The Problem
Cohealth is a large community health centre (CHC) based in the inner northern and western
suburbs of Melbourne and has multiple work sites. In October 2025 it announced it would have
to close some of its general practices because they were not financially sustainable. There was
a huge community and staff voiced disappointment with this decision.
Government Response
The Commonwealth Government granted $1.5 million to enable cohealth to maintain their
practices whilst a 3-member expert panel was set up by the Commonwealth and Victorian
Governments, tasked with analysing the problems and recommending needed change. This
report was completed in March 2026 and but just released last week.
Panel Report
The panel “identified four factors that, together, meant that the GP clinics were not viable under
existing funding and delivery arrangements.”
Two of these were intrinsic: the first was the management oversight and governance of
cohealth; and the second was the model of care. The other two factors were exogenous and
therefore outside the control of cohealth: firstly, the demographics and vulnerability of the
clientele, and secondly, the funding model, which was mainly Medicare rebates, but also with a
relatively small state government grant for specific allied health services.
The Panel concluded that refreshing the governance and management is necessary to provide a
better foundation for the implementation of a new increased funding envelope and a stronger
GP led multidisciplinary model of care.
With respect to the model of care, it found that although there were a variety of health care
professionals working in the centres, they were not being used optimally at the top of their
various scopes of practice to provide timely, coordinated care.
Importantly however, it stated that:
“Nonetheless, even with the best management in the world, the three clinics would still
run at a marginal loss as other CHCs that run GP practices reported to us. So, Medicare
funding arrangements do indeed need to change.”
This is a clear statement that the issue of lack of financial viability is not restricted to cohealth
but is shared by other CHCs who have similar very complex, vulnerable patients/customers.
Importantly, the Panel’s recommendation with respect to models of care involves a new funding
model: pooling both state and federal funds and changing how these funds are used in order to
promote coordinated efficient care. This clearly requires both levels of government to work with
cohealth, using the local Primary Healthcare Network to fundhold and to aid with setting up an
adequate evaluation process for this new model. Although the model does not require any new
funding commitments, it does increase the funding pool for cohealth through paying out federal
allied and mental health funds which currently are not used to their capacity.
Government responses
The federal government has reviewed the report and granted another $1.5 million over 12
months and this is expected to:
“include a strengthening of senior management and board governance, and a new
integrated and sustainable general practice model of care.”
Media release M Butler 8 May 2026
How this will occur is unclear. There is no mention of either level of government pooling funds to
construct the Health Program Grant suggested by the panel. The governments have had the
report for nearly three months which should be time enough to formulate a proper response.
We have previously suggested that under the Medicare rebate system of funding, there should
be an increased rebate adjusting for socio-economic status. Rebates are already adjusted for
regionality/remoteness so we know this can be done. However, we also strongly support a move
away from fee for service Medicare rebates and Minister Butler’s Strengthening Medicare
Taskforce recommended such a change, suggesting that by 2030, 40% of funding to general
practices be some form(s) of block funding. Any pooled or block funding can be adjusted to take
in the demographics of the clientele including age, gender, comorbidities, and socio-economic
status.
Conclusion
Thus, apart from recommending a change in the model of care, the governments must change
the funding model. In addition, the glaring omission from governments has been the complete
lack of acknowledgement that this problem is not unique to cohealth.
Without a change in funding for other CHCs serving vulnerable communities, their general
practices will inevitably also have to close because they are simply not financially viable under
current arrangements.