The Victorian government will ignore a central recommendation of an expert panel to forcibly merge hospital services – which was expected to improve patient care and reduce costs – but has vowed to find savings in other ways.
The premier, Jacinta Allan, and health minister, Mary-Anne Thomas, on Thursday released a long-awaited report on the Victoria’s public health system.
Among its 27 recommendations was a call to reduce the number of individual health services operating across the state, from 76 to 11.
The report, by an expert advisory committee led by former Labor MP and health executive Bob Cameron, said such a move would bring Victoria into line with every other state and reduce “duplication, inefficiency and competition between health services” for staff.
“Currently many administrative, compliance and clinical and non-clinical support functions are duplicated in each health service, resulting in inefficiencies that divert precious health resources away from patient care,” the report said.
But Allan said the government would not adopt the recommendation.
“We will not be forcing hospitals to amalgamate because I’m not convinced that that’s in the best interest of patient care,” she said.
“We’ve seen how under Jeff Kennett and the former Liberal government, they tried to go down that path. It didn’t have a focus on patient care, and I’m not prepared to do the same.”
She said it was possible for the government to adopt the remaining 26 recommendations without the need for amalgamations, via the creation of a new agency within the health department, Hospitals Victoria.
Allan said the agency, to be led by current Northern Health chief executive, Siva Sivarajah, would work with hospitals to move them all on to the same payroll and IT system, as well as an integrated electronic medical record system.
“We have too many different IT systems, too many different payroll systems, too much back-office bureaucracy,” she said.
“That is why we are establishing Hospitals Victoria as a dedicated agency to work with hospitals so they can remain firmly focused on frontline care, not back-office bureaucracy.”
Allan conceded some back-office jobs will be lost as a result of the changes but that there would be no impact to frontline services.
She said the “local health networks” recommended in the report will also be established, each with a formal relationship with a major tertiary, women’s and children’s hospital.
Charles Maskell-Knight, a former senior federal health department official and health policy analyst, said other states had introduced similar changes as early as 2010, as part of a funding deal with the federal government.
“Every state except Victoria either built on their existing regional structures or created new ones,” he said.
“The case for networking has been made on many grounds, not least the difficulty in ensuring good clinical governance for small standalone rural facilities, as well as the benefits of reduced duplication of back-of-house services.”
But Maskell-Knight doubted it would lead to significant savings “in the scheme of things”.
“I imagine if the 76 services could be consolidated into say a dozen networks, the annual savings after the dust had settled would likely be in the order of millions of dollars, rather than tens of millions,” he said.
An additional $1.5bn has also been provided to hospitals, who had earlier warned they would be forced to close beds, delay elective surgeries and sack staff if they were forced to rein in their budgets.
At the time, the government said it had provided a record $8.8bn in funding in the May budget, which would cover deficits recorded by more than half the state’s public hospitals. The hospitals were then urged to take measures to reduce deficits going forward.
Public backlash ensued, which has been attributed to Labor’s drop in primary vote share in recent polling.
Several Labor MPs have said concerns that the party could be seen as “losing” on the issue of health had prompted cabinet to agree to a “pared-back” response to the health services report and the allocation of additional funding, which will be included in the mid-year budget update.
The opposition leader, John Pesutto, described the move as a “humiliating backdown”.
“These funding cuts were never about efficiencies or better services, but mopping up the real-world consequence of a decade of financial mismanagement and record debt under Labor,” he said.
“What a dysfunctional circus this Allan Labor government is.”
Cameron’s report had recommended the 11 “local health networks” would be led by a single board and chief executive but would retain their independent branding.
A similar structure is in place in New South Wales and Queensland, where there are 16 and 18 local hospital networks, respectively.
