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Hospital funding is becoming a key battleground for the state’s budget

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That would be in addition to $1.4 billion for elder care, personal protective equipment, testing, treatment and respiratory clinics that Butler announced Monday.

When asked whether the health care budget would adjust for inflation, Butler said the Independent Office for Health and Aging Care Pricing, which sets official prices for the hospital system, “is updating this costing engine to reflect prices “.

“He’s doing it now, especially because of the impact that inflation is having on hospital systems this year,” he said.

But hospitals won’t get any extra money from this spending update until 2023-24 – and states and territories say that will come too late as they carry out hundreds of thousands of elective operations postponed during the pandemic.

Since December 2019, the cost of personal protective equipment has increased by more than 600 percent.credit:Steven Sievert

Hospital costs are rising so fast that the states and territories are expected to exceed the cap this financial year, leaving them alone to bear the higher costs.

A spokeswoman for New South Wales Health Minister Brad Hazzard said the methodology behind the national hospital funding agreement “does not reflect price increases, particularly following COVID-19 and supply chain challenges, as well as inflation”, in resulting in funding being “unrealistically low”. .

A Victorian government spokesman said public hospitals needed “a fit-for-purpose funding model and cost-sharing arrangement … not one where the Commonwealth’s contribution to state funding is capped at 6.5 per cent each year”.

The independent Health and Aged Care Pricing Authority determines hospital funding by calculating the so-called “effective price” for hospital services using a complex calculation based on data from three years ago.

Tasmanian Premier and Health Minister Jeremy Rockliff said all states and territories were grappling with the rising costs of providing public hospital services “while managing unpredictable peaks in demand due to the response to the pandemic”.

The issue has recently “been raised as an important priority across the country”, Rockliff said, with the Prime Minister, Chief Ministers and Health Ministers across the country coming together to advocate for “a fairer funding mechanism with a review of the way it is calculated financing.”

In its determination of hospital funding for the current financial year, published in March, the Office of Pricing said it was “not possible to definitively estimate the long-term impact that COVID-19 may have on hospital service delivery and costs in 2022-2023”.

Albanese promised before the election to “sit down and negotiate” with the states the hospital funding deal, signed in 2018 by then-prime minister Malcolm Turnbull, which imposed a 6.5 per cent growth cap and set the Commonwealth’s contribution to new spending at 45 percent. .

The states and territories are calling for this to be raised to 50 per cent in a new deal due to be signed next year and starting in 2025.

A recent analysis of public hospital data by the AMA found that cleaning costs rose 35 percent in the five years to 2019-20, while the cost of treating emergency patients for heart attacks, septicemia, and kidney and urinary tract infections rose 6 to 9 percent. . every year.

Unions are fighting for more pay rises as hospital workers grapple with a sharp rise in the cost of living after the consumer price index rose 6 percent in the 12 months to the June 2022 quarter. In New South Wales, the nurses’ union is demanding a 7 per cent pay rise.

Melbourne University professor Stephen Duckett, a health economist who served as health secretary in the Keating government, said the 50/50 cost-sharing arrangement should be extended to help public hospitals meet higher demand caused by the pandemic.

Duckett said the 6.5 percent funding cap is an austerity measure without “public justification” and if it was legal when the hospital agreement was signed, “it’s not legal now.”

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