Kate Silburn. August 2015 AUSTRALIAN INSTITUTE FOR PRIMARY CARE & AGEING. ENQUIRIES Kate Silburn La Trobe University Victoria 3086

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1 Faculty of Health Sciences School of Nursing & Midwifery AUSTRALIAN INSTITUTE FOR PRIMARY CARE & AGEING Recommissioning community mental health support services and alcohol and other drugs treatment services in Victoria: Report on findings from interviews with senior personnel from both sectors Kate Silburn August 2015 ENQUIRIES Kate Silburn La Trobe University Victoria 3086 T E k.silburn@@latrobe.edu.au latrobe.edu.au 1

2 Disclaimer The information contained in this publication is indicative only. While every effort is made to provide full and accurate information at the time of publication, the University does not give any warranties in relation to the accuracy and completeness of the contents. The University reserves the right to make changes without notice at any time in its absolute discretion, including but not limited to varying admission and assessment requirements, and discontinuing or varying courses. To the extent permitted by law, the University does not accept responsibility of liability for any injury, loss, claim or damage arising out of or in any way connected with the use of the information contained in this publication or any error, omission or defect in the information contained in this publication. La Trobe University is a registered provider under the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS). CRICOS Provider 00115M

3 Acknowledgements The Australian Institute for Primary Care at La Trobe University convenes the Victorian Primary and Community Health Network. The Network aims to promote debate and influence policy development about primary and community health issues in Victoria. This work was undertaken following significant reform within Victoria in two important sectors one providing mental health community support services and the other community based alcohol and other drugs treatment services. These reform processes were the subject of ongoing discussion (and advocacy) by Network members. This work aims to collate some of the emerging concerns associated with impacts on service delivery and on clients in the early stages of implementing the reforms. I am grateful to the Network for facilitating access to senior managers from agencies affected by the reforms. As such, the information reported here reflects the views of these individuals and does not necessarily reflect the views of all network members. I would like to thank the CEOs and senior managers working in the mental health community support services sector and the alcohol and drug treatment services sector in Victoria who participated in interviews for this work and who commented on draft versions of the report. Without their generous contribution and commitment this work would not have been possible. The work was funded by the Australian Institute for Primary Care and Ageing and the Building Healthy Communities Research Focus Area, both at La Trobe University. 1

4 Contents ACKNOWLEDGEMENTS 1 INTRODUCTION 4 Re-design of mental health community support and alcohol and drugs treatment services in Victoria 4 Reform frameworks... 5 Implementation of re-designed mental health community support and alcohol and drugs treatment services in Victoria 6 The purpose of this document 7 METHOD 8 FINDINGS: THE REFORM PROCESS 9 Support for reform 9 Designing the reform 10 Restructuring within the responsible government department No co-production - limited consultation and tight time frames for sector re-design Unclear reform objectives and poor communication about them Design work on service system elements and specifications not finalised prior to procurement One-size fits all approach Limited assessment of work of existing providers to identify good practice Separate commissioning processes no integration between AOD and MH Recommissioning MHCSS just prior to introduction of NDIS Implementing re-design: Procurement 14 Service system considerations Role of department regional offices Requirement for consortia in the AOD sector A commercial approach, a focus on probity the probity veil Responding to the request for tender Inconsistencies in the information provided and the outcomes Interview process Poor feedback to agencies about reasons for outcomes Implementing re-design: Costs to the sectors 18 Cost to the sector & transition costs Human resources and workforce issues during reform process Implementing re-design: The transition period 19 Poor planning, lack of guidelines and information and limited systems alliance Not enough time and too many things happening at once Lack of communication with consumers and other types of service providers Process for transitioning clients Role of regional office Further development of central intake and assessment New system went live before agencies were ready FINDINGS: EMERGING ISSUES 24 Service system or service system infrastructure issues 24 Service coordination and integrated service delivery Central intake and assessment Other service system issues 32

5 Eligibility and prioritisation Lost clients Operation of consortia in the AOD sector Planning function Reporting and monitoring progress 36 Additional consequences for consumers 36 New service models Misaligned sectors: AOD and justice The question of choice DISCUSSION AND CONCLUSION 39 Re-designing the sectors Appendix 1: Documents describing issues with the reform process 41 REFERENCES 42 3

6 Introduction In any health system there are a range of functions that need to be fulfilled. These include those associated with governance, legislation, policy, financing, system performance, workforce planning and service delivery. Where these functions (or aspects of them) are undertaken and the form this action takes will depend on the jurisdictional structures and processes. A simple way of analysing systems is to consider there to be macro (system wide), meso (generally across a region or subset of a system) and micro (local and/or service delivery) levels. Lack of clarity around which aspects of function occur where and the consequences for this on other levels of the system often results in duplication and/or fragmentation of effort. Commissioning is meant to address some of these issues by introducing a mechanism where one organisation holds responsibility for planning and procurement of services to meet the needs of a catchment-based population. Key to this is the separation of the purchaser (or fund holder) and the provider of services. This is hypothesised to remove conflict of interest (particularly for providers) from the system and enable increased efficiencies and clear accountability for outcomes through the vehicle of well managed and monitored contracts. It is also often discussed as a meso level mechanism for enabling development of localised service systems reflecting community need. However, there are many difficulties associated with achieving predicted outcomes from commissioning (for example see Checkland, Harrison et al. 2012) and it has been noted that it is not a simple answer to solving system design and development issues (Addicott 2014). In Australian States like Victoria where there has been devolved governance of health for many years, the State (and to some extent the Commonwealth) government have largely held responsibility for commissioning health and community services 1. Put simply, the State government has a centralised policy making function and regional offices for managing policy implementation and contracts with funded agencies. Elements of planning are undertaken at both central and regional office levels and both have a role in contracting service provision. Re-design of mental health community support and alcohol and drugs treatment services in Victoria Non-clinical mental health community support services (MHCSS) and community based alcohol and other drug (AOD) treatment services have been provided in Victoria by a range of agency types. These include organisations specialising in either MHCSS or AOD services or multifunction organisations such as community health services which aim to provide comprehensive primary healthcare. These sectors had grown and evolved substantially over several decades, 1 There have been a number of experiments in devolving commissioning of primary healthcare services to regional structures nationally and in Victoria. For example, in coordinated care trials funds were cashed out and pooled so that care for people with specific chronic illnesses living in defined catchments could be purchased by one organisation. Some initiatives have not gone beyond the conduct of regionalised population based planning (for example in the Primary Health Care Access Program in the Northern Territory or in Care in Your Community pilots in Victoria), potentially because government was reticent to align its procurement with regionally determined priorities. There have also been a number of mixed models, in which the functions traditionally considered to be part of commissioning (eg planning and procurement) are undertaken at different places within a system. For example, Primary Care Partnerships (PCP) were initially charged with planning for their catchment, but government maintained responsibility for procuring services (although PCP plans did not end up substantially influencing procurement decisions). In the Hospital Admission Risk Program, government contracted consortia of primary and acute health service providers to plan for and develop new models of service delivery to clients with high risk of avoidable hospital admissions. These consortia then then allocated funds to their member agencies to deliver specified services [this is similar to the alliance contracting model of commissioning described by Addicott, R. (2014). Commissioning and contracting for integrated care. London, UK, The Kings Fund.]. Individual medical practitioners in Australia could also be seen to be commissioners of sorts as they are responsible for assessing client need and enabling procurement of (largely) publically funded services to meet those needs. However, the planning function in this case is limited to the specifications of MBS items and establishment of rules guiding eligibility to these. Work towards client directed commissioning is also occurring in Australia through the National Disability Insurance Scheme currently in pilot phase and in some of the new arrangements in aged care.

7 largely in the absence of a coherent long-term policy framework (this is acknowledged for the MHCSS sector in Department of Health 2012). Consequently significant issues in both sectors had emerged and been identified in a number of reports and reviews. These included access issues (and equity of access issues), system fragmentation, inconsistency with respect to service models, variability in the quality of service provision and accountability issues (for example see Victorian Auditor-General 2011, Department of Health 2012). These issues were well known by those working in both sectors and they and their peak bodies supported (and at times had called for) reform. They were therefore willing to engage in a process of sector re-design and this work occurred over a number of years prior to service recommissioning in In each sector this included establishment of advisory and/or consultative mechanisms (including engagement of peak service provider and consumer organisations), production of a consultation paper and technical work (largely commissioned in 2013) to inform development of key elements of a reformed service system (a detailed description of this process in the alcohol and drugs sector is provided by Berends and Ritter 2014). In the AOD sector, the latter was to include development of: practice tools and models for improved access to screening, assessment and treatment; analysis and modelling for service planning; development of an activity based funding model; development of an outcomes based performance framework and work to improve information collection, management and reporting (Department of Health 2013). In the MHCSS sector this preparatory work on system elements included projects on funding models, demand modelling, client information system functionality, performance management, workforce competencies and piloting of a catchment based intake and assessment service. 2 Reform frameworks In 2013 the Department of Health in Victoria released frameworks for reform for each sector (Department of Health 2013, Department of Health 2013). These documents stated that in both sectors reform would make the systems stronger, more responsive, streamlined and easier to access and navigate; ensure the needs of clients, carers and families were better met; deliver more flexible funding arrangements for providers; and promote delivery of consistently high quality, evidence based, recovery oriented services enabling outcomes meaningful to clients. In both sectors the workforces were to have high levels of skills and competencies and accountability was to be based on outcomes rather than outputs. There was also to be better integration with clinical treatment services, complementary services funded by the Commonwealth government and the broader health and human services systems (Department of Health 2013, Department of Health 2013). In the mental health area the reforms were to focus primarily on psychiatric disability rehabilitation and support services (PDRSS). In the State had allocated $117 million to these services, which were delivered to approximately 12,600 people through 105 agencies. 3 Support services that were to be reviewed at a later date (and were therefore not in scope) were mutual support and self-help, planned respite, supported accommodation, adult residential rehabilitation and Aboriginal mental health support services (Department of Health 2013). For drug and alcohol services the focus was on adult non-residential services. Information on government expenditure in this sector was not readily available, however government did indicate that the funds allocated to the recommissioned services would be $41 million. Community based pharmacotherapy was the subject of a separate 2 Information about these projects can be found at: accessed 27 March The annual Victorian budget for mental health services in the same period was $1.2 billion (Department of Human Services, 2013). There was also significant Commonwealth government investment in this area. 5

8 reform process and residential and youth service systems were to be addressed subsequently (Department of Health 2013) although it is currently unclear as to what will happen in relation to the latter. The reform frameworks for each sector outlined the establishment of 16 (nine metropolitan and seven rural and regional ) service catchment areas, a centralised intake and assessment function 4 in each catchment (although clients could still make initial contact at any service) and a centralised planning function to assist service providers respond to local need and support integration between services. 5 This was to enable development of an area-based service delivery model in each sector in which providers would be of a size such that they could optimise quality of service, achieve efficiencies, provide a full range of core functions and be sustainable (Department of Health 2013). New models for activity based funding and for outcomes based performance were also to be introduced. It was noted that the reform processes in each sector would be staged, with some functions being the subject of the reform process described here and some to be reviewed/ recommissioned at a later date. AOD services would also have a state-wide access point 6 which would work with the centralised intake and assessment provider in each region, manage bed vacancies for residential rehabilitation and provide self-directed care options for clients not wishing to access face to face services. Treatment would be delivered through six streams including: intake and assessment, recovery coordination, counselling (standard or complex), withdrawal (residential and non-residential), residential rehabilitation and pharmacotherapy streams (the latter two, along with residential withdrawal services were not subject to the reform process described here). Individualised client support packages and youth residential rehabilitation services would be delivered in the recommissioned sector (adult residential withdrawal services and supported accommodation services were not included in the reform process). It was proposed that the reform process, particularly the move towards flexible, client directed support packages would enable the MHCSS sector to be ready for transfer of many of its clients to the National Disability Insurance Scheme as it was rolled out in Victoria (Department of Human Services, 2013). Implementation of re-designed mental health community support and alcohol and drugs treatment services in Victoria The reform frameworks also set out a process for implementing the re-designed service sectors. Preferred providers would be selected through a competitive tendering process after which there would be a short period for transition to the new arrangements prior to their consolidation. The competitive tendering process had three stages. The first included a call for submissions against specifications followed by an evaluation and shortlisting process. Shortlisted applicants were then interviewed prior to recommendations being made about preferred providers, the functions they were to perform and service volumes. In the second phase, preferred providers were required to submit a service delivery plan and further information as well as enter into negotiations, after which final decisions about service providers and allocations were made. Finally service agreements were negotiated and executed (Department of Health 2013, Department of Health 2013, Berends and Ritter 2014). 4 While each sector was to have centralised intake and assessment in each region, the functions of these providers is different. In the AOD sector the provider does intake and comprehensive assessment prior to referring clients for treatment. In the MHCSS sector this first point of call is focused on intake and screening, with comprehensive assessment being undertaken by the treatment service providers to which the client is referred. 5 The funding for this function was $48,000 per region per year for each sector. 6 This is a 1800 number and is essentially a screen and referral service. Clients calling this service who have drug and alcohol issues will be referred to the relevant regional intake and assessment provider.

9 After announcements of preferred providers there was to be a transition period in which the new arrangements were to be established, followed by consolidation of the new arrangements and the next stage of reform (Department of Health 2013, Department of Health 2013). The purpose of this document Together, the processes associated with both sector re-design (culminating in the production of reform frameworks) and the implementation of the re-designed sector via selecting and purchasing services from preferred providers could be considered commissioning (and in Victoria are referred to as re-commissioning, probably to acknowledge the use of the tools of commissioning to completely re-configure a service system). The overall effects of this recommissioning will include consequences associated with both the design of the sectors as well as the implementation of the changes required to achieve the design. This document aims to describe a range of emerging issues for both MHCSS and AOD services arising from the recommissioning process described above. Many of the emerging issues can be traced back to the processes associated with either reform design or reform implementation. As the process issues have been well described elsewhere, 7 the main contribution of this work is in providing a starting point for a wider conversation about, and reflection on, the consequences of the reform for service providers and, most importantly, clients. Such a process is critical for two reasons. The first is to learn from different approaches to implementing wide-scale reform in community based health and welfare sectors so that over time excellence in change oriented to better meet client needs can be attained. The second is that in any complex system, no matter how significant the initial change, long term gains will only be made if there is an ongoing process of monitoring, review and adjustment to ensure the system is generally moving in the direction of achieving its stated goals (in this case providing excellent services to people with specific need). The majority of interviewees were from community health services who provided MHCSS and/or AOD services as part of their model of comprehensive primary health care. Therefore, some of the issues described in this document are particularly relevant to these organisations. Please note that this is not a thorough evaluation of the processes and impacts of recommissioning in Victoria. It is intended as a summary of issues identified by a number of key stakeholders involved in the process. It has been produced to contribute to a conversation about the effects of re-commissioning in two sectors with the hope that further work may be done to mitigate some of the negative effects and strengthen the positive outcomes. 7 A list of some of the documents describing these issues is at Appendix 1 7

10 Method Thirteen telephone interviews with 23 CEOs and senior managers from community health services, mental health and drug and alcohol service providers were conducted in February and March 2015 using a semi structured interview format. The majority of the interviewees were from community health services which provided MHCSS and/or AOD services. Comprehensive notes were taken during the interviews. Data was coded and analysed by theme. Ethics clearance was received from the La Trobe University Human Ethics Sub- Committee (for the College of Science, Health and Engineering) reference number D15/1. The draft report was sent to all participants and to members of the Primary and Community Health Network for comment after which the report was finalised. Terminology The term treatment or service provider has been used to refer to providers of care or treatment to MHCSS and AOD clients. While central intake and assessment providers are part of the system of care, we are not referring to them when we use the terms treatment or service providers. Technically commissioning refers to a process that includes planning (identification of need and the types of services required to meet that need) and purchasing of services to deliver against a plan. Therefore, together the processes of re-designing a service sector and then procuring organisations to deliver against the specified re-design can be considered commissioning. However, in Victoria in the MHCSS and AOD service sectors, it is the latter process (procurement) that tends to be referred to as re-commissioning, while the former tends to be referred to as reform design. In this report we have tried to separate out these two elements of the process, calling them reform design and reform implementation (which includes procurement). However, in some places we have referred to the process of procuring services as re-commissioning.

11 Findings: The reform process Interviewees identified significant issues associated with both reform design and implementation processes. There were many commonalities in the views expressed by those participating in the mental health community support services (MHCSS) reform processes and those participating in the community-based alcohol and drug treatment (AOD) sector reform processes. Therefore feedback about the processes in the two sectors have been discussed together. Where significant issues are specific to either sector, this has been noted. While this approach potentially reduces the richness of the data with respect to the specific detail pertaining to each sector, it also enables drawing out of key lessons for any future processes of this kind. Support for reform The need for reform in both the MHCSS and the AOD service sectors was acknowledged by all informants, and many noted the range of papers and reports dealing with issues in their sectors and their advocacy related to addressing these. Most broadly supported the aims and intent of the new policy directions, including those associated with addressing service system fragmentation (and the consequent difficulties for consumers and carers in navigating the system), variability in the quality of service provision, limited planning and standardisation across regions and the state and limited monitoring of performance and accountability. There had grown up over many years some quirky agencies doing odd things [in the ADT sector], there was no synergy in relation to what happened between regions. There was no sense of standardisation, or a common expectation of a service standard across the State. Change was warranted in drug treatment it had become a system that continually had something bolted onto it. At one stage there was a ridiculous amount of treatment types [and] different entry types. Having said this there were some innovative models for how to provide for particular communities. We had some innovative processes around cell assessments, bail assessments, working with police none of these things were taken into account. Some of the strengths of the model put up was that drug treatment had become very generic and had become a place where people didn t say no. There was no ineligibility. If you believed you had an issue with a substance you got a service, or if you were living with someone who had an issue you got a service. All they [government] looked at was how many people were getting [MHCSS] services. They had no capacity or framework for holding organisations to account. Organisations under-delivered and fudged figures and weren t called to account. There was a general lack of accountability in the sector and the Department didn t give two hoots. There were no conversations about the outcomes received by clients. There was support for the client and carer/family focus of the reforms (in both sectors) and the focus on client outcomes. There was also enthusiasm for the idea that government and services would work to co-produce a more client and family oriented system with a focus on evidence based interventions. For some years prior to the reform the mental health service sector had been moving away from models where clients tended to become dependent to a more rights based model where people were supported to develop their independence. This meant that some MHCSS providers had already done significant work to change the shape of services to a more contemporary model while others noted that they had used the discussion of reform as a means of engaging their staff in a conversation about reviewing their service models. One consequence of sequential change processes identified by some of these organisations was that they had been through an extended period in which the focus of their organisation had been on managing internal change. While there was broad support for the goals of the reforms there was not unanimous agreement on the design of the models for the reformed systems, or for particular elements of them. This was likely to be due to what many saw as 9

12 the flawed processes for reform design. It was widely considered that these processes had not honoured the original intent of enabling the sectors to effectively contribute to (or co-produce ) the new models (further information is provided in the following section). This, along with the highly competitive nature of the subsequent procurement process led many in both sectors (including many who both supported the original intent of the reform process and who obtained funding in the recommissioning process), to have serious concerns about the capacity of the new arrangements to deliver improved care for clients and their families. Many thought that what they [government] wanted to achieve and what was achieved seem to be very different. It comes down to the difference between expectations and what actually happened. There was a lot of rhetoric about co-production and a lot of work softening up the sector The expectation may well have been that [the existing service model] would have morphed into a co-created co-designed future and when it was tendered out parties might have considered this [vision] had been lost [MHCSS]. Overall, this had led to significant demoralisation amongst the providers interviewed, many of whom said that their enthusiasm for reform had turned to disappointment, both with the process of designing and enacting the reforms and their outcomes. Some indicated that they considered their sector had been treated with disrespect. Having said this, there were some interviewees who, despite noting some of the issues with the reforms, were optimistic that over time the changes would produce improvements for clients. Some interviewees noted that no evaluation had been built into either reform which meant that there would not be rigorous assessment of the process or documentation of the lessons that could be learnt from them. Designing the reform The processes leading up to recommissioning both the MHCSS and the AOD sectors were run at about the same time and were managed from within the same government department, the Department of Health. There were many similarities (and some differences) between the processes. There were significant issues in the reform design processes and these were compounded by concurrent restructure of the responsible government department. These issues are discussed below. Restructuring within the responsible government department The Department of Health underwent a substantial restructure and downsizing at the same time as the reform design process was underway. This resulted in many staff with significant knowledge of the MHCSS and AOD sectors leaving the public service. This represented a significant loss to the sectors: What the sector wants is an informed, up to date public service that has the time to do the policy work, one that has a good understanding of evidence based policy. The potential to avoid mistakes left with the people who left. A number of interviewees commented on the difficulty of attempting such a substantial reform with an underresourced Department (itself in the process of change) and noted this had resulted in the Department not being able to do the work required to properly design and implement the reforms within the timelines specified. This had also impacted significantly on Department staff who were doing the very best they could but were set an impossible task and were highly stressed and distressed. Government was grossly under-resourced. They had no risk plan, no communication plan. You can t run down the Department and then expect them to manage something like this well they did the best they could under the circumstances (the problems) are as much to do with an under-resourced public sector as to do with what they were attempting. They totally underestimated what they were trying to do and the energy and resources it would take they retendered an entire system with only three or four people in head office no wonder they didn t get it right.

13 Perceived consequences of under-resourcing and tight timeframes were that there was limited consultation with the sectors or with consumers and carers. This meant that the stated intention of co-producing sector reform was not possible and that the knowledge of the sectors and their clients about how the systems worked and could be improved had not been well utilised. Other reported effects included that information to guide the sectors was often not well developed 8 or available in a timely fashion and that processes were rushed at some points which resulted in mistakes being made. They were losing people and it was hard to get answers it was hard to find someone to give you reliable information people would go to Melbourne for a workshop and come back with nothing but frustration. Several interviewees considered that the restructuring within the Department had essentially resulted in lack of policy leadership: When policy leadership fails then you resort back to process, which becomes the end game. No co-production - limited consultation and tight time frames for sector re-design While discussion about the need for reform had been occurring in both sectors for a number of years, the period between the announcement that reform would occur and the procurement process was relatively short. This resulted in the processes of designing the reforms in each sector being too rushed and consultation processes truncated. Interviewees argued that this meant that both overall service system design issues and issues relevant to specific elements of proposed models were not adequately worked through before the recommissioning took place. Evidence cited in support of this view was that a number of the advisory groups established to enable sector input did not run their full course, with some meeting once and others only meeting a few times (specific examplse associated with the limited process for consultation in the design of the AOD reforms can be found in Berends and Ritter 2014). It was also reported that where working groups did meet, their recommendations appeared to have largely been ignored. Interviewees from both sectors reported going to meetings between CEOs and the Department and finding that all questions were taken on notice: When you [the Department] have CEOs sitting around a table and you re taking every question on notice, this is an indication that you haven t done the work. If the CEOs have thought about it, you should have thought about it. It was also observed that the limited time available meant that the model [for AOD] sector reform which had been developed as a discussion starter had largely been adopted without proper consultation. This led to a perception amongst some that the Department had already made many of the decisions about what the reformed sector would look like and that the consultation process was simply a tokenistic tick the box exercise. Some interviewees noted that there appeared to be a disconnect in what the sector was saying and what the Department was hearing and that the when the specifications for recommissioning were released they contained some real surprises. In the AOD sector one of these was a change in the age range for adult services from over 21 to over 16 years, which meant that some existing youth services (which had previously worked with young people from age 12 to 21) were at risk of being de-funded. At the time of the consultation process, Department of Health regional offices also had significant staffing losses. These offices were where the Department had its closest links with service providers and the reduction in staff meant 8 Examples given include that guidelines were still in draft form and that the funding model was confusing and difficult for agencies to work out 11

14 that many providers no longer had access to a mechanism to interact with the reform processes. One interviewee considered that the limited avenues for consultation meant that larger providers with political links and other mechanisms for influence essentially obtained greater say in reform design. Unclear reform objectives and poor communication about them Possibly as a consequence of poor redesign consultation processes, some interviewees considered that while government had indicated reform objectives were about creating an integrated service system delivering high quality services at a reasonable cost and that this would result in a reduction in the number of service providers, the priority objective had been associated with the latter and with rationalising the number of contracts government had to administer. 9 Those holding this view argued that rather than developing a quality and outcomes framework and using this to guide decision making about the agencies to be funded a simple rule limiting the number of agencies to operate in each catchment had been made. An alternative view was that the Department was unable to keep up with the vision and aspirations that the Minister articulated through both processes and, faced with tight timeframes had truncated reform design processes. This lack of clarity led to some in both sectors believing that they had been misled and that there had not been transparency (or honesty) about what the reforms were aiming to achieve: I think it was about reducing the number of contracts rather than about improving service provision it was meant to be about increasing client choice, but now there are less providers, so there is less choice. Along the same lines, some interviewees in rural areas considered that the agenda (in both sectors) was largely developed to address a predominantly metropolitan issue in that there were large numbers of providers and a fragmented system. They considered that this was generally not an issue in rural and regional areas where there were limited numbers of providers, who in the experience of those interviewed, generally worked well together. Design work on service system elements and specifications not finalised prior to procurement Interviewees from each sector noted that much of the work that government had undertaken to inform the redesigned system had not been completed when the procurement process began. Reported examples included that work on new reporting systems was not completed, there was a lack of clarity regarding how the central intake was to operate and that in the MHCSS sector the evaluation of central intake piloting undertaken over 12 months had not been released. One-size fits all approach Some, particularly those from rural agencies, noted that a one size fits all approach had been used in the reform design and implementation process. Many of these interviewees considered that a significant number of issues that the reforms were to address (such as reducing the number of providers) were essentially metropolitan issues. They considered that while there was a need for consistencies across the state, there also needed to be flexibility so that systems could be developed in a way that they made best use of the existing strengths and capacity at local (or catchment levels). Rural agencies noted that this approach had resulted in significant loses for their areas: The primary goal of the [mental health] recommissioning was to tidy up the mess the Department had made by funding multiple providers in Melbourne. There were people getting tiny bits of money to do work in different places. If the purpose was to improve client choice and provide services in a different way, I was totally in favour of 9 Several interviewees noted that a reduction in the number of service providers had been clearly stated as one of the objectives of the reforms. It had been stated that reducing the number of providers was one means of improving client outcomes. As a result of this knowledge some organisation in the MHCSS sector merged prior to the implementation of the reforms.

15 it. I was in favour of getting rid of the old day program and other programs that were siloed the model was great we were supportive of it and advocated for it in the consultation process. But I believe it should have been addressed region by region. In [x region] there were already only three providers and we worked well together. We used to go for funding together, we had a network. The Department should have listened to the regional office [they] should have worked locally to work out who should provide what and how they should link. Limited assessment of work of existing providers to identify good practice While many interviewees noted that variability with respect to the quality of services delivered by different providers (in both sectors) was a genuine issue (and had been documented prior to the beginning of the reform process), some, particularly in the AOD sector considered that there had been no formal assessment of the quality of services being delivered by individual agencies, or no attempt to identify where there were existing models of good practice and preserve or build on them. 10 This had two consequences firstly models working well did not necessarily survive the recommissioning process and secondly, without some kind of a baseline (or at least knowledge of the quality of service clients received prior to the recommissioning) it would be difficult to identify whether the quality of service provision improved after recommissioning. In the consultation before it was all about what would change rather than what worked well. I got the sense in the process that the Department or the Minister believed we were over-servicing the client. It seemed it was more about pushing clients back onto Commonwealth funded services (such as GPs, mental health plans) than about what was required in Victoria. Separate commissioning processes no integration between AOD and MH Some interviewees noted that while the discourse in health and human services is about integration, joined up services, seamless service provision for clients and localised governance, they were surprised that the MHCSS and AOD sector reform and recommissioning processes had been undertaken separately without a common overarching framework. This meant that a range of opportunities had been missed, including the opportunity to develop a more coordinated and consolidated MHCSS and AOD intake and assessment function. 11 This was a particular concern when the rates of dual diagnoses 12 are considered. Related to this, one (metropolitan) interviewee was surprised that central intake and assessment for MHCSS and AOD were allocated to different agencies in their region as this meant there was no capacity to link service provision for clients with dual diagnosis at the intake and assessment stage. It should be noted however, that one of the reasons that integrating work between the sectors may have been difficult (or impossible) was that the government had made a commitment to roll MHCSS funding into the National Disability Insurance Scheme from as early as July 2016, while AOD was to remain a State Government funded program. More broadly, it was noted that government had not made an attempt to consider their whole program of reform across a range of sectors in a coordinated way. 13 This meant that the development of new systems, such as client management systems, were not undertaken in a way that enabled them to support collaboration and coordination. An additional issue was the question of why the Department required different approaches to the structural arrangements required by providers in the two sectors. In the MHCSS sector the message was that single providers could tender, whereas in the AOD sector the message was that organisations would need to form consortia or partnerships with a lead organisation to be the contact point for the Department: 10 As described in the introduction, there had been a number of reports written about service delivery in both sectors, although not all of these were publically available. These included evaluations of specific programs. Non-the-less that government did not have an accurate knowledge of the service models and client outcomes being delivered was a strong perception amongst many of the interviewees. 11 We note here that one agency is providing central intake and assessment for both MHCSS and AOD across all of rural Victoria. However, this does not mean that the intake and assessment process is integrated. 12 Dual diagnosis refers to clients with co-existing mental health and alcohol and other drugs issues. MHCSS and AOD services in Victoria are all meant to be dual diagnosis capable. 13 Child and Family Services were also undergoing reform at this time. 13

16 The Department was quite querulous. The process in mental health was slightly different to the process to AOD. In mental health you basically had to indicate your willingness to be a provider and tender for the bit of the system you wanted. For alcohol and drugs it was clear that they wanted you to form consortia, so people were trying to smooch up to all sorts of people to make consortia and to make things work. Recommissioning MHCSS just prior to introduction of NDIS Rolling MHCSS funding into the National Disability Insurance Scheme (NDIS) will essentially result in a second restructuring of this sector within a period of several years. Some questioned the wisdom of this, considering the constant change and disruption was unproductive, whereas one thought that having to go through restructuring processes had been beneficial in that their organisation had developed change muscles and were now prepared for a much larger transition process. One interviewee noted that the NDIS came onto the radar at the end of the process for developing the reform and the beginning of the re-commissioning. They considered that: NDIS started to hijack the reform process. The tender documents had a focus on getting the sector ready for the NDIS. The baby might have gone out with the bathwater. NDIS is bigger than anyone in the community mental health game [MHCSS]. Implementing re-design: Procurement The concerns stakeholders expressed about the process for designing the reformed sectors were exacerbated by the approach to, and process for implementing the reforms. The first step in this recommissioning process was procurement of services to deliver against the design specifications. The process used for procurement was competitive tendering with strict probity rules. As described in the introductory section, this was a staged process. A range of issues with the approach and process are described below. Service system considerations Many interviewees expressed concern at the nature of the procurement process, noting that a focus on competitive tendering with strict probity requirements appeared to take precedence over more careful consideration of how to best develop a highly functional service system. Some argued that the tendering process resulted in decisions based on the quality of individual tenders rather than an assessment of the mix of agencies that could produce the best service system in each catchment. Another way of putting this was that the capacity of organisations to write good tenders was potentially more highly valued that the existing strengths of the agencies and systems in each catchment. They took probity to the nth degree. I said to the Department you don t treat a service system the same as a bridge. When you re dealing with a service system you need to try to create a coherent system and policy you d think they d work from an asset basis not a deficit basis work out what s working well in the system and how to enhance this. It is clear to me that the procurement specialist in the Department looked at every tender in isolation from the system they looked at someone s tender and said can they deliver this? They didn t look to see what would make sense for that area In some areas they have new providers coming in and the old providers are still there doing their old work with different funding streams - there are ludicrous outcomes. It felt like it was driven by a procurement strategy rather than what outcomes they were trying to achieve. Some in community health services argued that significant work has been done in Victoria to develop their agencies so that they can provide comprehensive primary care (including MHCSS and AOD services) to local communities. Interviewees reported that, rather than viewing these integrated services as a critical part of the service system infrastructure, they were simply considered as another competitor. This meant that in some locations, community health services lost their state-funded MHCSS and/or AOD services and these were taken over by state-wide MHCSS or AOD providers without an existing base in the region. As well as no existing office, they also did not have existing

17 knowledge of the local service system or the local communities. It was reported that in some cases: they are having staff stay in hotels overnight and meeting clients in coffee shops. This has a range of consequences including that some community health services now provide a less comprehensive model of primary care to their community. Role of department regional offices The Victorian government department responsible for human services at the time of the reform was structured with a central office largely responsible for policy and program development and regional offices, responsible for program management and liaising with funded agencies. Interviewees noted that regional office staff have a good understanding of local service systems, are in a good position to advise the central office and were usually critical players in assisting agencies work through potential changes to government policy. However, they noted that these staff were disenfranchised throughout the reform design and implementation processes. This meant that they often did not have enough information to enable discussion with local agencies: When central office cut out the region they lost allies and history and intellectual capital The regional PASA [Program and Service Advisor] had been the PASA for 15 years, so had huge knowledge about AOD and the region but she couldn t feed in at all. Some considered that reducing the role of regional offices was partly to do with how the government was viewing probity (see below), but that one of the consequences was that decisions were made that did not make sense when considered at the regional or local level. One interviewee noted that when their agency got to the third stage of the procurement process, the regional office were able to be more active and come out from under the blanket of probity. Conversely, after the results of the procurement process were known, the central office of the Department shifted responsibility for working through issues back to the regional offices. Some noted that regional offices often hadn t been given enough information or resources to enable them to work through emerging issues. Some saw this as a lack of leadership from central office and noted that: Central office has washed their hands of it they won t use the leverage they have to make sure the model they wanted implemented is put in place. With no-one providing oversight or holding the line around what should be done, the result is that agencies are reverting back to what they used to do before the reform this is undermining the reform and its only five months in. The Department was lacking in leadership with respect to making decisions, holding to them and enforcing them. Some providers thought that government was not prepared to hear feedback about what is happening in the sector as a result of changes: When you speak up they think it is just sour grapes. The sector would have moved on by now if that was the case. You lose things, you win things, it happens all the time. It s about the poverty of quality in this. I have seen a decline in access to services and to the quality of services. It is unacceptable. There has been no understanding of rural and regional areas and an absence of analysis of what has happened. The people in the Department they don t want to hear that it isn t working. They are convinced that it is working. Requirement for consortia in the AOD sector The requirement to form consortia or partnerships in the AOD sector meant that stand-alone services would not be funded. Consortia development was made difficult by the tight timeframe for responding to requests for tender (six weeks). While some agencies were able to build on existing relationships with others, many faced significant challenges in establishing these consortia. This was because the work of developing partnership arrangements, and then negotiating how members would change their service delivery so that together they could deliver new service 15

18 streams, is difficult and complicated work and takes time and resources. As a result, some considered consortia bids often largely reflected the lead agency and potentially missed including important expertise held by smaller partners. Others noted that this approach has not resulted in reduction in the number of service providers nor in fragmentation, as there are still large numbers of small service providers operating through consortia, with the main difference being that the Department now only liaises with the lead organisation. It was also noted that some consortia have unworkable business models (for example in which smaller agencies get an allocation of funds equivalent to 0.6 of an EFT, but still have to do significant amounts of reporting) and that lead organisations do not always communicate well with their member agencies. This may in part be because of the situation described by one interviewee which was that the quantum of funding for service delivery had not been announced when the requirement to form consortia was indicated. This meant that organisations began establishing consortia they later realised were unrealistic when the available funding became known. A commercial approach, a focus on probity the probity veil Many interviewees noted that the tendering process adopted was very commercial and in their opinion this was not suitable for commissioning human services. While understanding issues associated with probity, most raised concerns about how probity had been used to restrict the information agencies could obtain, to the extent that they were unable to get all of the information required for tender writing in a timely way (one referred to this as a probity veil ). This was exacerbated because some of the re-design work had not been completed prior to procurement, which meant that there was a lack of clarity in some aspects of the service specifications. As a consequence of this, plus the rigid application of probity, some agencies reported that they were having to develop tenders without a full understanding of what the targets would be or the work required. Some considered that if there had been a capacity to do more talking some of the emerging issues could have been avoided. The probity model meant that government stopped talking to the sector and basically required the sector not to talk to each other. In a human services system why would you stop people talking to each other of course this will end badly. While I understand the requirements of probity, it was Monty Pythonesque, because it went to extremes. One interviewee noted the extent to which the notion of probity had been taken, providing an example of requesting a copy of documentation referred to in the tender specifications that had not been attached. The interviewee was told that the Department would not be able to respond to the request because of probity management. The focus on commercial processes, probity and competition created a culture of mistrust and some noted that long term relationships between different providers came crumbling down as former collaborators competed for the same services. Some noted that this culture of mistrust is still apparent in their sectors. Responding to the request for tender Most interviewees described how difficult the process of responding to the request for tender was and how much work was involved. Some thought that in order to succeed organisations had to have access to a high degree of commercial savvy and significant resources (more detail on the cost of the process to the sector is provided below). One interviewee considered that the process (MHCSS) was rigorous, intensive, highly demanding, resource and time consuming, while others were not so sure of the rigour of the process. Some in AOD programs stated that: the specifications were not particularly clear; there was lack of clarity about whether some elements of the system were in or out of scope; the processes were not straightforward; it was difficult to get answers to simple questions; and the timeframe for submitting an application once the tender specifications were released was relatively short. The tender submission processes were followed by a protracted process of interviews, requests from government for additional information and a lot of delays which resulted in a two month hold up in the roll out in the AOD sector. Some in the

19 AOD sector also reported that the Department was not able to provide much information about some aspects of the reform as they were still working through what they wanted themselves so it wasn t clear what they were after. Several interviewees noted that their agencies had done considerable work to prepare in advance for the recommissioning process (for example, redeveloping their service models, establishing partnerships), but that they had still be surprised by the specifications and requirements of the tender documentation. A further issue was that it was difficult for smaller organisations to participate in the MHCSS process, or as lead organisations in the AOD process because (1) the tender specifications indicated that to be eligible entities would have to deliver across large catchments; and (2) the resources required to develop a tender were significant. Inconsistencies in the information provided and the outcomes Some stakeholders reported that the information they received from the Department led them to make decisions about what they were eligible to apply for that was inconsistent with the recommissioning outcomes. Examples of this included: Some (non-state-wide agencies in rural areas) were under the impression that they could only submit applications for central intake and assessment for their region, only to find that the providers who were awarded central intake and assessment were successful partly because they applied to deliver the service in multiple regions. Some interviewees (in rural areas) reported being told that in order to apply for central intake and assessment they also had to provide treatment services, while the successful tenderer in their region does not do this. A group of community health services had asked whether there would be any advantage in putting in a statewide bid and were told that there had to be a bid for each region. However, the outcome of the process was that some providers got contracts across multiple regions. While these agencies might have put in multiple bids (one for each region) the impression taken away by the community health CEOs had been that a multiregion bid was out of scope. Interview process Some noted that the interview processes were very formulaic and that those conducting them appeared to have limited understanding of the service system and did not push for more in depth responses from providers about their models. Others noted that they thought the Department was acting on a view that you get a better process if you keep it almost content free. While either sector was not supplied with the questions prior to interview, there were strict limits around the time allocated to answer each question. Services that had applied for work in more than one region had interviews for each region, which gave them an advantage in their subsequent interviews as they were then familiar with the questions being asked. One interviewee considered that this level of advantage should be used to seek a probity enquiry. However, to date, there have been no known challenges to the probity or outcomes of the tender process. Poor feedback to agencies about reasons for outcomes One interviewee operating in a regional area noted that despite their agency having been the main provider of AOD services in their region they had been given feedback by the Department that their bid was unsuccessful due to concerns that they would not have the workface available to deliver the services. However, the successful agency was a statewide provider with only a very small existing presence in the catchment and with a very limited workforce in the region. 17

20 Implementing re-design: Costs to the sectors Cost to the sector & transition costs Interviewees reported that there were significant costs (both financial and human) to both sectors throughout the recommissioning process. First, there was a substantial cost associated with developing service models (including negotiating with other agencies) and preparing tenders. Many organisations allocated staff time to the task and also engaged external consultants (one agency estimated they had spent $100,000 on the latter). Many considered that this cost, which could otherwise have been used to support service delivery, 14 did not produce a return commensurate with the outcome for the sector and the system. Some interviewees noted that while government would have understood the costs to the sector of the reform process and of the transition arrangements, they made little provision for these costs and consequently they were largely borne by agencies. Secondly, interviewees reported the enormous cost associated with workforce changes (also see section below). It s very costly the amount of existing resource time that gets caught up and lost in going through a process like this is significant not just for management staff. There is a high level of concern from all staff about both the models they hold dear to their hearts and their jobs. The cost to the client group with respect to loss of stability is also very high. We were in the crazy position of being a winner but it didn t matter [with respect to cost of workforce changes] because we got more business in some areas and had to make people redundant in other areas. We paid redundancies to 25 people and employed 30 people at the same time. What does that cost the sector? This is fundamentally wrong these funds are meant to be for delivering services or doing innovation. Many of those with redundancies walked straight into jobs with another provider. I would love to know how much money was lost to the sector for us, at least $100, 000 to consultants, more than this for redundancies as well as all the other diverted resources. Examples were also given of agencies that had found out they would not be successful at the first stage of the procurement process but had had to continue supporting staff and clients without knowing who the new providers would be. This meant that they were having to try to manage staff who would no longer have jobs and maintain services to clients until a new agency was appointed to take over service delivery. They were trying to maintain staff who knew they wouldn t have a job staff are leaving, clients are getting concerned about the future they were absolutely furious probably because of being treated with disrespect [in the process]. Human resources and workforce issues during reform process The period leading up to the reform implementation was reported to be difficult to manage for many agencies and very destabilising for their staff. Uncertainties about future funding meant that many organisations were not able to offer staff continuity of employment and there were significant impacts on staff wellbeing and moral. Some interviewees from rural areas noted that the limited opportunities for employment in their region added to the stress experienced by workers. Difficulties with the rushed transition period (see below) only compounded the negative impact on staff. 14 There are at least two views about this. One interviewee considered that agencies should build up surpluses over time and that these surpluses should be used for this kind of activity (and therefore that the funding should not have been considered potentially available to support service delivery). Others considered that ideally, any funding that was built up as a surplus was funding that should have gone into either improved or additional service delivery rather than being used to write tenders.