Hospitals may have to reduce staff and services due to savage Allan government cuts

Victoria’s peak public health service body has warned major hospitals may be forced to cut frontline staff and services as the Allan government works to rein in health spending.

Victoria’s peak public health service body has warned clinical service delivery is at risk because of attempts by the Allan government to rein in health spending.

Ahead of this year’s budget the Victorian Healthcare Association (VHA) urged the government to “prioritise the health and wellbeing of the state over the health of the economy.”

The government has subsequently demanded hospitals slash their budgets with cost saving models now under assessment before budgets are finalised in coming weeks.

The Royal Children’s Hospital is among hospitals which has warned jobs and services are at risk, with sources revealing it is bracing for funding cuts of up to $60m.

Monash Health has been working to find savings of $350m while Alfred Hospital insiders say up to $180m could be wiped from its books.

The Royal Melbourne Hospital is bracing for up to $230m in cuts over the next two years, while Bendigo Health is looking to reduce costs by $120m.

The Royal Children's Hospital is bracing for funding cuts of up to $60m. Picture: David Crosling

In a letter to hospital CEOs this week, VHA chief Leigh Clarke said it was “unclear how risks to clinical service delivery will be avoided in the current financial environment.”

Ms Clarke also raised serious concerns about the ability of the government to implement planned healthcare system governance reforms.

“My reflection is that the current financial situation is also bringing greater uncertainty to the governance reform work,” she said.

“We initially expected that the Victorian government would take a decision on governance reform to cabinet in mid-June. We now understand a decision over the coming weeks is imminent.

“We believe that it is going to be difficult to achieve governance reform of the scale under consideration in the current budget environment without compromising on the delivery of care and services in the community.”

The Royal Melbourne Hospital is bracing for up to $230m in cuts over the next two years. Picture: Luis Enrique Ascui

Ms Clarke said the limited financial capacity of Victoria’s publicly funded healthcare system could not be understated.

“The VHA does not support any decisions by government to embark on major reform in an environment where services are being left with no choice but to consider frontline redundancies and reductions in services,” she said.

On Tuesday premier Jacinta Allan promised to ensure hospitals were given top-up funds to avoid both staff cuts or surgery cancellations.

The position appeared to contradict health minister Mary-Anne Thomas who has for weeks warned hospitals there would be no top-up funding.

In a letter to health boards following this year’s state budget Ms Thomas said it was “imperative that health services operate within their prescribed budgets and are proactive partners in mitigating cost growth in the system.”

But the Premier said on Tuesday the government stood ready to increase funding to hospitals.

“There should be no cancellation of surgery or putting off of staff,” Ms Allan said.

“If we do need to provide more funding to hospitals in addition to the record funding we have provided in this year’s budget, if government needs to provide additional funding as we work through this budget setting process with hospitals, we will do so.”