Bold claim: Victoria’s health bill is exploding, and the state is under intense scrutiny for letting hospitals drive a growing slice of public spending. A comprehensive state review, led by former senior official Helen Silver, endorses the Health Department’s recent crackdown on hospital budgets and highlights hospitals as a major cost pressure. The report flags concerns about top-ups given to hospitals after their allocations and calls out the system’s reliance on hospital emergency departments as a primary entry point for care, even when other options might be more appropriate.
Key findings include a startling 41% of emergency department presentations being from lower-urgency cases that could be managed in primary care, such as general practitioner clinics. The review notes that the public views emergency departments as the default entry to the health system, which isn’t always the best fit for patient needs. Over the last decade, Victoria’s health spending rose by 39%. In per-capita terms, Victoria spends about $4,200 on health, compared with New South Wales’ roughly $3,600 per person.
A major shift proposed is the dissolution of VicHealth, Victoria’s independent health promotions agency. The agency would be absorbed into the Health Department, a move criticized by VicHealth’s partners and public health advocates who fear it weakens community-based health initiatives and could lead to worse health outcomes.
Silver’s review also urges the Commonwealth to fully fund Victoria’s 12 state-funded urgent care clinics, created during the pandemic to alleviate pressure on hospital emergency departments. Premier Jacinta Allan said the state would press the federal government to take fuller control while continuing to support the clinics in the meantime.
The report also proposes phasing out special COVID-19 leave for health workers. However, the government will not follow the recommendation to end state funding for its doctors-in-schools program, arguing that federal measures increasing bulk-billed care, after-hours GP access, and telehealth have reduced the program’s necessity.
In fiscal terms, Victoria’s Health Department spent $30.7 billion in the 2023-24 financial year, about a third of all state government expenditure at the time. The review recommends eliminating 47 full-time equivalent positions to save just over $1 billion through mid-2029.
Public sentiment and political messaging frame hospital budgets as a key battleground. Health Minister Mary-Anne Thomas has argued for hospitals to tighten their belts, while ongoing tensions around wages and staffing persist. The Age reported concerns about Seymour Health facing government-ordered use of reserve funds to address debt, with assurances that hospitals’ treatment of employee entitlements remains unchanged amid cost-saving efforts.
Medical leaders acknowledge substantial financial pressures facing hospitals but caution that simplistic cuts won’t fix systemic issues. The Australian Medical Association’s Victoria branch emphasizes that frontline care must be protected, even as costs are managed.
Meanwhile, roughly 1,000 allied health workers and public hospital support staff, aligned with the Health Workers Union, gathered at Parliament to demand an end to an 11-month pay dispute. Their actions prompted the cancellation of around 1,000 planned operations. The government says it is working with the union and the Victorian Hospitals Industrial Association to minimize disruption to patient care while negotiations continue.
Looking ahead, Victoria plans to begin negotiations on a new enterprise bargaining agreement with doctors early next year, as pay and staffing debates continue to shape health policy and hospital funding decisions across the state.
