Queensland Premier Anna Bligh says she's so fed up with the scandals that have beset Queensland Health that she's splitting the department in two.
Ms Bligh says the final straw was the embezzlement of $A16 million.
New Zealander Joel Barlow, 36, was arrested on Monday.
The ABC reports an investigation has begun into why the health department and the police failed to follow up a complaint about the accused last year.
Police Commissioner Bob Atkinson admits Mr Barlow's history could have been discovered earlier.
A complaint was made to the Crime and Misconduct Commission last August. But his history in New Zealand was not checked.
Ms Bligh says KPMG will advise on how to split the department in two.
One agency will take care of hospitals and health care. Another will take care of corporate functions and support.