Bed bloc: how the states are uniting to demand hospital funds
Premiers, ministers and treasurers are aligned in pointing to a critical shortfall in health funding. And they are all blaming the commonwealth’s failings in aged care. So is it a co-ordinated campaign?
NSW Health Minister Ryan Park had only just stepped into the job two years ago when he was first briefed on the growing problem of aged-care bed block within the state’s hospitals.
A growing number of hospital beds across the state were being occupied by elderly patients who no longer needed hospital care, but who had nowhere else suitable to go.
While the commonwealth had responsibility for aged care, it was the state-funded hospital system that was paying the price for the Albanese government’s difficulties in sufficiently expanding the aged-care sector.
As those issues continued to build in NSW, Mr Park soon discovered he was not alone. Over the course of multiple conversations with South Australian counterpart Chris Picton, he realised the factors at play in NSW were also being felt in SA. The seeds were being sown for a co-ordinated campaign by the states and territories that is now heaping pressure on the Albanese government to act.
“Chris and I have probably been trying to lead on this as a large state and a medium-sized state,” Mr Park told The Australian.
“We’ve been trying to look at our respective systems and work together to try and push the commonwealth to get this situation resolved.
“I’m not saying the commonwealth has done nothing, but what is happening is not putting a dent into these numbers. And that’s the big concern for me, it’s a big concern for Chris, and it’s a big concern for our state and territory counterparts because they’re seeing similar challenges in their jurisdictions.”
Labor and Liberal, state and territory governments across Australia are all grappling with the same problem and are on a unity ticket calling for the Albanese government to do more.
It is an issue that is not just on the radar of health ministers. Premiers across the country recognised the political risks posed by a struggling public hospital system, while treasurers were increasingly concerned about what was going on as they were inundated with requests for ever more funding.
States and territories historically caught up in squabbling over funding and interstate rivalries have put all that aside in a display of unity rarely seen since federation.
The result of that has been a trio of co-ordinated campaigns from premiers, treasurers and health ministers that have led to a procession of extraordinary pronouncements in recent weeks.
Armed with data
On the eve of the latest meeting of health ministers in Perth last month, the state and territory ministers released a damning analysis showing about 3500 hospital beds around the country were occupied by patients who were otherwise healthy enough to be discharged but did not have suitable accommodation available. Mr Picton described it as a “national tragedy” that was failing older Australians and costing taxpayers about $1bn a year.
Late last month, the Council for the Australian Federation – comprising the six premiers and two territory chief ministers – issued a statement accusing the Albanese government of falling “tens of billions of dollars short” of delivering the health funding they had been promised.
The commonwealth had promised in 2023 to fund 42.5 per cent of public hospital costs by 2030. Under the arrangement now proposed by the commonwealth, the premiers said, that actual share would be closer to 35 per cent.
Then, earlier this month, the Board of Treasurers – armed with the findings of a report from veteran health economist and former commonwealth Health Department secretary Stephen Duckett – issued a communique warning that commonwealth health funding shortfalls would impact the ability of the states and territories to provide the hospital services Australians expected.
Dr Duckett had barely returned from his Christmas-New Year break when he was approached by the state treasurers seeking his perspectives on the situation. By May, they had commissioned him and Create Health Advisory to look into the underlying drivers of the crisis.
Unlike many other commissions he has witnessed over the course of his long career, Dr Duckett told The Australian, this was not an example of governments looking for consultants to provide them with the answer they wanted. He said the treasurers gave him a clean slate and genuinely wanted an objective and unfiltered view on what was driving the rising cost pressures in health.
“The state heads of Treasury approached me back in January to look at this issue collectively,” he said.
“They had an open mind and they were really seriously interested in what was the problem, how did this all happen … We had no pressure from the states to come up with the ‘right’ answer, because it was in their interest to have something which would stand up to scrutiny.”
Bed block
In Dr Duckett’s report, number one on the list of factors that were “legitimate, unavoidable, almost certain to persist over the medium term and beyond the control of states” was the growing cohort of stranded long-stay patients in public hospitals awaiting commonwealth-funded aged care and disability accommodation. The study found that up to 10 per cent of public hospital beds were occupied by patients awaiting discharge.
Dr Duckett said that while there was still inefficiency in the public hospital system that the states needed to address, it was apparent that the commonwealth had “dropped the ball” on aged care some time ago.
He believes the gap between the commonwealth and states grew when the Independent Health and Aged Care Pricing Authority, which provides advice to the federal government on funding for public hospitals and residential aged-care services, pushed up prices considerably. That, he believes, frightened the commonwealth and stoked a sense inside the government that states weren’t managing their health systems properly.
The current situation, he warns, delivers poor outcomes for both patients and taxpayers.
“It’s way more expensive to keep a person in a public hospital than it is to keep them in a residential aged-care service,” Dr Duckett said.
“It’s bad for the taxpayers to have them in public hospitals, and it’s bad for patients because they’re not in a homelike environment.
“It’s one of these few issues where the solution is not necessarily, in the long term, going to cost a lot of extra money. It might cost a bit of money in the short term, but in the longer term we’ll be reducing the pressure on growth in public hospital spending.”
While state health ministers will talk at length publicly about the problems facing patients as a result of the aged-care bed block, in the background is another headache that is not spoken about as much, but which would be of just as much concern to those ministers and treasurers.
Voter power
It is that the state governments are in the firing line of voters when issues in hospitals persist. The states, from premiers down, are acutely aware that the public will punish them if they feel their hospitals are not functioning properly. They don’t want a scenario where they lose power because the commonwealth didn’t put up the money it had promised.
“It’s never the commonwealth who has to face an angry person who can’t get access to an ED (emergency department) bed or can’t get access to a bed or can’t get access to their surgery because there isn’t a bed,” Mr Park said.
“That’s always the responsibility of state health secretaries or state ministers or local health district CEs or local staff, who have to wear that when people are really frustrated on the frontline,” Mr Park said.
“A big frustration for me personally is that many of these things are outside my control, but they have a direct impact on the ability for patients in NSW to access care. That’s what we want the commonwealth to understand better.”
In NSW alone, according to Mr Park, about 1100 hospital beds are occupied by patients who no longer need to be there but who can’t access residential aged care or an appropriate NDIS package. That compares to about 700 such patients a year ago, and is the equivalent of two entire hospitals taken out of the state’s health system.
SA Premier Peter Malinauskas, meanwhile, came to power after a successful campaign focused on the state’s ambulance ramping crisis.
After ramping hit a record high of 5866 hours in August, Mr Malinauskas said he accepted that people would see his government’s failure to make headway on ramping as a broken promise.
“In terms of fixing the ramping crisis, of course we’d like better results,” he said.
“I’m not going to shy away from that. That would be unfair and not responsible.”
The continued climb in ramping hours, the Premier said, came despite major growth in the number of doctors, nurses, ambulance staff and hospital beds. The root problem, he said, was the ageing population.
As the SA election in March draws closer, Mr Malinauskas risks being on the receiving end of the same ramping-focused campaign that got him elected in the first place.
Similarly, in Western Australia, the hospital system has long appeared to be the biggest weakness of an otherwise dominant Labor government.
After his resounding election win in March, in an attempt to make headway in a hospital system that had long been struggling, WA Premier Roger Cook cleaved the health portfolio into four separate roles: health operations; health infrastructure; aged care, and; preventive health. It is still early days, but so far there is little progress to show for the split.
Barely a day goes by that Liberal leader Basil Zempilas doesn’t remind West Australians that Mr Cook in opposition described 1000 hours a month of ramping as a “crisis”. WA has recorded more than 7000 hours of ramping for each of the past three months.
Mediscare ire
The frustrations felt by the states about the commonwealth’s perceived shortcomings in aged care and the belief that they were the ones having to pay the price for the federal failures weren’t helped by Anthony Albanese’s successful Medicare-focused federal election campaign.
The daily sight of the Prime Minister pulling out his Medicare card and talking up Labor’s record on health did not match with the states’ experiences around aged care.
Mr Park says the extraordinary bipartisan unity between the states and territories on the issue shows the extent and seriousness of the problem across the country.
“This isn’t a political issue that we’re playing games with or having a barney across the other side of the political divide on. This is a real issue that’s impacting patients, that’s impacting staff, that’s impacting hospitals,” he said.
“I know the commonwealth don’t have responsibility for hospitals but the states and territories do, and when we’ve got one arm tied behind our back by having so many beds taken up that we can’t utilise because those people can’t get out of those beds and back into their community where they need to be cared for and need to treated, then that becomes a real problem.
“That’s been an issue that’s galvanised states’ and territories’ health ministers, because of the extent of the problem and because the problem seems to be only getting worse.”
Aged-care delays
For WA Aged Care Minister Simone McGurk, it was also a conversation with Mr Picton soon after she was appointed to the newly created portfolio that brought home the scale and reach of the bed block problem.
She recalls being startled to hear that hundreds of beds in South Australia were being occupied by elderly patients who were fit for discharge but did not have anywhere suitable to go.
“I was a bit shocked that had gone over 300 for South Australia, and then, sure enough, two months later in our winter surge we were in exactly the position,” Ms McGurk said.
The number of WA hospital beds occupied by those waiting on suitable accommodation peaked at 340. Not long ago, the state was averaging about 100 such patients.
“The pressure that we’re feeling in the hospitals is probably the biggest and most compelling indicator for the state government,” Ms McGurk said.
“What sits behind those numbers that we’ve talked about are older West Australians and their families who are already in some sort of crisis because of what’s led them to be admitted into hospital, and at the same time they’re having to deal with life-changing decisions and not knowing how on Earth they’re going to start navigating this system.
“We need to do better. Older West Australians, older Australians, deserve better, and the demographic wave that is coming at us is compelling us to give the sector better investment certainty on the pricing signals.”
Beyond the push for more commonwealth assistance, the states themselves are trying to find their own ways of alleviating the pressure.
Most states have started expanding their transition care services, offering more appropriate accommodation outside hospital for those older patients who no longer need to be in hospital but cannot access federally funded aged care.
South Australia has taken over dozens of rooms at Adelaide’s Pullman Hotel to accommodate those patients.
NSW is pumping money into expanding its geriatric outreach program aimed at ensuring elderly patients can where possible be treated at home or in aged care rather than hospital.
WA has similarly expanded its transition services, effectively buying residential aged-care beds where people who are in hospital can relocate while they consider next steps, and has introduced low-interest loans for people struggling to raise the refundable accommodation deposit needed to secure aged care. The state is also actively scouring to identify land and buildings that can be used to support the establishment of more aged-care facilities.
Ms McGurk said WA alone needed another 2800 aged-care beds by 2030 – the equivalent of 28-30 new facilities. Just nine were built across the whole country last year.
It is part of what Ms McGurk describes as a “demographic tsunami” closing in across the country as baby boomers continue to age.
Ms McGurk on Tuesday met federal Health Minister Mark Butler and Aged Care and Seniors Minister Sam Rae, as well as several aged-care providers, to discuss the federal government’s recently announced pricing review as well as ways to speed up the delivery of extra aged-care beds.
The pricing review is not due to deliver its report until mid-2026, but investment in new beds is needed now.
Ms McGurk also wants to see WA secure a share of aged-care funding more in line with its population share. Currently, she said, the state received about 7.7 per cent of home care packages and residential care funding – well short of the state’s 10.2 per cent share of the nation’s over-65s.
“We say that we’re not getting a population share and we’ve stressed that to both Minister Butler and Minister Rae,” she said.
Hospitals, NDIS funding
Mr Butler and the Albanese government, meanwhile, have restarted negotiations aimed at finalising that 2023 deal on hospital funding and NDIS reforms.
The most recent offer included an extra $20bn in commonwealth funding for public hospitals over the next five years, a $7bn increase from the previous December 2023 offer.
“The commonwealth remains committed to the December 2023 national cabinet deal, and we are committed to making a fair contribution under the hospital funding agreement to give Australians better access to health services they need, when they need them, and to reduce pressure on hospitals,” a federal government spokesperson said.
The federal government also pointed to the 12 per cent growth in its funding towards state and territory health systems over the past year, which has sent another $3.7bn to hospitals around the country.
Regardless of the effectiveness of the states’ campaign, Dr Duckett warns that resolving the crisis won’t happen overnight.
“There’s going to be a combination of solutions, including getting the pricing right so that private facilities can afford to take these sorts of patients,” he said.
“The first thing is for the commonwealth and the states to agree that it is a problem, and that we have strategies to address it. Not just more pilots and committees and all that sort of stuff, but actual pricing action so that we can actually address the problem.”
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