‘Turn the lights off’: Hospital staff offered cost-cutting tips in budget crackdown

Staff at three major Melbourne hospitals have been told that even simple things – such as turning the lights off when they leave a room – can save money as Alfred Health reviews costs in a desperate bid to cut spending.

Chief executive Andrew Way said in an email to staff that the model budget Alfred Health had received from the Department of Health was “significantly less” than it had planned and there would be “no exemptions” to what it considered when determining how to bridge the budget gap.

Alfred Health manages the Caulfield hospital.Credit: Justin McManus

He urged staff to exercise financial discipline and only recruit staff to critical roles, tightly control rosters to minimise overtime, review supply contracts and reduce transport costs.

“Even simple things like turning the lights off when we leave a room will have a financial impact, and that one is good for the planet too,” Way wrote in the email seen by The Age.

Alfred Health, which manages The Alfred, Caulfield and Sandringham hospitals, a large network of community programs and 16 statewide services, provides the most comprehensive range of healthcare services in Victoria.

“We will have to stop things we have been able to do and there will be less of us to do it,” Way wrote. “These are not easy decisions to make.”

Way is the latest hospital chief to warn of the impact of their budget being squeezed. Health Minister Mary-Anne Thomas has said Victorian hospitals must get rid of “waste and duplication”.

The Age revealed on Wednesday that Northern Health and Western Health, which each manage several hospitals and health centres, and employ 8000 and 11,000 staff respectively, had imposed immediate hiring freezes in response to the Allan government’s demands for huge savings.

Victoria’s hospital budgets are being squeezed as the state grapples with spiralling debt and cuts to spending. The most recent state budget predicted that by 2028, taxpayers will be paying more than $25 million a day in interest repayments alone.

Thomas was asked four times on Thursday whether hospitals would have to wind back services as a result of her government’s demand for savings.

She declined to rule out bed closures or elective surgery cancellations, but did insist she had not asked hospitals to slash patient care to rein in spending.

“There’s a lot of fearmongering and politicking going on at the moment,” Thomas told ABC radio.

“Right now, we are asking our health services to look at their budgets, to negotiate their upcoming budgets with my department, and to look at where they can streamline that spending.”

Thomas said the negotiations with health services were designed to create a sustainable health system. “The message is very clear: it’s time to get rid of waste and duplication,” she said.

Health Minister Mary-Anne Thomas.Credit: Justin McManus

“It’s time to take a hard look at the number of executives, the number of communications and marketing people, [and] whether or not it’s really necessary to travel overseas for professional development.”

In the email to Alfred Health staff – obtained by 3AW radio presenter Neil Mitchell – Way said the health service had already stopped its additional surgery capacity.

He said it was looking at all spending, including management costs and back office and corporate activities.

“We are doing everything in our power to minimise impact on patients, the education we provide to you and our future workforce and of course the research that will find cures for the future,” Way wrote. “But there are no exemptions.”

An Alfred Health spokesperson said it was continuing to work with the Department of Health to finalise the 2024-25 budget for the health service.

“Recognising the difficult budgetary environment, we are reviewing all aspects of our activities including corporate and back-of-house services,” they said on Thursday.

“Our priority is to minimise impact on patients and support our dedicated staff.”

One Labor minister, speaking on the condition of anonymity to detail confidential discussions, said the squeeze on hospital budgets was not a major cause of concern around the cabinet table.

“We will always win on health,” the minister said. “Hospitals should be financially responsible … not just spend more money than they are allocated.”

Opposition Leader John Pesutto said the elective surgery reductions showed the seriousness of Victoria’s financial woes. “Lives will be put at risk because of the severity and savageness of these budget cuts,” he said.

On Thursday, Premier Jacinta Allan backed Thomas, insisting that no final decisions had been made regarding public hospital budgets for the new financial year.

“So any speculation is just that – speculation – and fearmongering,” Allan said. “Particularly by Liberal politicians who only know one line when it comes to the hospital system, and that is to cut and close.”

Another Labor source, speaking on the condition of anonymity to discuss internal matters, said it was better to have a fight with hospital chief executives now than on the eve of the next state election. Victorians are due to go to the polls in late 2026.

In May, The Age revealed that support for Labor had slumped to its lowest point in years under Allan’s leadership amid ballooning debt, infrastructure delays and broken promises.

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