Regional hospitals are warning they face ‘inevitable closures’ or widespread job losses following a Victorian-wide mandate to cut spending ahead of this year’s state budget.
Leaked internal documents reveal that chief executives of many of the state’s health services have warned that forced ‘unrealistic’ savings targets are unsustainable.
Some reported multi-million dollar deficits in the last financial year and say there is no way to cut costs without affecting frontline services.
The directive to cut spending came from the Victorian Treasury to all 76 health services, with individual targets for the next three financial years as part of so-called Financial Management Improvement Plans.
Some departments have been told to save millions of dollars, but are being urged by the Department of Health to start with ‘ancillary’ functions, such as corporate services, and to cut administrative positions as they become vacant.
Hospital managers have expressed doubts that the targets will be met, fuelling fears that frontline services will be compromised and could be axed.
A senior manager at a regional hospital in Victoria said he had not seen a similar directive in two decades.
“A lot of hospitals are saying it can’t be done without (job) cuts or service cuts,” he said.
Senior health sources say the Department of Health has also refused to guarantee that hospitals’ deficits will be covered so that they can continue to operate at a loss, and that hospitals are being asked to use restricted funding – money given by donors for specific purposes – as cash for operational needs.
This comes at a time when the government is also considering forced hospital mergers to reduce the number of health services from 76 to just 12.
The Allan Government is desperate to rein in spending, with Victoria on track to reach a net debt of $178 billion by 2026-27, $156 billion more than the $22.3 billion Labor inherited when it took office in 2014. The massive debt will be the equivalent of $70,000 for every Victorian household.
Health Minister Mary-Anne Thomas confirmed on Thursday that the government had ordered regional hospitals to find ways to cut their budgets.
But she guaranteed that “there will be no hospital closures on my watch”.
