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Payments to Visiting Medical Officers in Rural and Regional Hospitals

Tabled: 23 May 2012

Independently contracted, fee-for-service visiting medical officers (VMOs) are a common feature in public rural and regional health services. In 2010–11, health services spent $108 million on VMOs. This audit examined the appropriateness and transparency of payments to VMOs, including the adequacy of contractual arrangements.

Payments to VMOs by rural and regional health services are appropriate and transparent. Testing of a statistically significant sample of VMO payments at the four audited health services found no material errors or evidence of inappropriate VMO billing. Rural and regional health services, with feedback from review work by the Department of Health (the department), have improved their VMO payment systems. The department's implementation of an IT payment system for small rural hospitals will also assist.

Health services now need to focus on achieving the best possible outcomes through contracted VMO arrangements. None of the audited health services were assessing VMO performance against their contracts, and only one was strategically considering their use of VMOs compared to other employment options. Given the essential nature of medical services, these contracts should be closely managed.

Rural and regional health services also lack clarity about the legal implications of their VMO arrangements. Aspects of VMO arrangements, for example where lump sum payments to VMOs are processed through payroll, and VMOs are given access to salary packaging, imply that they are employees of the health services rather than independent contractors. Health services need clear advice about the employment status of VMOs and the arrangements needed to meet the definition of that status.




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