maturing capability required a sustained focus over several years.

Accordingly, building capability continued to be at the core of much of our corporate effort in 2016-17.

Leadership and culture

Survey results have demonstrated that the Department’s leadership and culture have improved. The APS State of the Service Employee Census (Staff Survey) results showed our staff are more highly engaged than the APS average and their perception of senior leadership is significantly higher than the APS average.

We developed a new Leadership and Management Framework. It outlines the leadership expectations required at each level and provides an overview of options available for staff to improve their leadership performance.

Options include the Department’s leadership development programs, which were revised during the year to support continued building of leadership at all levels. A particular focus was support and development for Executive Level staff, including by incorporating 360 degree feedback into relevant development programs. Feedback from staff, colleagues and supervisors is used as the basis for participants to identify professional strengths and developmental opportunities.

Governance and delivery

The Data Governance and Analytics Committee was established as an additional senior governance committee. It leads the oversight and direction for the strategic management and sharing of the Department’s data holdings, analytics and compliance activities.

Additional arrangements were put in place to monitor the delivery of major initiatives. They have provided the Executive with visibility of implementation planning and progress, facilitating the identification of skill gaps and other risks and the taking of action to mitigate them.
We now have a solid foundation for maturing project management and related capabilities within the Department.

Risk

A new Risk Management Framework was established to assist departmental leaders and staff to make well-informed risk-based decisions. It includes the identification of 12 Enterprise Level Risks, an Enterprise Risk Appetite Statement and an updated Risk Management Policy.

Fraud and corruption

The Department is committed to building a fraud and corruption awareness culture, which helps to protect the integrity of its information and resources. In 2016-17 our long-term strategic educational approach included:

  • information sessions and other communications targeted at leadership and management groups; and
  • training via various learning options, with 84 per cent of staff having completed the training.

A significant shift was reflected in the Staff Survey results, with staff reporting levels of knowledge and confidence consistent with a strong culture of fraud and corruption awareness.

Records management

The Records Management Capability Program continued throughout 2016-17 to improve the management of documents and records. It addresses compliance with legislated records management obligations and addresses audit recommendations. Benefits of the program include increased efficiency, improved accountability and reduced organisational risk.

Harnessing diversity

To build on our progress in recognising Aboriginal and Torres Strait Islander cultures, and developing a culturally capable workplace, we have launched our new Innovate Reconciliation Action Plan (RAP). Our RAP will help us to deepen our awareness, understanding and appreciation of Aboriginal and Torres Strait Islander cultural issues, and making a further contribution towards a reconciled Australia. A greater cultural understanding within the Department will also ensure we are delivering appropriate and effective health policies and programs for Aboriginal and Torres Strait Islander peoples.

In addition, the Department has developed the first Accessibility Action Plan, including establishing a working group to develop a Lesbian, Gay, Bisexual, Transgender and Intersex Action Plan.

These plans challenge us to think about how all employees are responsible for embracing equity within the workforce.

Health State Network

Since its creation on 1 July 2016, the Health State Network (HSN) Division has been implementing an operating model to: engage with the Department’s stakeholders; manage aged care provider compliance and regulation; and administer grant funding.

Key features of the operating model include:

  • progressing the streamlining of grants administration and moving to adopt whole-of-government grant processes where possible;
  • a functional realignment that changes the way the HSN works towards greater consistency, efficiency and quality;
  • revising and redesigning the end-to-end grant process that takes a risk proportioned approach to grants administration;
  • implementing the Domain Management model, which enables a consistent approach to the HSN’s engagement with policy areas to deliver on the policy objectives of their respective domains; and
  • leading the local rollout of significant policy reforms such as Commonwealth Home Support Programme, mental health and Primary Health Networks.

Through the HSN, we have used our local presence to work with stakeholders across the health system. We have developed strong relationships with Primary Health Networks, and worked with providers of health and aged care services to support services across the community.

Overall the HSN has administered more than $5.3 billion in grant payments, with 10,000 grant activities delivered by 4,200 organisations across the country.

Efficient and effective delivery of corporate services

A corporate front door on the Health intranet was introduced in July 2016, making it faster and easier to find information and contacts for hundreds of corporate services. Using an interactive carousel display to guide, staff can identify the service they need, when they need it. User testing demonstrates the increased efficiency from this self-service tool, with employees across the Department able to successfully find information up to 55 per cent quicker.

The corporate front door spearheaded the development of other self-service systems and tools across the Department to better enable employees to do their jobs, manage their business and meet their compliance obligations.

Financial results

In 2016-17, the Department administered 28 programs on behalf of Government. Administered expenses totalled $63.4 billion and comprised primarily payments for personal benefits of $42.6 billion (67 per cent of the total), including those for medical services, pharmaceutical services and private health insurance rebates. Subsidies, predominantly for Aged Care, amounted to $12.1 billion (19 per cent of the total). Grants expenditure was $7.5 billion (12 per cent of the total), the majority ($6.8 billion) of which was paid to non-profit organisations.

At 30 June 2017, the Department’s administered assets totalled $2.3 billion, including investments in health related agencies and inventories held under the National Medical Stockpile. Administered liabilities were $2.9 billion which included provisions for personal benefits, grants and subsidies.

Key administered expenditure is illustrated in Figures 3 and 4.

The Department incurred an operating loss of $55.5 million, prior to unfunded depreciation. This loss was largely a result of undertaking important additional activities within existing resources. Included in the operating loss is the Medicine and Medical Devices Review which was agreed by Government through the 2016-17 Budget process and was funded by revenue derived from industry.

Downsizing the workforce to reflect future funding levels has been a key priority for the Department. Measures, including a comprehensive voluntary redundancy program and continued recruitment controls, have been effective in reducing staffing to an affordable level.

The Department is committed to managing within resources provided by Government to deliver key programs and reforms and remains in a positive net asset position as at 30 June 2017.

Financial statements

The Auditor-General has provided the Department with an unmodified audit opinion for the 2016-17 financial statements.

Part 4 Financial Statements contains the Department’s financial statements, which include information on the financial performance of the Department over the financial year.

Alison Larkins

Chief Operating Officer
September 2017

Figure 3: Breakdown of administered expenditure

Figure 3 is a vertical bar graph comparing the breakdown of Administered Expenses across the period 2011-12 to 2016-17. In 2016-17, administered expenses totalled $63.4 billion, comprised primarily of payments for personal benefits of $42.6 billion, subsidies predominantly for aged care totalling $12.1 billion and grants expenditure of $7.5 billion.

Note: The movement in subsidies from 2014-15 to 2015-16 relates to aged care programs following the Machinery of Government changes in 2015.

Figure 4: Administered expenditure by category

Figure 4 is a pie graph showing the breakdown of administered expenditure during 2016-17. Administered expenses comprised primarily of payments for personal benefits (67 per cent of the total), including those for medical services, pharmaceutical services and private health insurance rebates. Grants expenditure was 12 per cent of the total, subsidy expenses were 19 per cent of the total, and two per cent attributed to other expenses.