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Regional Healthcare Is Changing. Are Health Boards and Executive Teams Ready for the Next Era?

by | Aug 18, 2026 | Deep Dive, The Spark Briefing

Core argument

The future challenge for regional health leaders is not simply running excellent organisations. it is leading within an increasingly interconnected regional health system, where strategy, governance and collaboration extend beyond organisational boundaries.

Summary

Victoria’s regional health system is entering a new phase of evolution. Recent reforms, including the continued development of Local Health Service Networks, greater investment in care closer to home, virtual models of care and regional planning, signal a gradual shift towards a more connected and collaborative health system. While these reforms are still evolving, they present an opportunity to rethink how health services plan, deliver and govern care across regional Victoria.

This article argues that the success of this transition will depend not only on policy and funding, but on the capability of Health Boards and Executive Teams to lead differently. It explores why strategy must remain grounded in the needs of local communities while also embracing a broader regional perspective, and why leadership, governance and strategic capability will become increasingly important as health services work together to improve outcomes across organisational boundaries.

A system in transition

Regional healthcare in Victoria is changing – not through one major reform, but through a series of connected developments that are gradually reshaping how care is planned, delivered and governed. Over the past few months, a series of Victorian Government announcements, policy updates and performance reports have continued to reinforce a common direction for healthcare across the state. Local Health Service Networks are beginning to mature, investment continues to support care closer to home and virtual models of care, and new approaches to service planning are encouraging greater collaboration between health services. Recent audit findings have also highlighted the need for stronger performance measurement and clearer accountability for outcomes.

Taken individually, these developments may appear to be separate reforms. Taken together, however, they suggest something more significant. Victoria’s regional health system appears to be entering a new phase of evolution – one that places greater emphasis on collaboration, place-based planning, shared capability and coordinated care across organisational boundaries.

This transition is still in its early stages, and many aspects will continue to evolve over the coming years. Yet the direction of travel is becoming increasingly clear. The question is no longer simply whether organisations can adapt operationally. It is whether Boards and Executive Teams have the strategic capability to lead through this transition.

Strategy must (still) begin with local communities

One of the risks in discussing regional health reform is assuming that every regional community needs the same solution. They don’t.

The health needs of Mildura differ from those of Warrnambool. Fast-growing communities in Ballarat, Bendigo and Geelong face different pressures to smaller rural communities across the Mallee, Gippsland or the Hume region. Communities experiencing rapid population growth face different challenges to towns with ageing or declining populations. Some communities require greater access to maternity and children’s services, while others face increasing demand for chronic disease management, mental health support, rehabilitation or aged care. Workforce availability differs. Transport challenges differ. Community expectations differ. So too do health outcomes.

This is why understanding local need must remain the foundation of strategy. Regional collaboration should never come at the expense of local knowledge. In fact, it should strengthen it. The greatest opportunity presented by Local Health Service Networks is not simply that they bring organisations together around the same table. It is that they create an opportunity for health services to collectively understand the populations they serve, identify shared challenges, coordinate capability and design services around the needs of their communities.

Regional thinking should therefore never replace local understanding. It should build upon it.

…but regions play an increasingly important role

Historically, regional health-service strategies have understandably focused on the organisation itself i.e. improving services, attracting workforce, maintaining financial sustainability and responding to growing demand. Those priorities remain critically important and will continue to demand the attention of Boards and Executive Teams.

However, the environment in which these organisations operate is changing. Many of the outcomes communities value most such as timely access to specialist care, coordinated mental health pathways, seamless transfers between providers, hospital avoidance and care closer to home can no longer be delivered by a single organisation acting independently. They increasingly depend on how effectively organisations work together across a region.

The Victorian Government’s continued investment reflects this broader direction. The 2026–27 State Budget includes more than $32 billion for health services, with significant funding supporting Better at Home, Virtual Hospital initiatives and expanded regional healthcare. Better at Home alone has reportedly helped avoid more than 326,000 hospital bed days since its introduction, demonstrating the growing shift towards delivering care beyond traditional hospital settings.

Importantly, ‘care closer to home’ should not be interpreted as delivering every service in every community. Rather, it requires thoughtful decisions about which services should remain local, which capabilities should be strengthened regionally, where outreach or virtual care provides better access, and where partnerships with larger regional or metropolitan providers remain essential. These are no longer simply operational decisions; they are strategic choices that will shape the future of regional healthcare.

This represents an important shift in thinking. Increasingly, Boards and Executive Teams need to ask not only, “What should our organisation become?” but also, “What role should our organisation play within the broader regional health system?”

The capability challenge

If regional strategy is evolving, leadership capability must evolve with it.

Workforce shortages have dominated discussions about regional healthcare for many years, but they can no longer be viewed simply as a recruitment challenge. Workforce is increasingly one of the principal determinants of strategy. An organisation cannot sustainably build services that the region cannot realistically staff, nor can neighbouring health services continue competing indefinitely for the same limited workforce.

This is why regional workforce planning is becoming so important. Shared appointments, coordinated training pathways, cross-service employment models, flexible deployment and digital access to specialist expertise are increasingly becoming strategic responses rather than operational initiatives. They require organisations to think beyond institutional boundaries and consider what is best for the region as a whole.

The same applies to digital capability. Most of our clients across Victoria have reported an increase in virtual care, allowing more patients to receive specialist advice without travelling long distances and enabling more care to be delivered safely in people’s homes. Yet technology alone will not create integrated care. If referral pathways remain fragmented, clinical information cannot move easily between providers or governance arrangements differ significantly across organisations, digital systems simply accelerate fragmentation rather than solve it.

Boards therefore need to ask a different question. Rather than asking whether their organisation has a digital strategy, they should be asking whether their digital capability enables the regional model of care their strategy assumes.

Perhaps the biggest shift, however, is one of governance.

Traditionally, Boards have focused (appropriately) on overseeing the safety, quality, workforce, financial performance and sustainability of their own organisations. Those responsibilities remain fundamental. But regional collaboration introduces another dimension. Many of the outcomes communities care most about now depend upon decisions made across multiple organisations. No single Board controls those outcomes, yet collectively Boards influence them.

This creates an important leadership challenge. Boards remain accountable for institutional performance while increasingly needing visibility of regional performance. That does not mean governing other organisations. It means understanding whether the regional system is delivering better access, better patient journeys and better outcomes for the communities it serves.

The capabilities required to lead in this environment are also changing. Systems thinking, collaborative leadership, place-based planning, service portfolio design, partnership development, outcomes measurement and influencing without formal authority are becoming core strategic capabilities for both Boards and Executive Teams. These are no longer desirable leadership attributes; they are increasingly essential.

A window of opportunity

One of the defining characteristics of this transition is that the future regional health system is still being shaped. Local Health Service Networks are continuing to mature, new models of care are being tested, partnerships are evolving and approaches to regional planning are still emerging. Unlike more mature systems, many of the structures, governance arrangements and ways of working have not yet become fixed.

For Health Boards and Executive Teams, this creates a rare strategic opportunity. Rather than simply responding to reforms as they unfold, organisations have an opportunity to help shape their role within an emerging regional health system. The decisions made over the next few years, about where to lead, where to partner, which capabilities to build and how to contribute to regional outcomes, are likely to influence not only organisational performance, but also the way healthcare is delivered across their communities for years to come.

The organisations that wait for the system to become fully defined may find that many of the strategic choices have already been made. Those that engage early have a greater opportunity to influence regional priorities, establish trusted partnerships and help shape a model of care that reflects both local community needs and broader regional aspirations.

Five questions every regional health Board should be asking

As Victoria’s regional health reforms continue to evolve, there are five questions that every Board and Executive Team should be discussing.

  • First, do we genuinely understand the changing health needs of the communities we serve, and how are those needs shaping our strategy?
  • Second, what distinctive role should our organisation play within the broader regional health system?
  • Third, which capabilities should we strengthen ourselves, and where should we deliberately partner with others to achieve better outcomes?
  • Fourth, do our workforce and digital strategies support the future model of care, or are they primarily designed around today’s operating model?
  • Finally, how will we know whether our contribution is improving outcomes for the region, not simply improving performance within our own organisation?

These questions are not about reducing local identity or organisational accountability. Rather, they are about strengthening both. The organisations that understand their communities best are often those best placed to define their unique contribution to a regional health system.

Looking ahead

Victoria’s regional health reforms are still evolving, and many of the structures, partnerships and governance arrangements will continue to mature over the coming years. There is still much to learn about how Local Health Service Networks will operate in practice and how success should ultimately be measured.

What already seems clear, however, is that the next era of regional healthcare will require a different way of thinking about strategy and leadership. The organisations that thrive are unlikely to be those attempting to provide the broadest range of services or simply pursuing organisational growth. They are more likely to be those that deeply understand the communities they serve, are clear about the distinctive contribution they can make, and work confidently with others to improve outcomes across an entire region.

A more regional, integrated and pathway-oriented system will require Boards and executives to develop a stronger capability in system stewardship. This means understanding not only how their own organisation performs, but how it contributes to the performance, sustainability and equity of the broader regional health system.

Several capabilities may become increasingly important.

  • First, Boards may need stronger regional and system-level strategic literacy. This includes understanding where their organisation sits within regional pathways, workforce flows, service dependencies and future role delineation.
  • Second, executives may need deeper partnership and influence capability. In a more networked system, success may depend less on direct control and more on the ability to shape outcomes through LHSNs, PHNs, ACCOs, local government, aged care, disability, mental health and community partners.
  • Third, health services may need stronger pathway and population health thinking. The strategic unit of analysis may increasingly shift from the hospital episode to the patient journey, cohort, region or population segment.
  • Fourth, digital and data maturity will become a leadership issue, not just a technology issue. Boards may need to understand whether their organisation can participate effectively in shared information environments, integrated reporting, regional analytics and whole-of-system performance measurement.
  • Finally, workforce strategy may need to move from organisational recruitment and retention toward regional workforce capability. This may require new thinking about shared workforce models, expanded scope of practice, virtual workforce support, regional rotations and common training pathways.

In this environment, the question for Boards is not simply whether their organisation is well managed. It is whether it is becoming strategically capable of operating in a system where value, performance and sustainability are increasingly created across organisational boundaries.

How can we help?

Spark Strategy works with Health Boards and Executive Teams to navigate complex system change, clarify their role within regional health networks, and build strategies that are grounded in community need. If you would like to explore how your organisation can strengthen its strategic direction, governance capability or regional partnerships, please contact us at info@sparkstrategy.com.au.

Sources

  1. Australian Government Department of Health, Disability and Ageing, National Health Reform Agreement (NHRA), https://www.health.gov.au/our-work/national-health-reform-agreement-nhra?language=en
  2. Victorian Department of Health, Local Health Service Networks, https://www.health.vic.gov.au/health-services-plan-reform/local-health-service-networks
  3. Victorian Government, Making it easier to get free healthcare, https://www.budget.vic.gov.au/making-it-easier-get-free-healthcare

This is about regional healthcare, read about rural heathcare here

 

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