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Govt under pressure as hospitals stumble

Sydney hospital gets $120m upgrade - Featured Image

Mounting evidence that public hospitals are struggling to make headway in meeting key performance benchmarks is increasing the pressure on the Federal Government to agree on a permanent boost to funding as part of any overhaul of Commonwealth-State health arrangements.

Australian Institute of Health and Welfare figures show that the performance of public hospitals is slipping back as massive funding cuts announced in the 2014-15 Federal Budget begin to bite.

The proportion of urgent emergency department patients receiving treatment within the recommended time fell back in 2014-15 from 70 per cent to 68 per cent – brining to an end six years of continuous improvement and leaving performance well short of the target of 80 per cent, which was due to be reached two years ago.

The goal for all emergency department visits to be completed within four hours, which was meant to be achieved this year, has also been missed.

The results bear out warnings made by the AMA earlier this year that the Commonwealth’s funding cuts for hospitals would undermine the delivery of care.

Launching the AMA’s annual Public Hospital Report Card in April, President Professor Brian Owler said the Federal Government’s cuts – amounting to $57 billion in the next 10 years – were creating “a huge black hole in public hospital funding”.

“It’s the perfect storm for our public hospital system,” he said. “There’s no way that states and territories can even maintain their current frontline clinical services under that sort of funding regime, let alone build any capacity we actually need to address the shortfalls now.”

Health Minister Sussan Ley rejected the warnings at the time, but the latest evidence of declining performance are likely to make it increasingly difficult for the Government to win State backing for an overhaul of funding arrangements without more money on the table.

Late last week the nation’s leaders were due to discuss a proposal by South Australian Premier Jay Weatherill to increase the goods and services tax to 15 per cent, with the proceeds to go to the Commonwealth. In exchange, the states would be given a guaranteed slice of income tax revenue.

Weak growth in consumer spending has undermined the flow of revenue to the states from the GST, making it increasingly difficult for them to fund fast-growing demand for public hospital services.

Mr Weatherill said giving states a slice of the faster-growing income tax take would enable them to keep funding health.

The states have been ramping up the pressure on the Commonwealth over the impact of its spending cuts.

Queensland Health Minister Cameron Dick told a meeting of the nation’s health ministers last month that the Coalition Government’s cuts would slash $11.8 billion from the State’s hospital system. The Victorian Government has calculated it stands to lose $17.7, while New South Wales has figured a $16.5 billion loss, South Australia $4.6 billion, Western Australia $4.8 billion and Tasmania $1.1 billion.

The big cuts form a challenging backdrop for discussions of reform to Federal-State relations that include proposals for Commonwealth public hospital funding to be replaced by a “hospital benefit payment” that would follow individuals, similar to Medicare.

Government discussions of changes to the private health insurance industry have included reference to option two in the Reform of the Federation Discussion Paper, which proposes a Medicare-style payment for hospital services, regardless of whether they are provided in the public or private system.

Under the arrangement, the price of hospital procedures would be set by an independent body and the Commonwealth would pay a proportion. For patients in the public system, the states would be expected to make up the difference, while in private hospitals the gap would be covered either by insurers or the patients themselves.

States would retain responsibility and operational control of public hospitals, and would be able to commission services from the private sector, while the Commonwealth would discontinue the private health insurance rebate.

Adrian Rollins

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