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
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.