DHHS service agreement staff need to strike a balance between managing funded organisations' performance in accordance with contractual requirements and partnering with them so that they are best placed to provide quality services to clients. The varied and often competing priorities of service agreement staff reinforce the need for DHHS to clearly define their roles, including key skills and capabilities. DHHS also needs to provide all staff with sufficient opportunities to acquire and develop key skills and capabilities over time.

In this part, we assess:

With $2.8 billion spent annually on service agreements across 1 927 funded organisations, DHHS needs sufficient assurance that clients are receiving quality services in a proper, timely and efficient manner. This requires that service agreements:

• contain clearly defined performance standards, deliverables and review mechanisms
• impose requirements on funded organisations that are proportionate to their risk profiles.

In this part, we assessed whether DHHS service agreements are fit-for-purpose, focusing on these two areas.

DHHS is responsible for policies, programs and services to support and enhance the health and wellbeing of all Victorians.

DHHS's service responsibilities are vast and include:

• health services—acute health care, aged and home care, primary and dental health, mental health and drug services
• human services—child protection and family services, housing assistance, community participation and disability services.

DHHS plays multiple roles in delivering health and human services as shown in Figure 1A.

The Department of Health and Human Services (DHHS) is responsible for policies, programs and services to support and enhance the health and wellbeing of all Victorians.

DHHS partners, through service agreements, with approximately 1 900 funded organisations to deliver person-centred services and care. It spends approximately $2.8 billion annually in this way. Service agreements define DHHS's and funded organisations' mutual responsibilities and obligations.

Introduction

In accordance with section 16(3) of the Audit Act 1994, a copy of this report, or relevant extracts from the report, was provided to the Department of Health & Human Services and named public hospitals with a request for submissions or comments.

The submissions and comments provided are not subject to audit nor the evidentiary standards required to reach an audit conclusion. Responsibility for the accuracy, fairness and balance of those comments rests solely with the agency head.

Responses were received as follows:

Accountability

Responsibility on public sector entities to achieve their objectives, with regard to reliability of financial reporting, effectiveness and efficiency of operations, compliance with applicable laws, and reporting to interested parties.

Activity-based funding

Method of funding allocation based on unit prices for each activity undertaken, and the number of that activity to be performed by an entity.

Figure C1 shows the indicators used in assessing the financial sustainability risks of public hospitals in Part 2 of this report. These indicators should be considered collectively, and are more useful when assessed over time as part of a trend analysis.

Figure C1
Financial sustainability risk indicators