A secretly recorded meeting of executives from some of the state’s biggest hospital networks has revealed the sense of crisis felt inside the system as it faces its greatest financial shock in 30 years.
Draft budgets provided this month by the Allan government to the state’s 76 separate public hospital networks lay bare the challenge facing the public health system.
Health Minister Mary-Anne Thomas.Credit: Justin McManus
The state’s largest network, Monash Health, has been asked to carve about $200 million out of its operating expenses.
At a meeting this month, the possibility of bed closures, shutting entire wards, reducing elective surgery, cancelling breast screening and even closing special-care cots used to treat critically sick babies was openly discussed.
“The whole system is going to tank,” one administrator told the meeting.
The discussions also exposed the gulf between Health Minister Mary-Anne Thomas’ public comments downplaying the financial crunch for hospitals and the reality of the cuts hospitals themselves are canvassing.
The Age has listened to a partial, edited recording of the meeting where executives – unaware that their comments are being recorded – speak frankly about the depth of services they are considering cancelling to make their budgets.
One administrator flagged the closure of a satellite dialysis unit, despite demand for the service already outstretching supply; cutting one in 10 allied health staff working in areas like pathology and pharmacy; and scrapping COVID-19 testing for all patients on admission.
Others spoke about considering closing special care cots and the knock-on impact that would have on the Royal Children’s Hospital.
“The thing I am concerned about though, one of ours is reducing special-care nursery cots. Now, in closing those in clumps big enough for it to be effective, there’s a roll-on consequences for the Royal Children’s Hospital or for other hospitals.”
Another says: “The other thing we have discussed today was the early parenting centre that we just opened and whether we continue to operate that. I don’t know how palatable that will be.”
“We are considering not running BreastScreen ... at all.”
“It’s been a harrowing week.”
Another discusses bed closures: “So we may have two levels of savings where the first stage might be just a closure, a number of beds spread across four or five areas. And then if we have to progress to a full ward closure, which obviously does save a lot more, because you save admin and other roles in those wards.”
The leaking of the secret tape, which prompted threats of legal action against The Age from two hospitals, reflects savings measures being contemplated by the state’s hospitals, rather than decisions taken.
The hospitals must submit their plans to the Victorian Department of Health, which has the final say over where clinical services are provided.
The scale of the cuts being imposed by the Allan government prompted the peak body for the state’s public hospitals to warn that the sector would be forced to cut clinical staff, close hospital beds and stretch waiting times for people needing care.
“Any suggestion that these measures are only there to address wastage in the system is false,” Victorian Healthcare Association CEO Leigh Clarke said.
“These measures will go way beyond that – this is cuts to services. If the Victorian government doesn’t change course, we will inevitably see these cost-cutting measures ripple through the system with significant consequences for the delivery of care and services in the community.”
The Victorian peak body for senior medical staff warned the proposed budget cuts threatened their ability to provide safe and effective care to Victoria’s growing population, with even less capacity to flex in the face of major disasters or future pandemics.
In a letter to the health minister seen by The Age, the Committee of Chairs of Public Hospital Senior Medical Staff Associations said: “Service closures, reductions in staff, cancellation of planned surgery activities, increased waiting times and inability to access specialist care pose a direct threat to patient safety and will lead to preventable adverse outcomes.”
Budget pressure on the health system has heightened concerns about services at Royal Children’s Hospital.Credit: Pat Scala
“In addition, bed block and crowded emergency departments will cause further disruption to already strained emergency services by contributing to ambulance ramping. Vulnerable populations, without access to alternate means of care, are the most likely to suffer.”
The letter said recruitment freezes would have significant impacts on trainees finishing in 2024, with the likely consequent loss of a passionate and skilled workforce interstate or to the private sector.
Thomas has publicly suggested hospitals have been asked only to “streamline” spending and can meet their savings targets by reducing travel, executive wages and the number of staff in non-clinical areas such as communications and marketing.
Asked on Friday how carving out $200 million from Monash Health could just come from marketing and travel expenses, the minister said it was a large health service.
“We are working to make sure that the money – the record money – that we’ve invested in health is being used and prioritised towards the delivery of patient care,” she said.
Thomas said she was “absolutely” prepared to step in and prevent a hospital from shutting breast screening or dialysis services.
“There are conversations happening right now as part of the budget-setting process between my department and our health services. And no agreements have been reached. There’s no finalisation of any of those budgets right now.”
A Victorian government spokesperson said final budgets for health services would not be set for several weeks. “We are investing a record $20 billion into our hospitals this year alone – including an additional $1.5 billion this financial year,” the spokesperson said.
Australian Medical Association Victorian president Dr Jill Tomlinson said the contents of the recorded meeting were consistent with what she was hearing from hospitals.
“They speak to the savage nature of the proposed model budgets, which would decimate health services,” she said.
Medical Scientists Association of Victoria secretary Matt Hammond said members – including medical scientists, psychologists and pharmacists – feared jobs would be lost. “It makes me incredibly angry when the government is talking about the biggest investment in health services, yet our members are finding out their jobs are under threat.”
Victoria’s Department of Health secretary, Euan Wallace, said although the budget for all state hospitals had increased, some would need to find savings to bridge the difference between what they will actually spend this financial year and what they have been budgeted for next year.
He said that more of next year’s hospital funding was activity-based – payment for clinical services actually provided – and reflected a return to “normal business” for the first time since before the pandemic.
“Budget to budget, there is more money in the system than there was last year,” Wallace said. “But actual spend to budget, things are much tighter.
“We have increased the portion of money that flows through the system through an activity-based approach. Services which can do more activity get paid more, those services which for whatever reason can’t do the activity will be paid less. It’s about sending money to the places where work can be done.”
Royal Children’s Hospital pediatric neurosurgeon Patrick Lo said his hospital would struggle to accommodate any additional patients in its special care nursery cots.
“There is very little capacity to ramp things up,” he said. “Our capacity is constantly maxed out. If you don’t have these units then some neonatal cases may have to be delayed. They become sicker.”
A long-serving hospital chief executive, speaking on the condition of anonymity, said the government’s approach, while designed to make public hospital care more efficient, represented the biggest financial correction experienced by the $20 billion sector since the Kennett government introduced casemix funding 30 years ago.
Victoria’s hospitals had been asked to find savings on a smaller scale in the year leading into the pandemic, but that process was abandoned once the first COVID-19 case hit.
“This is years of accumulated deficits coming home to roost,” he said.
“You are not going to pull hundreds of millions out of a hospital by cutting your public relations department or stopping executive travel. There is an incongruence between conversations that are actively happening in hospitals and what is being told to the public.”
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