‘No one wants to be sharing this message’: Major hospitals confirm budget squeeze

Two of Victoria’s largest health services have imposed immediate hiring freezes in response to the Allan government’s demands for huge savings, with hospital chiefs acknowledging the stress and uncertainty the budget pressure was causing.

Northern Health and Western Health, which each manage several hospitals and health centres and employ 8000 and 11,000 staff respectively, announced the recruitment holds as they struggle to rein in spending.

Broadmeadows Hospital is run by Northern Health.Credit: Justin McManus

Western Health – which manages Sunshine, Footscray, Williamstown and Bacchus Marsh hospitals and five community health centres – will also reduce elective surgery, scrapping weekend and high-intensity theatre “HIT lists” spruiked as part of the government’s waiting list blitz.

Hospitals across the state have been warned they will have to contain costs as the debt-laden government tries to save money, prompting fears jobs and services will be at risk.

The moves come as Victorian nurses and midwives overwhelmingly approved an almost $1 billion deal for a 28.4 per cent pay rise over four years, ending eight months of tense negotiations between their union and the government. The union’s Victorian branch secretary Lisa Fitzpatrick on Wednesday said the agreement was not to blame for hospitals’ funding problems.

Western Health chief executive Russell Harrison on Monday emailed staff detailing the measures to contain costs.

“No one, least of all me, wants to be sharing this message. I appreciate that this will be confronting and will be adding a further layer of stress, anxiety and uncertainty on top of the many challenges we all face and tackle each and every day,” he wrote.

Meanwhile, Northern Health – which manages Northern, Broadmeadows and Kilmore District hospitals and Bundoora and Craigieburn centres – told staff that a temporary freeze on some recruitment activities had been implemented on June 24.

“This decision is necessary as we strive to reduce our operating deficit for 2024-25,” a staff update on June 26 said.

“Many of us have been impacted by the news of the 2024-25 budget and understandably wonder what it means for us, our colleagues, and families. We recognise that uncertainty and stress is present across our community who have already adapted to significant changes across the last few years.”

Northern Health – which includes Hume, Whittlesea and Mitchell, three of the state’s six growth areas – has an annual turnover of more than $900 million. More than 97,000 patients are admitted to its hospitals each year and it assists with the delivery of more than 3300 babies.

Harrison said Western Health had received its budget spreadsheet for the next financial year from the Department of Health on June 14.

“It is fair to say that we are facing an incredibly challenging environment, more so than any of us had anticipated or expected,” he said, although he noted the process was not yet concluded.

“The current draft budget has been reduced from previous years. It is a clear signal from the government that they are changing their approach and viewing this as a reset for health service budgets.”

Sunshine Hospital is part of Western Health.Credit: Jason South

Harrison told staff Western Health was working through a co-ordinated approach to address its financial goals and sustainability. He said it was critical a prudent approach be taken to minimise the potential service impacts and create immediate savings.

This included a recruitment freeze on all positions across the organisation, including existing openings. The only exception was Footscray Hospital roles that had explicit funding from Treasury.

There would also be no new capital works programs, a ban on travel unless paid for by external sources and a reduction in elective surgery. “There will be no more weekend or high-intensity lists for the forseeable future,” Harrison wrote.

The state government rolled out so-called Super Saturdays and HIT lists last year to reduce elective surgery waiting lists.

Surgeons would run HIT clinics to power through a backlog of similar operations, such as hip replacements, and add another day of surgery on weekends.

In May, the Allan government walked away from a promise to offer an extra 40,000 elective surgeries annually by 2024, lowering its targets back to pre-pandemic levels.

Harrison also encouraged staff to reduce spending on items such as stationery, training courses and furniture. “If you have any cost-saving ideas please share these with your manager or through improvement initiatives such as Getting Rid of Stupid Stuff.”

Harrison said he believed it was important to be open and honest with staff and share the situation Western Health faced: “It’s cold comfort, I know, in that we are not facing this alone and I suspect it will be some weeks before we have a final outcome from this process.”

He said Western Health’s board would submit its response to the draft budget – and its implications – on June 28.

“I wish I could have given you all a much more positive message or a fuller one,” Harrison wrote, urging staff to treat each other with dignity. “It will help us prevail and support us to get through this as best we can.”

A Western Health spokesperson said the organisation was working with the Health Department on a final budget to support the healthcare needs of the growing community in Melbourne’s west.

“Healthcare services operate in a complex and challenging setting and we are taking active steps to respond to a constrained fiscal environment, such as recruitment holds, capital expenditure and preventing travel at this time, aimed at having minimal impact in providing best quality treatment, care, research and education for the people of the west,” the spokesperson said.

Northern Hospital in Epping.Credit: Luis Enrique Ascui

The Victorian chair of the Royal Australasian College of Surgeons, Dr Patrick Lo, said staff at another public hospital where he works had also told been they were unable to recruit new employees.

“I am worried that those who finally get to have their surgery may have to wait some more,” he said. “That puts their health at risk.”

Lo said he fears the cuts will also damage the mental health of staff. “All the workers have worked so hard, now we have no support.”

The Department of Health said health services had been provided with their modelled budgets for 2024-25 and corresponding activity targets.

It said options for efficiencies were being considered by every service to ensure they could plan for the rest of the year. These plans will be considered by the department to ensure there was oversight of potential impacts to the system as a whole.

Some services were making localised decisions about short-term changes to reduce costs, while prioritising frontline care, the department said.

“We are investing a record $20 billion into our hospitals this year alone – including an additional $1.5 billion this financial year,” a government spokesperson said.

Opposition health spokeswoman Georgie Crozier.Credit: Simon Schluter

The government said services had not even submitted budget action plans to the Department of Health for review and final budgets had not been agreed to.

Opposition health spokeswoman Georgie Crozier said funding cuts were having a direct impact on hospitals being able to deliver safe patient care.

“Labor’s ongoing mismanagement of health will see a loss of services and a loss of frontline jobs that will impact the delivery of safe patient care,” she said.

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