Productivity Commission pushes stronger hospital–PHN partnerships
14 Jan 2026
In its final report, Delivering quality care more efficiently, the Commission says formal agreements between hospitals and PHNs would help address long-standing issues such as unclear roles and misaligned incentives across the health system. The report identifies the National Health Reform Agreement as the main mechanism to drive this change.
At the centre of the proposal is collaborative commissioning, with Local Hospital Networks (LHNs) and PHNs encouraged to work more closely to respond to local health needs. This would involve jointly developing programs, tracking progress and reporting outcomes.
However, the final report does not include funding for general practice multidisciplinary teams, GP-based pharmacists or health assessments — measures previously recommended by the RACGP in its submission.
The college has consistently supported improvements to the way PHNs operate, including in its response to the Commission’s interim report released in September. It has called for greater flexibility so PHNs can tailor services to local communities.
The RACGP has also argued that pooling funds could reduce duplication and allow larger, more effective services to be delivered without increasing overall government spending.
The college stressed that GPs must be actively involved in collaborative commissioning and properly supported, while PHNs and LHNs should be able to address social determinants of health at a local level, similar to the model used by Aboriginal Community Controlled Health Organisations (ACCHOs).
It said stronger collaboration with ACCHOs and LHNs could also help lift the performance of underperforming PHNs. A newsGP poll conducted last year found more than half of respondents rated their local PHN as performing poorly or very poorly.
The Commission said better collaboration would create higher-quality and more efficient care by supporting the uptake of proven interventions. It noted that while governments recognise the benefits of collaboration, progress has been slowed by unclear responsibilities and incentive structures.
The report also highlighted that successful collaborative care models often struggle to be expanded or sustained under the current system.
As part of broader reform, the Commission estimates its proposals could reduce potentially preventable hospitalisations by 5%. An earlier target of 10% was considered unrealistic in the short term.
The Commission also recommended establishing a National Prevention and Early Intervention Framework, a proposal supported by the RACGP provided it is shaped by GP expertise. It estimates that investing $1.5 billion over five years in prevention could deliver $2.7 billion in savings over a decade.
https://www1.racgp.org.au/
Source: Productivity Commission report Delivering quality care more efficiently / newsGP