Victorian regional hospitals may close, merge in budget crisis

Regional hospitals are being ordered to stick to impossible budgets or face amalgamation, but the state’s health minister says no hospitals will close under her watch.

Regional hospital insiders say they will be forced to shut down or amalgamate after a leaked memo from the Victorian health minister revealed they are being ordered to stick to impossible budgets.

A letter from Health Minister Mary-Anne Thomas to Victorian health boards, seen by the Herald Sun, warns “no more funding will be provided” to health services above what was set out in the May budget.

Ms Thomas said the recent new funding injected into the system along with targets set by the Health Department would create “greater certainty and stability to the sector”.

Regional hospitals face closure or amalgamation as they struggle to stay within budget. Picture: Getty

“I am glad to be able to provide this funding support in 2023-24 in the context of a very constrained fiscal environment and we’d like to highlight that it is not associated with the increase in your activity targets,” Ms Thomas wrote.

“It will be imperative that health services operate within their prescribed budgets and are proactive partners in mitigating cost growth in the system.”

Ms Thomas said on Thursday she was still waiting on the findings of a system wide report before determining whether regional hospitals would be amalgamated.

The state government commissioned an expert advisory committee post Covid to determine what is needed to deal with the “unprecedented challenges” that have hit the health system.

“It is important to look at whether the system that we currently have is the best that we have to meet the health needs of Victorians now and into the future,” Ms Thomas said.

“No decisions have been taken in relation to what changes may or may not be made to our health system.”

On Thursday, Ms Thomas said the committee was yet to provide its report. Once it does, she will begin consultation with the sector, but refused to put a time frame on when that work would be completed.

She said no hospitals would close and there would not be a reduction in available beds across the state.

“Under my watch there will be no hospital closures.

“Let’s be clear – we need every health service that we have. We need every bed that is available across our system. There will be no reduction in beds.”

Victoria Health Minister Mary-Anne Thomas. Picture: Tertius Pickard

Ms Thomas has vowed that no patient in Victoria would ever be turned away from accessing treatment.

“To suggest that is simply ludicrous,” she said.

In the letter Ms Thomas acknowledged health running costs had increased during the pandemic, but urged services to work with the Health Department “to ensure plans are in place to reduce the rate of cost growth”.

In response, health insiders said the amount of money being handed out was not enough and some services would not survive without reducing their offerings

Ms Thomas also reminded hospital bosses that under the Health Services Act the state could outline what service delivery was expected without health boards being required to “countersign” the contract.

Dr Jill Tomlinson, president of the Australian Medical Association in Victoria, said her organisation would seek more clarity after the letters had been sent.

“We will be discussing this letter with the Health Minister and her staff in the coming weeks and months to seek clarification as to how exactly this funding has been costed to ensure delivery of projected future activity, high-quality patient care, safe staffing levels and the delivery of award entitlement for the entire healthcare workforce,” she said.

Last month, the Herald Sun revealed hospitals had been ordered to slash costs ahead of the state budget, but insiders said there was no way to do it without affecting frontline services.

Ms Thomas says no hospitals will close under her watch.

The Herald Sun also revealed that rural services were facing huge costs just to bring in staff with casual anaesthetists offered $10,000 a shift in the Latrobe Valley.

Insiders say the health system has been in chaos for years, with hospitals often needing ad hoc “top-up” funds to pay providers and staff and to balance the books at the end of the financial year.

In the May budget the state committed $8.8 billion in health funding.

A Government spokesperson said: “We will always support our public hospitals – which is why we’re reforming the way we fund our hospitals and helping them plan for the future to ensure our healthcare workers can continue doing what they do best – caring for Victorians.

“This reform will deliver a significant funding uplift over the next five years, providing greater financial certainty and stability to the sector.

“An investment of this size comes with a responsibility and requirement for financial discipline and accountability, as the community would expect.

Opposition spokeswoman for health, Georgie Crozier said: “This letter confirms Labor is starving health services of funding, which will result in cuts to services, job losses and forced amalgamations across the state.

“These communications are deeply concerning for rural and regional health services and for their communities.

“Labor cannot manage money, cannot manage our health system and as a result, Victoria patients will suffer.”