Cash injection on the cards for beleaguered public hospitals

Extra cash to bail out struggling public hospitals could be released to states and territories to tackle swamped emergency departments and a surgery backlog after a review of the government’s contentious hospital funding deal is finalised at the end of the year.

Health Minister Mark Butler and his state and territory counterparts agreed to an independent review of the five-year hospital funding arrangement at a meeting on Friday, following months of lobbying from state premiers for the Commonwealth to pay a greater share in supporting public hospitals.

Federal Health Minister Mark Butler acknowledges that public hospitals are under pressure.Credit: Alex Ellinghausen

The report – which could recommend the federal government contributes more to the health system, already one of its top five areas of expenditure growth – will be handed down in December with an interim report presented to health ministers in August.

The doctors’ union has joined the states in campaigning for more Commonwealth money and said the system could not afford to wait for a new agreement to come into force in 2025.

An Australian Medical Association (AMA) analysis last month found just three of the country’s public hospitals were providing care within recommended timeframes, and AMA head Steve Robson said it was obvious the current funding arrangements weren’t sufficient.

“If you look around at the moment, it’s pretty dismal. Waiting until 2025 doesn’t do any favours for Australians waiting for care or struggling to access emergency departments,” he said. “We strongly encourage a half-time shake-up here, and that they don’t wait until the end of the match to make the changes.”

State premiers and health ministers have been agitating for an extension of the 50:50 cost-sharing deal they struck with the federal government during the first three years of the COVID pandemic, in which the Commonwealth pitched in billions in additional funds to support hospitals.

That arrangement came to an end in December, despite health ministers’ pleas for it to continue until 2025 as spiralling inflation, delayed elective surgeries and crowded emergency departments increased the cost of running public hospitals to record levels.

The states have also been calling on the Albanese government to abolish the 6.5 per cent annual growth cap on its contributions.

Prime Minister Anthony Albanese promised before the election to “sit down and negotiate” with the states over the controversial hospital funding agreement orchestrated in 2018 by then prime minister Malcolm Turnbull, who imposed the 6.5 per cent growth cap and set the Commonwealth contribution at 45 per cent.

The government has commissioned former finance department head Rosemary Huxtable, who was also a deputy secretary of the federal health department, and former director-general of Queensland Health Michael Walsh to lead the review.

They will investigate the flow-on effects of COVID, the performance of small rural and regional hospitals, cost-shifting and perverse incentives in the system, as well as whether the overall agreement remains fit-for-purpose while the government embarks on a Medicare overhaul that will move towards a more integrated primary care system.

Health Minister Mark Butler said hospitals around the country were under pressure. “This review will help identify areas for improvement and I welcome working with all states and territories throughout this process,” he said.

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