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Hospitals face funding ‘black hole’

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Almost a third of Emergency Department patients in need of urgent treatment are being forced to wait more than 30 minutes to be seen, while thousands of others face months-long delays for elective surgery as under-resourced public hospitals struggle to cope with increasing demand.

The AMA’s latest snapshot of the health of the nation’s public hospital system shows that improvements in performance have stalled following a sharp slowdown in Federal Government funding, underlining doctor concerns that patients are paying a high price for Budget austerity.

“By any measure, we have reached a crisis point in public hospital funding,” AMA President Professor Brian Owler said. “The states and territories are facing public hospital funding black hole from 2017 when growth in Federal funding slows to a trickle.”

The Federal Government will have slashed $454 million from hospital funding by 2017-18, and a downshift in the indexation of spending from mid-2018 will reduce its contribution by a further $57 billion by 2024-25.

Professor Owler said the consequences of Commonwealth cutbacks were already showing up in hospital performance, and the steep slowdown in funding growth in coming years will further exacerbate the situation.

“Public hospital funding is about to become the single biggest challenge facing State and Territory finances, and the dire consequences are already starting to show,” the AMA President said. “Without sufficient funding to increase capacity, public hospitals will never meet the targets set by governments, and patients will wait longer for treatment.”

The AMA’s Report Card, drawing on information from the Australian Institute of Health and Welfare, the Council of Australian Governments Reform Council and Treasury, shows the performance of public hospitals against several key indicators has plateaued and, by some measures, is declining.

In terms of hospital capacity, the long-term trend toward fewer beds per capita is continuing. The decline is even more marked when measured in terms of the number of beds for every 1000 people aged 65 years of older – a fast growing age group with the highest demand for hospital services.

In 1993 there were almost 30 beds for every 1000 older people, but by 2013-14 that had virtually halved to around 17 beds.

Alongside a relative decline in capacity, there are signs the hospitals are struggling under the pressure of growing demand.

Emergency departments, often seen as the coal face of hospital care, the proportion of urgent Category 3 patients seen within the clinically recommended 30 minutes fell back to 68 per cent in 2014-15 – a two percentage point decline from the previous year, and a result that ended four years of unbroken improvement.

The national goal that 80 per cent of all ED patients are seen within clinically recommended times appears increasingly unlikely, as does the COAG target that 90 per cent of all ED patients be admitted, referred or discharged within four hours. For the last two years, the ratio has been stuck at 73 per cent.

The outlook for patients needing elective surgery is similarly discouraging.

The AMA report found that although there was slight reduction in waiting times for elective surgery in 2014-15, patients still faced a median delay of 35 days, compared with 29 days a decade earlier.

It appears very unlikely the goal that by 2016 all elective surgery patients be treated within clinically recommended times will be achieved. Less than 80 per cent of Category 2 elective surgery patients were admitted within 90 days in 2014-15 – a figure that has barely budged in 12 years.

The Commonwealth argues it has had to wind back hospital spending because of unsustainable growth in the health budget.

But Professor Owler said the evidence showed the opposite was the case.

The Government’s own Budget Papers show total health expenditure grew 1.1 per cent in 2012-13 and 3.1 per cent the following year – well below long-term average annual growth of 5 per cent.

Furthermore, health is claiming a shrinking share of the total Budget. In 2015-16, it accounted for less than 16 per cent of the Budget, down from more than 18 per cent a decade ago.

“Clearly, total health spending is not out of control,” Professor Owler said, and criticised what he described as a retreat by the Commonwealth Government from its responsibility for public hospital funding.

“There is no greater role for governments than protecting the health of the population,” he said. “Public hospitals are the foundation of our health care system. Public hospital funding and improving hospital performance must be a priority for all governments.”

In a statement to Fairfax Media, Health Minister Sussan Ley declined to specifically address the issues raised in the AMA Report Card.

Instead, the Minister pointed out that Commonwealth funding for hospitals was increasing on an annual basis, and there had been no policy anouncements in last year’s Budget or MYEFO affecting that. While technically correct, the Minister’s comments brush over the big changes announced in the first Hockey BUdget in 2014-15, including a massvie slowdown in the growth of Federal funding for hospitals.

The issue of hospital funding is set to loom large when the nation’s leaders meet in March to discuss reform of the Federation.

Already, several premiers are pushing for an overhaul of taxation arrangements to provide the states with a better growth revenue stream than the Goods and Services Tax.

South Australian Premier Jay Weatherill has proposed that the Commonwealth hold on to GST revenue and, in return, give the states and territories a slice of income tax receipts.

Adrian Rollins

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