Cohealth board threatened with sacking amid soaring deficits

The board of prominent inner-Melbourne medical provider cohealth faces being sacked and replaced by a state administrator following widespread financial and management failures, a long-awaited independent report reveals.

The scathing review, released by the federal government on Wednesday, recommends that Victorian Health Minister Harriet Shing issues cohealth a formal final warning to prove it is effectively run, or face a complete government takeover.

Under the Health Services Act, the state government holds powers to appoint an administrator to seize control of community health assets if local governance fails. The review panel said intervention was now required after cohealth’s executive management kept its soaring deficits hidden from the board by using reassuring language in formal paperwork until February 2024.

Report co-author Stephen Duckett told this masthead there were “serious deficiencies” in cohealth’s governance.

“There are problems with the culture and management and how they report,” he said.

“There is a total breakdown in relationships with the community.”

He said he had little confidence that the existing governance and management could win back the trust of the community. “We have demonstrated a litany of failures,” he said.

Shing said she was carefully considering the findings, and working with the Commonwealth and cohealth to implement the recommendations.

“It’s my strong expectation that cohealth demonstrates the integrity, transparency and accountability required to deliver the important health services some of our most vulnerable community members rely on,” she said, adding that the state government provided $68 million to cohealth last year.

The review, which was also authored by John Furler and Jane Seeber, was commissioned following intense community pressure over shock closure announcements. Last year, the 137-year-old institution announced it would stop providing primary care and counselling services at its Kensington, Fitzroy and Collingwood sites due to a funding shortfall.

The closures would have affected more than 12,000 patients who need bulk-billing services – including vulnerable people from nearby public housing estates, homeless clients and those with drug and alcohol issues.

At the time, cohealth blamed the situation on inadequate Medicare rebates for complex patients – who create a heavy, unbillable administrative workload and have high rates of non-attendance – and a lack of state government funding to upgrade the Collingwood facility.

While the independent panel confirmed that Medicare models were po