Hunger Games hospitals: Victoria’s radical health shake-up sparks fears

Victoria’s biggest hospital shake-up in 20 years has sparked fears of a Hunger Games-style competition between health services for staff and funding while introducing another layer of bureaucratic red tape.

Premier Jacinta Allan released a 179-page Health Services Plan on Thursday and ruled out forcibly merging the state’s 76 independently governed health services, but the opposition accused the government of “amalgamation by stealth”.

Victorian Premier Jacinta Allan has announced the new health services plan.Credit: AAP

Instead, health services will soon be grouped into geographic regions with shared back-of-house operations, but retain independent boards and branding.

The health plan proposed grouping the services into 11 distinct regions, each with a regional board, that would eventually share payroll and other IT systems. Small hospitals in the new local health service networks will have formal links to a major “tertiary” hospital and specialised hospitals so that staff can be easily shared.

“We have too many different IT systems, too many different payroll systems, too much different back office bureaucracy that can be instead focused on delivering patient care,” Allan said.

New government agency Hospitals Victoria will also be created. That extra layer of bureaucracy will help hospitals manage their budgets and shift to digital technology, while the boards of the new health networks will be focused on targets for their geographic region.

The government said there would be no reduction to frontline services. But sources in the health sector feared services could be rationalised and hospitals pitted against each other in a Hunger Games-style competition in which they will have to fight among each other for limited staff, services and funding.

They also worried the statewide health restructure could ultimately lead to amalgamations. Allan repeatedly said there would be no “forced amalgamations”.

One hospital executive, speaking on condition of anonymity to talk freely, described the proposed shake-up as “bureaucracy gone mad”.

“If we have to go to our board and then another region-wide board, I’m not sure we will get that innovation,” the executive said. “Health services will lose their ability to be innovative. I think it will be caught up in red tape or bureaucracy.”

The executive said some of the regional networks covered huge geographical areas. “I’m not sure how one body can plan for all of that.”

Thursday’s report said Victoria’s existing hospital structure was “no longer fit for purpose” and the networks are needed for a more “equitable, consistent” system for patients, the health workforce and local communities.

“While our health services system has served us well in the past, it is no longer fit for purpose to meet current and future challenges. Change is needed now,” the plan said.

Location of new local health service networks

REGIONAL VICTORIA

Barwon South West

Barwon Health, Casterton Memorial Hospital, Colac Area Health, Great Ocean Road Health, Hesse Rural Health Service, Heywood Rural Health, Moyne Health Services, Portland District Health, South West Healthcare, Terang and Mortlake Health Service, Timboon and District Healthcare Service, Western District Health Service.

Grampians

Beaufort & Skipton Health Service, Central Highlands Rural Health (excluding Kyneton Hospital), East Grampians Health Service, East Wimmera Health Service, Grampians Health, Maryborough District Health Service, Rural Northwest Health, West Wimmera Health Service.

Loddon Mallee

Bendigo Health, Boort District Health, Cohuna District Hospital, Dhelkaya Health, Echuca Regional Health, Heathcote Health, Inglewood and Districts Health Service, Kerang District Health, Kyneton Hospital, Mallee Track Health and Community Service, Mildura Base Public Hospital, Robinvale District Health Services, Rochester & Elmore District Health Service, Swan Hill District Health.

Hume

Albury Wodonga Health, Alexandra District Health, Alpine Health, Beechworth Health Service, Benalla Health, Corryong Health, Euroa Health, Goulburn Valley Health, Kyabram District Health Service, Mansfield District Hospital, NCN Health, Northeast Health Wangaratta, Seymour Health, Tallangatta HealthService, Yarrawonga Health, Yea and District Memorial Hospital.

Gippsland

Bairnsdale Regional Health Service, Bass Coast Health, Central Gippsland Health Service, Gippsland Southern Health Service, Latrobe Regional Hospital, Omeo District Health, Orbost Regional Health, South Gippsland Hospital, Yarram & District Health Service.

METRO MELBOURNE AND STATEWIDE

West Metro

Western Health in partnership with Mercy Werribee Hospital (denominational).

Parkville

Peter MacCallum Cancer Centre, Royal Children’s Hospital, Royal Melbourne Hospital, Royal Women’s Hospital.

North Metro

Austin Health and Northern Health, in partnership with Mercy Hospital for Women (denominational).

East Metro

Dental Health Services Victoria, Eastern Health, and the Royal Victorian Eye and Ear Hospital, in partnership with St Vincent’s Health (denominational).

South Metro

Monash Health, West Gippsland Healthcare Group

Bayside

Alfred Health, Kooweerup Regional Health Service and Peninsula Health, in partnership with Calvary Health Care Bethlehem (denominational).

Victoria has more independently governed health services than the rest of Australia combined, and the state’s basic hospital structure has remained largely unchanged for 20 years.

Thursday’s report said the 76 health services had at times “unexplained variation in how patient care is delivered”.

The flow-on effects for patients can be life-threatening, the plan said, with delays sometimes extending beyond 50 hours for transfers to hospitals with appropriate expertise.

The health plan recommended metropolitan Melbourne be split into six regions: West Metro, Parkville, North Metro, East Metro, South Metro and Bayside.

There would also be five regional networks: Barwon South West, the Grampians, Loddon Mallee, Hume and Gippsland. The final number and exact make-up of the new networks could be subject to change during the rollout.

The Australian Medical Association (AMA) said it didn’t have enough information to know what the plans would mean for health services, healthcare workers and patients, but it was reassuring that services would not be forced to amalgamate.

“Significant benefits may flow from reform under the Health Services Plan, but if it is to be a success we will need to see the department and government listen and respond to local voices, not ignore the recommendations and requests of health service boards, workers and local communities,” said AMA Victorian president Dr Jill Tomlinson.

The May state budget included $8.8 billion for the hospital network, as health services were told to restrict their budgets. But on Thursday, Allan and Health Minister Mary-Anne Thomas said they had listened to hospitals and would tip an extra $1.5 billion to ensure there were no cuts to frontline services or jobs.

Credit: Matt Golding

Allan again committed to delivering a surplus in 2025-26 despite having to account for the $1.5 billion in new funding in the mid-year budget update. This year’s budget papers forecast a $1.5 billion surplus for that financial year.

The government accepted or accepted in principle all but one of the health plan’s 27 recommendations.

However, the premier said a recommendation to forcibly amalgamate Victoria’s hospitals – by scrapping individual boards and branding – had been rejected.

“I want to be very clear this morning,” Allan said. “We will not be forcing hospitals to amalgamate. I’m not convinced that that’s in the best interest of patient care.”

Allan and Thomas had spent months softening the ground for possible amalgamations.

There will be a review three years after the networks are established, and an assessment of outcomes five years into the implementation.

Opposition Leader John Pesutto said the government had abandoned its amalgamation plans without providing enough detail about the alternative.

“How can any Victorian look at this latest backflip from the Allan Labor government – today it’s on health – and not conclude that we have a totally dysfunctional government?” he said.

“This will be amalgamations by stealth. Make no mistake, this government has plans to amalgamate health services across the state.”

Victorian Healthcare Association chief executive Leigh Clarke welcomed certainty for the sector after months of concerns over budgets and amalgamations.

“It’s still large-scale reform,” she said. “That clarity will still need to come as to what that governance would look like internally within the network.”

Clarke said it wasn’t yet clear whether hospitals would be competing with each other for services. She said the proposed model kept all options on the table, and that some services might still be interested in consolidating.

Each metropolitan network will service about 1 million people, while regional networks will aim to cater to populations above 200,000. Rural health services lose staff at a 30 per cent higher rate than their metropolitan counterparts, according to the Health Services Plan, and spend 3.6 times more on recruitment per head.

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