The Victorian Healthcare Association (VHA) has submitted a plan to protect the health and wellbeing of Victoria’s health sector ahead of the May budget, with seven tangible actions.
Amid a tight fiscal environment, the VHA’s 2024-25 state budget submission urges the Victorian Government to prioritise the health and wellbeing of the state over the health of the economy. With cash reserves at reported lows, Victoria’s public healthcare services can only spend their available revenue – which is limited following the COVID-19 pandemic.
VHA CEO Leigh Clarke said that this year’s State Budget is already shaping up to be incredibly challenging for Victoria’s health services, with multiple challenges outside of the services’ control.
‘The cost of living continues to have very significant impacts on the ability of Victoria’s public health services to run their operations sustainably and deliver essential healthcare in a sustainable way. Health services are not being funded in line with the true cost of delivering services, which is placing a significant strain on frontline services and non-clinical staff and services,’ Ms Clarke said.
Ms Clarke said that health services are grappling with a range of escalating costs, including WorkCover – which have increased by 40% in a single year. This is placing a strain on the ability to support critical areas like staff health and wellbeing. If action is not taken to address these budget deficit challenges, the VHA is concerned that there will be staffing cuts and further impacts to services.
‘Without intervention from the Victorian Government, health services could be forced to take further measures to reduce staffing, increasing the risk of staff burnout, longer waiting lists for some services and a reduction in affordable care, especially for vulnerable communities who are reliant on public health services,’ she said.
She said that key to the VHA’s submission is also ensuring that Victorians living regionally have access to care, close to home – which mitigates future and more costly impacts on our healthcare system down the track.
‘Victorians should not have to travel hundreds of kilometres to distant suburbs to get the care they need. There is a pressing need to address the growing inequities in our healthcare system,’ Ms Clarke said.
The VHA’s 2024-25 budget submission calls on the Victorian Government to fund the true cost of delivering services to the community and reduce the impact of ‘thin markets’ on healthcare with seven tangible actions:
fund new costs associated with WorkCover to support our health sector
increase support to improve the health and wellbeing of Victoria’s health workforce
align health service budgets to anticipated wage increases
fund regional disaster recovery to support communities vulnerable to our changing climate
invest in a staged roll-out of Electronic Medical Records towards a more connected health system
enable a sustainably funded public residential aged care sector
invest in the CP@ model to bolster primary and preventative care in regional Victoria.
‘A solution to these underlying structural problems requires multiple policy interventions and will not be solved overnight. While reform is needed over the long-term, immediate action on these priority areas is vital to ensuring that our health system continues to deliver the care that Victorians expect and deserve,’ Ms Clarke said.
Read the VHA’s 2024-25 budget submission: Protecting the wellbeing of Victoria’s public healthcare services.
Inflation rose sharply during the last financial year, both domestically and globally, and continues to impact on the cost of living for consumers and for governments. The implementation of the COVID Debt Repayment Plan in last year’s State Budget sent a strong signal about the Victorian Government’s commitment to restore the balance sheet over the medium term.
There are some pressures the Victorian Government may not have any control over in the short term, including the need to balance the state’s Budget in a tight fiscal environment and the changing state of Commonwealth health reform. The Commonwealth Government’s response to the mid-term review of the National Health Reform Agreement has yet to be announced, although National Cabinet has agreed to revise the current contribution the Commonwealth makes towards the cost of hospital care to 45% over a 10-year period. The Commonwealth has embarked on reforms to Medicare through the Strengthening Medicare Taskforce, which could change the way states and territories contribute their fair share into the future.
Despite these challenges and uncertainties, the VHA believes that the Victorian Government cannot afford to prioritise the health of the economy ahead of the health and wellbeing of the state.
Victorian households are needing to manage their budgets with the rising cost of living, with wage growth still not keeping up with inflation. Public healthcare services too must consider the cost of delivering services within tightening budgets. With cash reserves at reported lows following the COVID-19 pandemic, health services can only spend their available revenue.
There are multiple challenges outside of the control of Victoria’s health services that are 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.
No single factor is responsible for growing the gap between revenue and the true cost of delivering healthcare. 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.
The VHA has released a fact sheet which explains what a structural deficit is, what it means for our health services and several policy issues that are contributing to the structural deficit based on feedback from Victoria’s public healthcare services.
For further information contact
Toli Papadopoulos, Public Affairs Advisor
0408 851 302
Visit our website: www.vha.org.au