Another funding fight is brewing between Victorian hospitals and the Allan government just months after a battle triggered by spending crackdowns and a once-in-a-generation restructure in the second half of last year.
The peak body representing the state’s 76 public health services has called on Treasurer Jaclyn Symes to use her first budget to provide hundreds of millions of dollars of additional funding to implement the new health service networks, even as the public sector is braced for widespread cuts.
Health Minister Mary-Anne Thomas has previously suggested that hospitals have the resources they need to meet compliance costs. Credit: Simon Schluter
The Victorian Healthcare Association says the additional cash is needed to meet rising compliance costs and ensure the smooth running of the 12 hospital groupings – which the Coalition has claimed are “mergers by stealth” – when they come online.
The Age can also reveal that, as of this month, some health services were still negotiating their performance targets with the Department of Health after last year’s budget and $1.5 billion sector top-up, despite planning having begun for this year’s state budget.
One high-level hospital executive, speaking on the condition of anonymity because they were not authorised to speak publicly, said there were lingering tensions between health services, the department and the government.
“There is no appetite for deficits,” the executive said.
As part of this year’s budget submission, public hospitals have sought $200 million in dedicated funding to set up the health service networks and $10 million in ongoing operational funding for each network.
Hospitals also want $30 million over three years to tackle red tape and hire dedicated compliance specialists, and $50 million to help regional and rural health services adopt electronic medical records.
Victorian Healthcare Association chief executive Leigh Clarke said the dedicated health network funding would be crucial to the success of the carve-ups first revealed last year and finalised in early January.
“The ability for [different hospitals in the same grouping] to deliver on the promise of patient flow and greater care closer to home will be about how well they can work together. We don’t believe that can be achieved in a business-as-usual funding envelope.”
Health service networks by region
Barwon
Barwon Health, Colac Area Health, Great Ocean Road Health, Hesse Rural Health Service
Bayside
Alfred Health, Bass Coast Health, Calvary Health Care Bethlehem, Gippsland Southern Health Service, Kooweerup Regional Health Service and Peninsula Health
East Metro and Murrindindi
Alexandra District Health, Eastern Health, St Vincent’s Health, Yea and District Memorial Hospital
Gippsland
Bairnsdale Regional Health Service, Central Gippsland Health Service, Latrobe Regional Hospital, Omeo District Health, Orbost Regional Health, South Gippsland Hospital, West Gippsland Healthcare Group, Yarram & District Health Service
Grampians
Beaufort & Skipton Health Service, Central Highlands Rural Health, East Grampians Health Service, East Wimmera Health Service, Grampians Health, Maryborough District Health Service, Rural Northwest Health, West Wimmera Health Service
Hume
Albury Wodonga Health, Alpine Health, Beechworth Health Service, Benalla Health, Corryong Health, Goulburn Valley Health, Kyabram District Health Service, Mansfield District Hospital, NCN Health, Northeast Health Wangaratta, Tallangatta Health Service, Yarrawonga Health
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, Mallee Track Health and Community Service, Mildura Base Public Hospital, Robinvale District Health Services, Rochester & Elmore District Health Service, Swan Hill District Health
North Metro and Mitchell
Austin Health, Mercy Hospital for Women, Northern Health, and Seymour Health
Parkville
Dental Health Services Victoria, Parkville Youth Mental Health and Wellness Service, Peter MacCallum Cancer Centre, Royal Children’s Hospital, Royal Melbourne Hospital, Royal Victorian Eye and Ear Hospital, Royal Women’s Hospital
South Metro
Monash Health
South West
Casterton Memorial Hospital, 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
West Metro
Werribee Mercy Hospital and Western Health
Clarke said cuts to back-of-house funding for health services during last year’s budget cycle had increased pressure on the remaining workforce. She said that in some instances clinical staff were picking up non-clinical work, decreasing the time spent on patient care.
“The compliance burden has been building over time,” she said. “What we’ve got is a growing layering of Commonwealth and state requirements, and it hasn’t struck the right balance between the red tape and high-quality care.”
Hospitals will probably face an uphill battle to secure additional funding. Earlier this week, the treasurer revealed that up to 3000 Victorian public servants – or 6 per cent of the workforce – could lose their jobs following a sector review aimed at saving billions of dollars. Frontline services will be ringfenced, but Symes conceded there were sometimes grey areas in determining what exactly was a frontline role and what was a back-of-house role.
On Thursday, Health Minister Mary-Anne Thomas confirmed her portfolio was not exempt from the cost savings, and said the expectation was for the Health Department workforce to return to pre-pandemic levels.
“Now is the time to do that,” Thomas said, adding that the efficiencies would not prevent the implementation of the health services plan. The 12 networks – the centrepiece of that plan – will operate from July 1.
Last week, when she announced standardised protocols for major emergency departments to tackle ambulance ramping, Thomas insisted that hospitals did not need more money to implement the new standards.
“They’ve got the resources that they need,” the health minister said at the time.
Clarke was coy on what would happen if hospitals did not receive the desired levels of network funding, or assistance with compliance issues and digital records. However, the sector was successful in lobbying for top-up funding last year after a difficult budget process.
“The sector was really clear last year,” she said. “I would reflect that the sector was listened to, and that was really pleasing for us. The health services are the ones delivering the care – they’re the ones closest to the impacts of policy decisions.”
An Allan government spokesperson said Labor would always give hospitals what they needed to care for Victorians.
“Investment in our hospitals has increased in each and every budget we have delivered,” the spokesperson said. “Unlike the Liberals, we will never cut frontline services.”
In August last year, the government said it would establish geographic hospital groupings after ruling out forced mergers of the state’s independently governed public health services.
Each grouping will feature at least one lead hospital that will support a catchment of smaller hospitals in areas such as major surgery. The government insists its plan will improve patient flow and quality of care.
But as revealed by this masthead in December, the Department of Health has also floated with hospital bosses the possibility of contentious cost-cutting initiatives, such as merging radiology services.
The state government also dropped its plan to end future hospital bailouts at the time the networks were first unveiled and instead revealed that health services would receive a $1.5 billion top-up. This prompted former treasurer Tim Pallas to warn that funding could not keep flowing like it had.
An Age analysis of more than 60 recent hospital annual reports found a growing number of health services went backwards financially during the 2023-24 financial year. Victoria’s net debt is expected to peak at $187.8 billion by mid-2028.
A Department of Health spokesperson confirmed that, as of this month, five health services were still negotiating their statement of priorities from last financial year. The spokesperson refused to name the five health services.
The opposition has seized on the revelations, with Coalition health spokeswoman Georgie Crozier describing the news as further proof that the state’s health system continues to be mired in “ongoing chaos and confusion”.
“How can the community have any confidence when the government and health services can’t agree to this year’s financial targets?” she said.
“Labor can’t manage money, can’t manage health, and it is Victorians who are paying the price.”
An Allan government spokesperson insisted the negotiations would have no impact on the upcoming budget process.
The Victorian budget is due to be handed down on May 20.
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