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The sick will pay heavy price for Govt cuts

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Patients are likely to face blow outs in emergency care and elective surgery waiting times from next year, and may even miss out on care altogether, unless the Federal Government acts immediately to unwind massive Commonwealth public hospital spending cuts.

AMA analysis shows a huge shortfall in Federal funding for hospitals will rapidly open up from mid-2017 as a lower indexation arrangement kicks in, creating a gap in resourcing that State and Territory governments are unlikely to be able to cover.

AMA President Professor Owler said the states and territories were facing an “economic disaster” unless the Federal Government urgently restored its funding, and warned patients would be forced to wait longer for vital health care and may, in some cases, miss out altogether.

“As hospital capacity shrinks, doctors won’t be able to get their patients into hospital or keep them there to receive the critical care they require,” Professor Owler said. “Doctors will always do the best they can by their patients, but these cuts mean the system as a whole simply won’t be able to meet the demand.”

His warnings came amid mounting speculation the Commonwealth will provide emergency funds to avert a pre-election crunch in public hospital finances – though it is expected to make little dent in the long-term shortfall, which is projected to reach $57 billion by the middle of next decade.

Expectations are increasing that Prime Minister Malcolm Turnbull will use a rare joint meeting with the nation’s premiers and treasurers scheduled for 1 April to clear the decks on a range of contentious issues in the lead-up to the Federal election, not least massive cuts to Commonwealth support for public hospitals unveiled in the Government’s disastrous 2014-15 Budget.

The Prime Minister has reportedly already offered New South Wales Premier Mike Baird an emergency $7 billion cash injection to tide the State’s public hospital and education systems through till after the election, which could come as early as July or as late as November, and other premiers are now lining up to demand similar assistance.

Professor Owler said such handouts would help relieve pressure on hard-pressed public hospitals in the short-term, but if a financial crisis for the nation’s public hospitals was to be averted there needed to be an overhaul of Commonwealth-State arrangements to ensure hospitals were supported by a reliable long-term source of funding that grew in step with the increase in demand for their services.

“It is clear there is a crisis in public hospital funding and an immediate commitment is required, but a quick fix will not solve the long-term capacity problems for public hospitals or ease the economic burden on State budgets,” he said.

There is mounting evidence that the performance of hospitals is already being hurt by a squeeze on their finances, even before massive cuts detailed in the controversial 2014-15 Budget come into effect.

The human cost

The AMA’s annual Public Hospital Report Card, released earlier this year, showed that hospital performance is already beginning to suffer as the flow of Commonwealth funds slows.

In emergency departments, 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, ending four years of unbroken improvement.

Meanwhile, improvements in elective surgery waiting times have stalled – the median delay in 2014-15 was 35 days, six days longer than a decade earlier.

Professor Owler said there was a real human cost to be paid for such a deterioration in performance.

“For a patient requiring urgent attention for abdominal pain, this could mean they are seen one to two hours after they present to the ED,” he said. “Their symptoms could be consistent with indigestion, or could be a perforated bowel. The quicker a doctor can see them and make a diagnosis, then the quicker they can receive relief from their pain, and their condition can be prevented from deteriorating, potentially to a very serious situation.” 

In the Budget, the Coalition announced it would renege on hospital funding guarantees to the states, saving $1.8 billion over four years, while a further $57 billion would be would be saved by 2024-25 by downgrading the indexation of Commonwealth hospital funding to inflation plus population growth.

Increasing the squeeze, the Independent Hospital Pricing Authority has set the National Efficient Price – which determines how much the Commonwealth pays for hospital services – at 1.8 per cent lower than the amount that was set last year, locking in hospital underfunding.

States under pressure

The massive Commonwealth cuts have outraged the states, which have warned of a significant reduction in hospital services unless another stream of funding is found.

The savings appeared to be part of a broader Commonwealth strategy to dump most of the funding responsibility for health services onto the states and directly on to patients, and occurred in the context of a renewed debate about taxation and the structure of the Federation.

Two premiers, Mr Baird and South Australia’s Jay Weatherill, had championed changes to the GST and income tax arrangements to give states access to a more robust stream of revenue to fund hospitals and schools, but they were undercut when Mr Turnbull dismissed any talk of changing the consumption tax.

The resistance of Canberra to calls for more funds has been stiffened by the fact that all the states are currently in surplus, while the Commonwealth expects a deficit of $37.4 billion this financial year, and no return to surplus over the next four years.

But, while Treasurer Scott Morrison has continued to talk tough, telling the states to sort out their hospital funding problems themselves, behind the scenes Mr Turnbull has reportedly been approaching some premiers to discuss a possible deal.

Professor Owler discussed the looming crisis in a meeting with Mr Weatherill earlier this month, and the SA Premier echoed his concerns.

Any short-term deal offered by Mr Turnbull would only “kick the can down the road”, he told ABC radio.

But he indicated the states were likely to accept any injection of funds offered.

“Mike Baird and I have been pushing for a much bigger solution – a 15-year solution – but we have to be realistic, we’re on the shadows of an election, and it’s an urgent problem,” Mr Weatherill said.

Adrian Rollins