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Outrage as the federal government cuts billions of dollars from public hospital budgets

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The federal government’s decision to cut billions of dollars from public hospitals over the next four years has angered doctors who say they are “stunned” that the government is cutting money amid rising inflation, a depleted workforce and a huge backlog of elective surgeries.

This week’s federal budget revealed payments to states and territories for public hospitals are expected to be cut by more than $755 million this financial year, with overall funding cut by $2.4 billion over four years.

Federal Australian Medical Association (AMA) president Steve Robson said he was shocked the money was being cut when demand for hospital services was at an “all-time high”.

“We know hospitals are busy, ambulances are running outside emergency departments and patients are waiting years for essential elective surgery,” Professor Robson said.

“And we know that hospitals are struggling to close the backlog of care created by COVID-19.”

The states and territories have an agreement with the Commonwealth where hospitals are funded – based on how many and what type of patients they treated in the previous year – and it taking into account cost increases such as wage increases, rent increases, equipment and electricity.

This is known as performance-based funding and is different from what happens in smaller regional hospitals, where they receive “block funding” or lump sum payments.

Health Minister Mark Butler said that based on the model, budget funding reflected the expected reductions in hospital services provided by states and territories.

“We’re not cutting money,” he said Thursday.

“The amount the Commonwealth pays state governments each year is based on the advice they give us through the Hospital Funding Administrator about the level of activity they are doing in their hospitals.

“Obviously, COVID-19 has had an impact, for example, on the number of elective surgeries – especially in the two big states – that have been able to take place.

“We’re doing what governments have been doing for years, and that’s paying for the activities that are done in hospitals based on advice from state governments.”

However, Professor Robson argued, hospitals are doing less simply because they lack staff or money and are forced to cut back.

“Why are states and territories predicting cuts to hospital services at a time when demand is at record highs? The answer is simple: states and territories need to expand their capacity – more beds and staff – to meet community demand,” he said. said.

“But they don’t have the staff, they may not have the beds, and the current funding model is broken, the overall investment from both the states and territories and the Commonwealth is falling short.”

The federal government has been under increasing pressure in recent months to increase funding for state and territory hospitals, withthe struggle between the country’s leaders continues about who should pay the bills for increased demand on hospitals during the pandemic.

Historically, the federal government covered 45 per cent of the cost of public hospital services – through performance-based funding – and states and territories paid the rest.

However, in the midst of the pandemic, the federal government has agreed to pay a larger share of the total through a 50-50 funding agreement that runs until the end of this year.

But that money comes with conditions: The commonwealth puts a damper on any big spending increases by capping annual growth at 6.5 percent, capping federal increases at about $2 billion a year.

This means states and territories must cover any additional costs incurred above that, and they have long been seeking a new funding package that exceeds the cap and extends the 50-50 sharing arrangement.

Professor Robson said that given the states and territories needed more money, cutting funding did not make sense.

“With the 50-50 COVID-19 hospital funding set to expire in December, the situation is only going to get worse at a time when — if we look at what’s happening internationally — we’re likely to see a new spike in COVID-19 cases. “

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https://www.abc.net.au/news/2022-10-27/federal-budget-prompts-health-funding-backlash/101585400

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