The peak body representing Victoria’s public health services has warned that left unchecked, health services will struggle to absorb any further rise in the health industry rate of WorkCover premiums.
The Victorian Healthcare Association (VHA) is concerned that Victoria’s public hospitals and community health services could face another increase in premiums in the new year until meaningful reform can be achieved.
‘Just as households are feeling the crunch of inflation outpacing wage growth, health services are not being funded in line with the true cost of delivering services,’ VHA CEO Leigh Clarke said.
‘Health services are not immune to the cost-of-living challenge. Overall funding for Victoria’s healthcare services needs to match inflation to meet rising demand and deliver quality care.’
Since 1 July 2023, Victorian businesses have paid 40 per cent more in WorkCover premiums compared to the previous year. This equates to an average of 1.8 per cent of remuneration, exceeding the premiums in both New South Wales (an average of 1.48 per cent) and Queensland (1.23 per cent).
While Ms Clarke recognised the financial challenges facing the WorkCover scheme, she urged the Victorian Government to consider the significant impacts of premium rises on Victoria’s health services. For one health service, the WorkCover premium has almost doubled from $1.4 million to $2.72 million over the past 12 months.
Health services are facing significant pressures as they were recently asked by the Victorian Government to find back-of-house efficiencies.
‘Requiring health services to pay even higher premiums while at the same time asking them to do more with less is only going to add fuel to the fire,’ Ms Clarke said.
The VHA welcomes a discussion on system-wide reform to address the sustainability and financial viability of the WorkCover scheme. However, Ms Clarke said that without immediate action, Victoria’s health services may have to bear the unsustainable cost of another rise in premiums.
Increased WorkCover premiums are one of many factors – outside of the service’s control – contributing to a structural deficit in hospital budgets. This comes after many years of funding not keeping up with the true cost of delivering services.
‘Without addressing the structural deficit over the long term, we will only see the gap between health funding and the true cost of delivering services continue to widen.’
‘The VHA is calling on the Victorian Government to safeguard the health sector from any further increase in WorkCover premiums. A well-resourced sector is better placed to deliver the best health and wellbeing benefits for all Victorians.’
The increase in WorkCover premiums is having a disproportionate impact on smaller health services – notably registered community health services who are operating on lean budgets. A VHA survey of registered community health services shows the sector paid an average of $140,000 more than the previous year.
Claims history is a large incentive to reduce premiums, however, this involves investment in people, processes and a safe culture.
Health services are continuing to take on these and a variety of operational costs, including adequate insurances for public liability, professional indemnity and workforce health and wellbeing. Left unchecked, health services will continue to struggle to absorb these and various other increases in operational costs.
While it could be suggested that the best way to keep premiums down is by reducing the number of claims, current incentives are not rewarding good performance.
Hospitals have been working hard to implement systems and strategies so that their staff who do suffer an injury are quickly returned to meaningful and appropriate employment following an injury.
Where a health service’s claims performance is favourable in comparison to the industry average, health services can benefit from WorkCover premium discounts. However, these discounts may be minimal when the 2023-24 premium increase is taken in account.
Additionally, some members who operate under multiple WorkCover Industry Classifications are paying up to 45 per cent more as a result of amendments to the annual premium capping arrangement.
Registered community health services who previously were capped at 30 per cent for their maximum year-on-year premium increase will now pay up to 75 per cent more.
For the registered community health sector, increases in the Workcover scheme and capping changes are outweighing the discounts from good performance.
No single factor is responsible for growing the gap between revenue and the true cost of delivering healthcare. However, rising WorkCover premiums are a contributing factor.
Hospitals have been left with a structural deficit following many years of funding not keeping up with the costs of delivering services.
Like governments, Victorian public health services also carry structural deficits on their balance sheet.
In addition to the demographic trends that impact on health expenditure at the local level, health services also have in-built financial losses caused by factors outside the control of the health service leadership, or the Board.
Media can contact the VHA's Public Affairs Advisor, Toli Papadopoulos, on Toli.Papadopoulos@vha.org.au or 0408 851 302, or the General Manager Communications and Engagement, Hazel Penfold, on hazel.penfold@vha.org.au or 0451 655 443.