The death knell for small hospitals


Senior NSW Government sources said as many as 100 regional and rural hospitals could become unviable.

Under what Mr Rudd described as the biggest change to Australian healthcare since Medicare, the Federal Government will become the major funder of hospital services, which will be run by local managers.

The Commonwealth will take $90 billion over five years – $50 billion over the first three – in GST revenue from the states to fund a new National Health and Hospital network.

Sue Dunlevy’s blog – hospital heads in the gun

Malcolm Farr’s blog – Rudd goes for the doctor and the voter

Mr Rudd will no longer provide states with money to run their hospitals, instead he will directly fund the local hospital networks, boosting the Commonwealth’s share from 35 per cent to 60 per cent.

The new funding system will remove the current caps placed on hospital budgets. A price will be set for each service, with the Federal Government paying 60 per cent of that.

This price will cover the “efficient” cost of hospital services and states such as NSW, which provide inefficient services, will have to subsidise those extra costs from state budgets.

“The Australian Government’s decision to take on the dominant funding role for the entire public hospital system is designed to end the blame game, to eliminate waste and to shoulder the funding burden of the rapidly rising health costs of the future,” Mr Rudd said yesterday.

Senior NSW Government sources said the plan would not put any more money into the health system.

They said the 100 hospitals across regional and rural NSW would be financially unviable under the casemix system, which allocated funding on a per-procedure basis, because the volume of medical procedures in small hospitals was too low.

“The State Government will have to make a decision as to whether it can continue to subsidise these hospitals or close them,” they said.

Greater Western Area Health Service health advisory chair Dr Steve Fleckhoe fears for the future of 44 hospitals in his western NSW region.

“I am absolutely sure that the small hospitals . . . could not possibly fit into a casemixed model,” he said. “It worries the heck out of me. The worry was always that an efficiency model would be applied that didn’t take into account other circumstances.”

Mr Rudd’s office said the reforms would not force any hospitals to close.

His office guaranteed that medical services to regional hospitals in NSW would be retained and assessed by the proposed new independent umpire.

“There will be loadings to recognise the needs of people in regional Australia,” a spokesman said.

Mr Rudd will also move to take over from the states’ primary care services, such as community health centres, mother and baby clinics, drug and alcohol services and community based mental health services.

The changes will start to be introduced in 2011 but voters will have to re-elect Mr Rudd twice before the new system takes full effect in 2013-14.

“There is a lot in these proposals that has the potential to significantly improve our hospital services,” said Australian Medical Association president Andrew Pesce, but he said NSW hospitals might lose if the payment-per-service system did not take into account care and training costs.

In developments today:

KEVIN Rudd has kicked off a media blitz to sell his proposed shake-up.

Mr Rudd said that under the proposed new national standards, maximum waiting times would be in place for elective and emergency surgery.

“What we need through new tough national standards is for patients to have confidence that there will be maximum waiting times, that there will be absolute maximum waiting times for elective surgery and for treatments of accident emergency,” Mr Rudd told the Nine Network.

“We are bringing in local hospital networks to ensure that locals can run their hospital systems for the future,” Mr Rudd said.

“So if you are a patient you know that your local health professionals are in the driving seat.”

DEPUTY prime Minister Julia Gillard said the reforms had been discussed in detail with the states.

“Of course there have been discussions with the states,” Ms Gillard told Macquarie Radio.

“The prime minister’s message to premiers and chief ministers is very clear: if we continue the way we’re going now, health costs are going to consume all of state budgets in around 20 years’ time.”

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