This year, the health industry received an unprecedented cash injection through the Federal Budget. Stephanie Quine asks three health lawyers just what this funding means to both the legal and health sectors.

When the Federal Government announced sweeping national health reforms in the 2011/12 Federal Budget in May this year, an air of cautious optimism settled on the health sector.

With $2.2 billion allocated to mental health reform over five years, and $55.4 billion for aged care programs over the next four, health professionals, operators and patients all looked forward to improvements within the embattled sector.

Health lawyers also became aware of potential changes to the work they do within the industry, but two months down the track, they say they have felt "no difference" since the much-heralded reforms.

Norton Rose corporate and commercial lawyer Bernard O'Shea, who specialises in the biotechnology and pharmaceutical spaces, says that while there are "changes in the pipeline at all levels" and a "great deal going on behind the scenes", the announcement has not yet manifested in more work coming to lawyers in the private sector .

"There's a fair hiatus from the announcement of the reforms, but it hasn't really hit our desks yet in terms of a specific work flow," says O'Shea.

Shane Evans, head of the national health & ageing industry group at Minter Ellison, also says the Budget announcements have thus far brought little change.

"The [aim] of the money was to better target and coordinate existing services, rather than create different services," he says. "There's a significant under-investment in mental health and a lot of the Budget was to make up for the shortfall. You'd be looking for substantial change or reform for that to translate into change in the legal services."

Governance and risk

One aspect of Evans' work which is likely to see significant change is the over-arching systems in place for health care providers and the responsibilities of management.

Since the early 2000s, tort reform under the Civil Liability Act has seen an increase in expectations on regulators about clinical governance.

"If there's an adverse outcome now, it's not just about looking at blame for an individual doctor or nurse. It's seeing what the executive and management are doing about it," says Evans.

A few years ago, he adds, a serious event might have resulted purely in a claim for compensation. Now, though, healthcare providers can expect that the state health complaints commission, the private health regulatory unit, the coroner, the complaints investigation scheme and OH&S bodies will all be involved.

"I think you might now see a much more holistic, comprehensive and sensible Commonwealth-coordinated approach to funding or reimbursement of the things which the industry supplies"

Bernard O'Shea, lawyer, Norton Rose

Essentially, says Evans, the Commonwealth's increased funding to public hospital services come on the proviso that recipients will adhere to national standards.

"Everyone will have to adhere to and report upon these standards, and if there's noncompliance it will be investigated. That's a significant change. We haven't before had such a mandated and consistent set of national standards," says Evans.

Leon Shohmelian, a solicitor at Atkinson Vinden Lawyers in Sydney, agrees that much of the funding revolves around the establishment of a new regulator for the industry - something he hopes will "improve the efficiency of bureaucracy in the sector".

Since amendments were made to the Retirement Villages Act in March last year, citesShohmelian,

operators have had to work within significant changes (especially relating to disclosure and budgeting issues), but he adds that "operators have got their heads around it now".

Out with the old ...

Another area which is benefitting from federal funding is new online health initiatives. Due to a boost in funding for e-health, tele-health and online health consultation, Evans says "there is a lot of work going on in relation to privacy issues, privacy IT policies and contractual arrangements".

Evans cites a recent case in which Minter Ellison was involved, whereby Medibank acquired an American business for online medical consultations, as being one example of the growth in this area.

"You expect it to generate legal work just because it's one of those transformational changes," he says.

"We need to investigate how to make funders more comfortable with lending in this area in order to move the industry forward"

Leon Shohmelian, solicitor, Atkinson Vinden

Another primary issue arising from the Federal Budget relates to funding for new developments in aged care. Given Australia's ageing population, and productivity commission reports which highlight the serious lack of housing for the elderly, Shohmelian says "we need to investigate how to make funders more comfortable with lending in this area in order to move the industry forward".

"The access to funds is definitely not as easy as it was before the global financial crisis," says Shohmelian, who adds that a recent ATO ruling was a "mistake" which makes the industry less profitable.

"It's completely contrary to the idea of encouraging investment and growth in the sector," he says.

Recently visiting the US, Shohmelian says that aged-care facilities in the US embrace the alignment of retirement villages and aged-care facilities much better than we do in Australia.

"The continuum", as he describes it, "is not so much about combining, but placing the two kinds of facilities on the same premises so there's a continuum of care for people as they move through those later years of their life".

Evans, who has acted for the Department of Health and Ageing as well as Queensland Health, believes aged care is due for a "big reform" in the next couple of years in the way it is funded and modelled.

"I think there will be a lot of consolidation. When the Commonwealth puts funding into that it will generate legal work because it's going to be a big change. The many small providers will consolidate and they will have to change the way they do business," he says.

Drugged up

According to O'Shea, another major issue facing the health industry is the current dichotomy of funding that occurs at both the state and federal levels of the health system. This, he says, has had the effect of convoluting access to pharmaceuticals.

"If there's an adverse outcome now, it's not just about looking at blame for an individual doctor or nurse. It's seeing what the executive and management are doing about it."

Shane Evans, partner, Minter Ellison

And with multiple clients having submissions for pharmaceuticals in the backlog of the pharmaceuticals benefits scheme (PBS), he believes a more formal mechanism, where "the Commonwealth takes the sole funding reigns", could help fix the overlap between various forms of Medicare reimbursement.

"The clients are not asking any particular questions because they've asked all the questions before and I say there's very little you can do about it ... Unfortunately for us lawyers, while you can complain about the system being slow, you don't typically speed it up by taking it off to court," he says.

O'Shea says the current senate inquiry into why the PBS-listing of seven drugs recommended by the Pharmaceutical Benefits Advisory Committee (PBAC) was deferred offers a useful forum for airing grievances, but adds that past processes whereby an "effectively uncontrolled group - namely cabinet -sits at the end just simply not doing anything" have been "simply rude" from an industry perspective.

The PBS was a strong area of focus of the Federal Budget, with $717 million allocated to expand access to diagnostic imaging services and make medicines more affordable.

"I think you might now see a much more holistic, comprehensive and sensible Commonwealth-coordinated approach to funding or reimbursement of the things which the industry supplies," says O'Shea.

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