Healthcare report calls for better funding arrangements to allow services to plan for rising demand

Under-pressure Victorian public health services will struggle to deal with increasing rates of chronic disease, an ageing population, and changing community demographics, a report warns.

Health services across Victoria face critical challenges around workforce, short-term funding arrangements and service co-ordination, a report has found. Picture: Luis Enrique Ascui

Under-pressure public healthcare services have delayed important upgrades, while a number likely have “limited flexibility” to respond to spikes in demand, a report warns.

The Victorian Healthcare Association’s State of the Health Sector report said services had shown “remarkable resilience” but faced critical challenges around workforce, short-term funding arrangements and service co-ordination across the public system.

Some services have ‘limited flexibility’ to respond to spikes in demand. Picture: Nadir Kinani

It found workforce shortages were a “sustained challenge” and growth was still unlikely to “meet the rising demand” amid “increasing rates of chronic disease, an ageing population, and changing community demographics”.

It called for sustainable, long-term federal and state funding arrangements to allow services to better plan for the jump in demand.

The report included a survey, from early 2025, of more than 60 publicly funded healthcare services – from hospitals and aged care to community health and bush nursing centres.

More than 85 per cent of respondents said workforce was “a significant concern”, while more than 90 per cent said funding was a “major challenge” for them.

There are calls for sustainable, long-term federal and state funding arrangements to allow services to better plan for the jump in demand. Picture: iStock

Less than a third of metropolitan and regional services felt they could “comfortably offer all the services my community needs”; 80 per cent said they were at “capacity”.

The report said while this showed “efficient” use of resources it also suggested “limited flexibility to accommodate sudden increases in demand”.

“This has been a noted challenge in times of elevated demand such as disease outbreaks and/or disaster response,” it said.

Almost two thirds of respondents said meeting demand had “become more difficult” in the past year, though virtual care initiatives, like the virtual emergency department, had helped to manage capacity.

More than 80 per cent said funding models were “inefficient”, while 62 per cent “stated they have not upgraded equipment or infrastructure as a response to funding ­challenges”.

The report noted the Victorian budget – released after the survey – had offered more certainty to hospitals.

But VHA’s Leigh Clarke said there was a “range of other services that operate on short-term, year-on-year funding” and services under Commonwealth areas, such as aged care, had budgetary challenges.

“There’s an opportunity to improve the sustainability of funding of those services to allow them to plan for the long term, allow them to build workforce retention strategies,” she said.

She said there needed to be more work to improve the links between community services, their prevention and promotion work, and hospitals.

About a third of publicly-funded healthcare organisations responded to the survey.

Ms Clarke said the sample was “largely representative” of the sector.

A Victorian government spokesman said this year’s budget invested more than $31bn into the state’s health care system.

“We’re investing in our world-class health system and backing our frontline health workers so Victorians get the care they need, when and where they need it,” he said.

A federal government spokeswoman said they were providing “record funding for Victorian public hospitals, an increase of $402m or 12 per cent from 2024-25”.

Originally published as Healthcare report calls for better funding arrangements to allow services to plan for rising demand