The Western NSW Primary Health Network says it welcomes the findings and had already reviewed and addressed key areas of the audit.
Accounting firm McGrathNicol has found that Western NSW PHN’s use of what it regarded as “self-generated income” was “potentially not in accordance” with Commonwealth funding arrangements.
The PHN’s parent company, which is registered under the name Western Health Alliance Limited (WHAL), set up a short-lived charity called Priority Red Health Foundation (PHRF) intended to assist GP practices at risk of closure.
It did this using about $2 million in retained earnings from WHAL.
The foundation was set up in September 2023 without funding approval from the Department of Health, Disability and Ageing, and was closed in March 2024 before it had delivered any projects.
In February of 2024, WHAL reportedly asked DoHDA for “retrospective approval” to fund the charity.
Technically, both the PHN and the foundation were subsidiaries of WHAL at that time.
The McGrathNicol audit was completed in July 2025 as part of a national round of PHN reviews.
“In WHAL’s communication with the Department, and during our consultations with Board and staff, WHAL communicated that all funds used in relation to the establishment and to meet ongoing costs for PRHF, were sourced from WHAL’s own ‘equity’ or ‘self-generated income’, including that PHN program funds were not used in relation to PRHF,” the audit said.
“There are multiple elements that comprise WHAL’s self-generated income balance, built up over nearly nine years between 30 June 2015 and 31 May 2024.
“From our work, we regard it as highly likely that a material portion of what WHAL regards to be self-generated income may have been indirectly or directly sourced from the Department’s funding.”
The audit also found that WHAL’s definition, recording and use of self-generated income was potentially not in accordance with Commonwealth funding arrangements and that there were potentially significant conflict of interest challenges that may have arisen.
McGrathNicol had just one recommendation in relation to the PRHF, though, which was to establish and implement a policy on how self-generated income can be earned.
“Audits have not identified a misuse of government funds,” a PHN spokesperson told The Medical Republic.
Related
“The WNSW PHN remains focused on delivering the Australian government’s priority areas of funding to communities by commissioning services and ensuring providers are supported, strengthened, and deliver results for the community.”
For its part, the Western NSW PHN said it welcomed the release of the audit and had cooperated with the audit process.
“While various areas were highlighted positively with processes found to be ‘robust and comprehensive’ the report reflects some areas for improvement over time,” the PHN said.
“The report also provides a valuable opportunity to further strengthen our organisational performance.
“Our dedicated team is working closely with the Department of Health, Disability and Ageing and our local stakeholders to ensure that the recommendations are implemented responsibly and in a timely manner.
“Some key areas are already being reviewed and addressed over the last 12 months.”
This article has been updated to reflect the correct amount of money invested into the PHN’s foundation.
