Bad management, not bulk-billing, behind Cohealth’s financial troubles: Stephen Duckett
The board of a universal bulk-billing community health service needing a $3 million government bailout is now facing dismissal after a scathing report condemned its management skills.
Cohealth, based in Melbourne, has been caring for some of the most marginalised patients in the city.
Supported mainly by Medicare rebates, its financial troubles raised questions about the adequacy of bulk-billing.
Cohealth itself had blamed Medicare funding for its plight last year, saying that even the additional $400,000 it would receive from the new bulk-billing incentive payments would not be enough to keep three clinics in the inner city open.
But a review led by health economist Professor Stephen Duckett to investigate how the clinics could be kept running has pointed the finger at bad management.
This week, Professor Duckett told the ABC that his review team “lifted the lid and looked inside” and found the relationship between Cohealth’s doctors and the management was “appalling”.
His review says that while Medicare’s design did contribute to the clinics’ losses, it was “obvious in retrospect that Cohealth did not manage oversight of financial risks well”.
It found the board had no visibility of the clinic-specific deficits until June 2023, and even then was not clearly informed of the scale of the problem until February 2024.
Even then, it took no documented action.
The report explores the limited support offered by Medicare for multidisciplinary care, and says rebates were not sufficient for longer consultations needed for Cohealth’s complex patient mix.
However, it was particularly scathing of the absence of meaningful engagement by Cohealth with GPs on how it was managing those funds.
Cohealth told GPs that it set budgets on a revenue target of $250 per hour, but executives told the panel they knew that target was “intolerable” and was set to account for just GP salaries, without including other staff salaries and overhead.
It has been reported that an uncensored version of the report showed salary expenses “exceeded the total income with salary costs representing between 121% [and] 130% of total income”.
As a result, GPs said they were given “vague”, “fuzzy” and “inconsistent” advice from different figures given by different managers at different times about revenue targets and viability.
“In the absence of clear performance indicators and revenue expectations, it is no wonder that vague targets are not met,” the report said.
Of 326 public submissions received by the review team, sentiment towards Cohealth’s management and board was almost completely negative.
The report said there was no comprehensive strategy to mitigate the impact of the closures for patients, and that GPs were left in the dark until the decision to close the clinics was made.
The panel went as far as to recommend Cohealth formally acknowledge the “trauma” caused to the community and staff by its conduct.
The report laid out two options: allow the organisation to fix itself, or have the Victorian Government use its legal powers to dismiss Cohealth’s board and appoint an administrator,.
The review recommended the second.
Speaking to ABC Radio in Melbourne after the report’s release, Professor Duckett said the board had not shown enough insight into what had gone wrong.
“In the end, we recommended the second, that is, they’ve had their chance, they’ve got to go,” he said.
“We said that because we had really no confidence that the board, as it currently is constituted, would actually do what needs to be done, or had the skills [to do] what needs to be done, had the skills to hold management to account.”
Cohealth said it welcomed the review and would work with the governments to implement the recommendations.
Read more: Bulk-billing rebates not enough? Second bailout for clinic caring for struggling patients
More information: Department of Health, Disability and Ageing; 3 June 2026
