THE Shadow Minister for Health, Georgie Crozier, has hit out at the State Government, accusing it of finding “tens of billions of dollars for a new train line from Cheltenham to Box Hill” but not enough for Victoria’s hospitals.
Out of the 68 health service annual reports tabled in State Parliament in the past week, Ms Crosier says 52 have recorded deficits for the 2023-24 financial year. In net terms across the 68 health services, she says, there is a deficit of $1,013,082,205.
Locally, Bass Coast Health reported an operating deficit of $3.233 million on a budget of almost $170 million, Gippsland Southern Health Service an operating deficit of $1.933 million and South Gippsland Hospital, a surplus “net operating balance” of $94,229 to the end of June 30, 2024, as compared to a $160,022 deficit last year.
The commentary by Ms Crozier seems to be supported in part by Gippsland Southern Health Service (GSHS) in its annual report, noting that it didn’t receive a “financial sustainability grant” as had been the case the year before, although the Department of Health, it said, had waived any clawback of funding “for below target activity”.
From the Gippsland Southern annual report:
“Gippsland Southern Health Service recorded a $1.9M operating deficit for 2023/24 with staffing gap challenges requiring the extensive use of agency staff to cover gaps.
“The organisation experienced a 3.74% increase in income from operating activities compared to an increase in expenditure of 9.4% excluding depreciation, non-operating activities and joint operations expenditure.
“Unlike previous financial years, the achievement of a breakeven operating result was not possible without the receipt of a financial sustainability grant at the end of the financial year ($2.1M – 22/23). The Health Service is appreciative of the financial support from the State Department of Health in waiving funding recall for below target activity.”
What the government said
The government has denied it has failed to support hospitals.
“Health systems globally remain under significant pressure following the one-in-100-year pandemic – it’s why we provided record funding of more than $21 billion, and implemented a new, fairer funding model to reset hospital budgets to meet demand and deliver the frontline care Victorians need,” a State Government spokesperson told the Sentinel-Times.
“We'll always back our hardworking doctors, paramedics and nurses and midwives, and since coming to Government we've grown our public health workforce by 50 per cent.
“Only Labor invests in our health system. The only political party that cuts and closes hospitals is the Liberal Party.”
Ms Crozier provided a list of hospitals with the biggest deficits:
* Monash Health $321,278,000
* Northern Health $115,791,000
* Western Health $104,509,000
* Eastern Health $100,043,000
* Austin Health $71,915,000
* Peninsula Health $59,122,000
* Albury Wodonga Health $52,419,000
* Grampians Health $46,870,000
In addition, according to Ms Crozier, several health services have failed to maintain benchmark cash on hand holdings, with Peter MacCallum Cancer Centre having less than 12 hours cash in the bank across 2023-24.
“These significant losses occur as the Allan Labor Government starved health services of critical funding through the 2022-23 financial year and as the Department of Health paid fewer than one in two invoices below $3 million within the required 10-day period since 2021,” Ms Crozier said.
“These reports reveal the extent of Labor’s one-billion-dollar hospital cash crisis.
“The Allan Labor Government can find tens of billions of dollars for a new train line from Cheltenham to Box Hill but cannot find the money to pay doctors and nurses on time – their priorities are all wrong.
“Labor’s financial mismanagement and record debt is starving funding from Victoria’s hospitals and means poorer health outcomes for Victorian patients.”
Bass Coast Health
Total revenue $164.925 million, total expenditure $169.754 million.
“Bass Coast Health’s financial performance throughout the 2023–24 year continued to be adversely impacted by the expanding and higher cost operational environment. This continued to be driven by higher staffing costs due to a need to use short term agency staff to fill roster gaps.
“Consumable costs also continued to increase, a result of the provision of additional services throughout the expanded programs and ongoing inflationary pressures.
“Additional operational funding from the Department of Health, of $19.7m, was received to support the increased costs and support cash flow sustainability. Despite this, Bass Coast Health reported an operating deficit of $3.233m with the reported net result from transactions for the year being a deficit of $4.829m.
“The operating deficit noted above includes capital purpose income of $8.8m and depreciation charges of $10.5m.”
Gippsland Southern Health Service
Total revenue $55.089 million, total expenditure $60.496 million
“The budgetary objectives for 2023/24 were unable to be achieved without the assistance of a funding stability grant from the Department of Health that has enabled a break-even operating result in previous years.
“The organisation is mindful that without the recall waiver, the result would have been a deficit of approximately $2.1m. The continued reliance on agency staff to fill roster gaps has been the main driver of this result.
The Victorian Minister for Health Mary-Anne Thomas MP has been asked for comment.
“The organisation has made enormous strides in increasing activity levels and with the uplifted unit price of the National Weighted Activity Unit (NWAU), is hopeful of being able to achieve similar activity levels in 2024/25 while reducing the reliance on agency staff, in order to achieve a break-even result.”
South Gippsland Hospital (Foster)
Total revenue: $16,232,758, total expenditure $16,138,529.
“In 2023-2024, SGH achieved the targets established under the Statement of Priorities. The hospital recorded a surplus of $157,558 after capital items.
“The operating result is a deficit of $228,622 before capital purpose income and depreciation. Capital purpose income of $997,413, was received during the financial year with depreciation write-offs totalling $674,562.”
In State Parliament
In State Parliament on Thursday, November 14, Ms Crozier doubled down on her criticism of the Premier Jacinta Allan and her government.
She said Ms Allan had deliberately “misled Victorians over the dire state of our health services’ finances”.
When asked about the Peter MacCallum Cancer Centre having just half a day’s cash on hand, the Premier described the question as “wrong”.
“It is the Premier who is wrong,” said Ms Crozier.
“Under Premier Jacinta Allan, Victoria’s health services have recorded a more than $1 billion deficit, with 31 health services – including the Peter MacCallum Cancer Centre - having less than 14 days’ cash on hand across 2023-24.
“Instead of misleading Victorians, the Premier must take responsibility for the cash crisis engulfing Victoria’s health system and stop starving Victorian hospitals of desperately needed funding.”
Background
By way of background, a government provided the following details:
An operating deficit has no impact on a health service’s ability to deliver care and nearly all hospitals were able to finish the 2023/24 financial year with a break-even cash position.
Health services across Australia and the world have been dealing with rapid increases in the cost to deliver care – with costs having gone up on average 9.8 per cent every year, for the past 5 years.
In a single year – the cost of medicines rise 18 per cent, the cost of things like needles and masks rise 14 per cent and the cost of utilities and insurance increase 12 per cent.
Last financial year marked the first year post pandemic and while some health services finished the financial year in an operating deficit, this year’s record funding of more than $21 billion, along with a new, fairer funding model, has enabled us to reset hospital budgets while enabling them to meet demand and deliver the frontline services Victorians need.
Re-setting how we fund health services and injecting record funding into the system means that we are confident this year health services will return to break-even budget positions.
For 2024/25, we are significantly reforming the way we fund our health services, with an uplift in the price we pay hospitals for the frontline care they deliver and transitioning from outdated base funding into more activity-based funding arrangements.
This means services are now paid a fairer price for the activity they deliver – rather that funding being distributed inadequately across the system – providing greater financial certainty and stability to the sector.
In August, the Allan Labor Government announced it would establish Hospitals Victoria – a new agency in the Department of Health, with a CEO who reports directly to the Health Ministers – that is fully focused on supporting hospitals to deliver frontline care.
Hospitals have different payroll and IT systems. It’s why, as part of its remit, Hospitals Victoria will work with health services to identify back-office functions that can be consolidated and streamlined.
The Government will continue its existing work to improve digital systems and technology, including how virtual care can be better used, in line with the report’s recommendations.
The new agency will also support the operation of our hospitals and their finances – ensuring that funding and health services are focused on caring for Victorians.
With better long-term financial sustainability comes more reliable services, a more stable workforce and the support Victorians need to stay happy, healthy and well – no matter where they live.
