Why governance is important in the Medical and Healthcare Industries

In a report by the Australian National Skills Commission in March 2021, it was projected that employment in healthcare and social assistance would increase by 249,500 (or 14.2 per cent) over the next five years. In a subsequent media news release in October 2022, the Australian Bureau of Statistics reported that 15% of Australia’s workforce was in the Healthcare and Social Assistance industry. More recently, Job Skills Australia reports that the number of workers in the Healthcare and Social Assistance grew by 107,600 (or 5.2%) between 2022 and 2023. Most of the workforce is employed in hospitals, but many others work in allied health services, medical services and residential care services.

There is an obvious trend of strong continued growth in health care. Along with a growing workforce, there will be increasing need for good governance amongst health care professionals and service providers. The medical and health care industry is heavily regulated in Australia – suffice to say that good governance is fundamental to the industry.

Governance refers to the set of principles and practices that ensure that an industry or organisation (public or private) is managed in a responsible and transparent manner. It involves establishing clear lines of authority, accountability, structure and transparency in decision-making processes.

Much of Australian healthcare is delivered in public sector and private sector organisations. The private sector, and to an extent the public sector, will be governed by Boards that are responsible for conducting the business of the organisation based on legislation and / or organisational constitution documents.  Governance under this framework is often referred to as “corporate governance”. There are public sector organisations that do not have governing boards and can be governed by an authoritative body established under enabling legislation, such as the NDIS Quality and Safeguards Commission.

Irrespective of the exact structure of an organisation, good governance is essential to balancing the interests of various stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community.

The importance of good governance in the healthcare industry cannot be overstated, given the critical role this industry plays in society. The topic of governance has gained significant momentum in the healthcare sector as healthcare organisations have faced unique challenges related to regulatory compliance, ethical decision-making, patient safety, and financial sustainability.

Issues such as maintaining quality of care, building trust and mitigating risk are all fundamental aspects of good governance in healthcare. In recent years, there have been some particular concerns in each of these respects related to Aged Care (as revealed by the Royal Commission into Aged Care Quality and Safety) and for participants in the NDIS Scheme. For example, in a media release last year in October, the NDIS Quality and Safeguards Commission stated that it had issued 40 infringement notices (carrying penalties of a combined total of $778,800) and compliance notices to Specialist Behaviour Support Providers and registered NDIS providers across Australia.

As illustrated by the growing number of fines and penalty notices in the NDIS service provider space, the work of governing organisations in the healthcare and social assistance industry needs to be defined in terms of satisfying more than just the “paper pushing” of governance, as ticking boxes may appear to adhere to certain criteria but the actual responsibility may not be met. In this way, organisations must differentiate between more common approaches to governance and the application of practices that actually enable the fulfilment of governance responsibilities.

A good way for organisations in the industry to devise and apply good governance is by breaking down key aspects. The Australian Commission on Safety and Quality in Healthcare has developed the National Model Clinical Governance Framework. This Clinical Governance Framework is based on the National Safety and Quality Health Service (NSQHS) Standards and separated into four different types of governance: clinical governance, financial governance, risk governance and “other” governance (human resources, legal etc.). For obvious reasons, there is a strong focus under this Framework on clinical governance because of the need to deliver safe and high-quality health care services to patients and to ensure quality clinical outcomes for all relevant stakeholders.

As lawyers, we advise our clients in the Health, Medical and Life Sciences Industries about how to mitigate risk to ensure not only compliance with the relevant laws, but also how to create and adhere to good governance principles through an organisation’s governing documents, policies and procedures, and contract (including with employees, health and medical professionals and groups and suppliers).

At Burke Lawyers, our lawyers are experts in working with clients in the medical and health industry to provide advice and assistance including in the areas of  risk and compliance.

If you need any assistance in your profession or with your business or organisation in governance or otherwise in commercial or business, contact Burke Lawyers today on +61 3 9822 8588  or email us HERE: Our medical and healthcare lawyers are here to help.

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