The territory government will split its 7000-employee health directorate into two new agencies - one focused on policy, the other on operations - in a huge overhaul designed to replicate similar moves interstate.
The changes will also see current ACT Health director-general Nicole Feely, a former chief of staff to then-Prime Minister John Howard, leave the directorate to pursue "other opportunities".
It follows the government moving 1000 ACT health administrative, executive and policy roles to Woden from its former offices in the city in an effort to address a long-standing divide between those areas and hospital operations.
Health Minister Meegan Fitzharris and Mental Health Minister Shane Rattenbury announced the restructure on Friday, saying the split would help the Canberra Hospital and Health Services focus more on operations.
Ms Fitzharris said the split of the territory government's largest directorate, by staff employed, would also help deliver the government's much-promoted new health services framework and the new policy arm would focus on overseeing operations and policy, in line with ministerial directions.
"The clinical and service planning underway through the territory-wide health services framework will remain a key priority for government and we will continue to establish clinical centres, which will group clinical services through centre service plans and specialty service plans," she said.
The split comes as the Auditor-General launces an audit into allegations of breaches of the Public Sector Management Act inside ACT Health, and long-standing issues with data reporting in the directorate and a lack of communication between the directorate and the minister.
Among them, Ms Fitzharris has said she had not been briefed on several key policy issues including a five year delay to updating the ACT's opioid treatment guidelines first reported by this newspaper.
But Ms Fitzharris on Friday rejected assertions that Ms Feely had been let go, instead saying her departure was made by mutual agreement.
She also thanked Ms Feely for her work, particularly on leading the development of the new health services framework development, wishing her "every success".
Ms Fitzharris said the government was now seeking two new directors-general to take over the two bodies when they are set up in October.
She said the split of the health directorate into two new agencies rather reflected similar moves by all other states and territories as part of the latest national health reform agreement in 2011.
But she would not comment on whether or not Ms Feely was asked to apply for either of the new top-level positions, and said that the restructure would not directly involve any redundancies.
Ms Fitzharris said the move would help to ensure the health of Canberrans was addressed better across all government departments, and the government would also be seeking the community and non-government sector's views on the split.
She said the move was not motivated by a desire for greater ministerial oversight of the health policy agenda, but rather to allow the operational wing of the department to focus on the day to day demands of the health system.
Mr Rattenbury, who is still setting up the promised Office of Mental Health, said he believed it would also ensure a wider and better coordinated focus on mental health across all territory government agencies.
The split will see the current group of health deputy directors-general oversee a new central government team to manage the transition to the two new agencies between now and the expected October start date.
Opposition Leader Alistair Coe said the decision to split the agency in two seemed to be an "ad hoc decision" that was "straight out of the LDA play book".
He said he failed to see how creating "two departments of health" in such a small jurisdiction would fix the city's "health woes".