By Annika Smethurst and Broede Carmody
Victoria’s cash-strapped hospitals have been hit with soaring workers’ compensation premiums, with some health services’ bills doubling in a year.
An analysis of more than 70 annual reports shows that WorkCover costs in the last financial year reached more than $250 million – a 51 per cent increase on the previous year’s total of $166 million.
The new Footscray hospital. Operator Western Health has recorded a 79 per cent surge in WorkCover premiums.Credit: Joe Armao
It comes as Victorian hospitals – including several of the largest Melbourne facilities – have been going backwards financially, running operating losses and in some cases having less than a day’s money on hand to pay the bills.
Western Health – which manages Sunshine, Footscray, Williamstown and Bacchus Marsh hospitals, and five community health centres – was hit with a 79 per cent WorkCover premium increase to $17 million in 2023-24, up from $9.52 million in the 2022-23 financial year.
Peter MacCallum Cancer Centre’s premiums doubled to $2 million year-on-year, while the Royal Women’s Hospital saw its annual premium soar by 117 per cent, forcing it to pay $3.1 million.
Many of the state’s small rural and regional hospitals were also slapped with large increases. WorkCover bills at Portland, Heywood, Inglewood, Casterton and Bendigo hospitals were more than double the previous financial year.
Bendigo Health spent $7.84 million on WorkCover premiums last financial year, up 122 per cent from $3.5 million the year prior. Portland District Health, in the state’s south-west, went from spending just $354,000 on premiums to $750,000.
The increases came as the government scrambled to fix the “fundamentally broken” scheme that compensates the state’s workers and pull it back to a sustainable financial footing. In December, The Age reported that WorkCover premium increases were putting pressure on the state’s health service budgets.
Victorian Allied Health Professionals Association secretary Craig McGregor said the dramatic rise in premium costs effectively shifted the financial burden from the government onto individual health services.
“The government and health services need to urgently address the systemic issues – such as chronic understaffing, unsustainable workloads, and unsafe workplaces – that are driving up WorkCover claims in the first place,” McGregor said.
“Without meaningful investment in the allied health workforce, hospitals will continue to buckle under the strain, and patient care will suffer as a result.”
Coalition WorkCover spokeswoman Cindy McLeish said the state’s hospitals had already faced enormous cost pressures, all of which threatened to have a worsening impact on patient care.
“The Allan Labor government’s mismanagement of WorkCover means Victorian health services pay higher premiums and less towards the essential services they should be providing,” McLeish said.
“Hospital staff have been feeling the impact of tightening budgets and worrying about the future of the service and their jobs, and WorkCover premium increases just add to that stress.”
An Allan government spokesperson said premiums needed to rise to cover the cost of the workers’ compensation scheme.
“We’ll always back our hardworking doctors, paramedics, nurses and midwives, and since coming to government we’ve grown our public health workforce by 50 per cent,” the spokesperson said.
“Only Labor invests in our health system. The only political party that cuts and closes hospitals is the Liberal Party.”
In March, Labor struck a deal with the Coalition to overhaul the workers’ compensation scheme after taxpayers were forced to chip in $1.3 billion to meet the soaring cost of compensation claims. As part of the deal, the government agreed to freeze premiums at the current average of 1.8 per cent of remuneration for the 2024-25 financial year.
The Age last week scrutinised more than 60 hospital annual reports and found a growing number of Victorian hospitals went backwards financially across the 2023-24 financial year.
Most health services had a target of 14 days of available cash, but 36 failed to hit that benchmark. In some cases, they had less than a day’s cash on hand to pay bills.
Cashflow shortages can force health services to pull funding from other areas – including not filling vacant positions, cutting spending on preventative health and stripping funding from training – to ensure they can provide essential support.
The analysis also revealed that 44 of the state’s health services had expenses outstripping their revenue, racking up combined operating deficits of $962 million. Total operating deficits the previous year totalled just $460,000 as just eight facilities failed to break even.
While the May state budget tipped a record $13 billion into public health, hospitals were also told to shore up future budgets, with no top-up spending for the first time since the pandemic.
At the time, health insiders warned the belt-tightening could lead to bed closures, surgery delays and even the end of some breast screening and kidney dialysis services. One health service even encouraged employees to turn off the lights when they exited a room to save money.
The state government dropped its plan to end future hospital bailouts in August after sustained backlash, and instead announced an extra $1.5 billion in health funding.
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