Impacts on New South Wales hospitals
hospitals budget, from New South Wales, is about $20 billion. That is one
year's salary, effectively...You can close the system for a year or you can fund
to meet demand...$18.3 billion so it is, virtually, a year's New South Wales
hospital budget worth of cuts.
Dr Andrew McDonald,
paediatrician, Campbelltown Hospital
As outlined in Chapter 3, the Parliamentary Budget Office's (PBO)
submission provided a detailed state-by-state breakdown of the difference in
Commonwealth hospital funding between the government's policy announced in the
2014‑15 Budget and the former government's hospital funding arrangements
under the National Health Reform Agreement 2011. The government's 2014‑15
Budget marked a fundamental policy shift away from the previous government's
activity based funding model, which established a national efficient price for
hospital services. Instead, it reverts to the former block funding model based
on CPI and population growth.
The PBO's figures show that New South Wales (NSW) will lose the most of
any state or territory, with $17.6 billion in hospital funding lost over an
eight year period due to the government's abandonment of the carefully
negotiated national health agreement. 
The annual funding differences are set out in Appendix 4.
After the 2014-15 Budget cuts were announced, the NSW Government's
reaction was similar to other states and territories, with the Premier, the Hon
Mike Baird MP, expressing anger over the cuts:
Mr Baird said it was a “kick in the gut” for people in the
“What services would (they) like us to cut here in NSW on the
back of the funding cuts that we’ve seen overnight?” he asked.
The NSW Treasurer, the Hon Andrew Constance MP, estimated that to make
up the loss from the 2014-15 Budget decision to scrap the NHRA, including the
immediate cessation of several National Partnership Agreements, NSW would have
to find an additional $1.2 billion over the next four years.
Professor Bradley Frankum, Vice President of the AMA NSW Branch, told
the committee that the AMA estimated the impact of the 2014-15 Budget cuts as
equivalent to closing five and a half hospitals the size of the Westmead
This would happen over a period of time between 2017-18 and
2024-25. That is short enough that the effects will be felt keenly and
immediately but long enough to be sufficiently insidious that the true cause
would be masked by the political cycle.
Professor Frankum explained that the funding cuts would make it
impossible for NSW hospitals to keep up with population growth and demand for
services. Using the Westmead Hospital as an example, he told the committee:
We could have chosen others, but Westmead is a large and
well-known hospital that saw nearly 1½ million patients in 2014-15. It is a
hospital in Western Sydney where the numbers of people with multiple chronic
illnesses are growing and demand for hospital services is growing rapidly. It,
like Blacktown, Bankstown and many other centres in Western Sydney, is seeing
surges in patient numbers that are outpacing population growth. I personally
live and work in Campbelltown and I see firsthand the impact of a system that
is struggling to keep up with growth. After July 2017, it is the federal
government's plan to link state health funding to population growth, even
though it is demonstrably the case now that demand for health service is rising
faster than the population. There is no reason to think that will not continue.
Professor Frankum also observed that the funding cuts impacted the
ability of state governments to plan for the health services needed in the
...the longer the uncertainty over funding continues, the worse
the federal government is making it for hospitals. To plan for the health needs
of a community the size of New South Wales, you need to be able to plan years
in advance. The way things are currently, we have a public health system with a
plan up until next year, really. Obviously it is not a problem unique to our
state, but New South Wales has the highest population of any state in the
Lack of funding is impacting clinical effectiveness and patient care
Professor Frankum's colleagues, Dr Andrew Pesce and Dr Antony Sara, told
the committee that in NSW hospitals there was already a tough budgetary choice
to be made between forward planning for workforce and infrastructure, and day-to-day
delivery of services:
Senator McLUCAS: Funding to drive the change, is that what
you are talking about?
Dr Pesce: Yes. If the priority is to save money, it is very
hard to reform the system.
Dr Sara: It becomes impossible. Essentially, the managers and
doctors in those hospitals and districts go into further spiralling into a pit
of despair. You would be unable to do any of the strategic planning stuff [workforce
planning and infrastructure] that [Dr Andrew Pesce] has talked about; it
just becomes a race to the bottom. That has been happening in South Australia
over the last couple of years, and it is a nightmare. They are not looking at
reconfiguration, they are just looking at slashing and burning. Then people
start thinking about their jobs. They start thinking about which patients gets
the care and which do not. Any rational basis for planning delivery of health services
just goes out the door.
At a grassroots level, the impact of funding cuts is severe. At the
committee's hearing in Campbelltown in March 2016, Dr Karuna Keat and Dr Andrew
McDonald, both appearing in a private capacity, provided examples of the impact
of budget cuts on services levels:
Dr McDonald: I will tell you a story. I was phoned at
11 o'clock last night by the mother of a child who I had sent home that
morning. She brought her back because I had given her my mobile number on the
off chance that this child is not well, and it was not. She rang me in tears
because she could not get a bed. There were two beds in that department which
were not being used. They were not being used because the staff to open them
had not been employed for the night shift. That is what happens if you cut
money out of the budget. You shave staff, and people cannot get help when they
need it. All this four-year-old child needed was a bed to lie down on—that was
it. She did not even have a flat surface so she cuddled a mother in the waiting
room even though she had only been sent home from hospital that morning and was
not well. This is what happens if you cut funding on an individual patient
Dr Keat: ...If you do not have the nursing staff to open
those beds, you get an overflow. There have been situations whereby we have had
patients waiting in corridors for a bed on a ward or for a designated bed in a
full bed ward. This particularly happens over the winter period. Planners try
to anticipate for that and the hospital does try and anticipate for that but we
have a turnover where a third of our presentations in emergency end up in a
hospital bed; they need to be in a hospital bed. We have more rapid turnover
beds than pretty much any other hospital in the state in the number of patients
per bed. There are always points. There are better days but there are bad days.
I get a text message from the executive saying: 'Please can review your [patients]
for discharge.' It is not like we do not review our patients for discharge but
the executive want it more urgently so there are circumstances where you go,
'Hold on, I might send that patient home a bit earlier even I am not completely
comfortable because I need to get another patient in for another procedure.' In
winter there are no beds for elective procedures.
Dr Keat gave the committee a further example regarding elective surgery:
We have patients who need muscle biopsies to make a diagnosis
for changes in treatment or for aggressive treatment we need to give but we
need a bed for that because it needs anaesthetic but we cannot necessarily book
that patient in for an elective procedure which would save hospital beds to a
degree. We know if it is going to happen that day, we will bring the patient in
that evening. The next morning they have the procedure and potentially go home
the next evening. We cannot plan that well. We tell the patient we will give
them a call if there is a bed available in maybe a week or two weeks. As it
goes on, the patient becomes weaker or we cannot initiate the appropriate
treatment in time and they may end up in hospital and a vicious cycle develops.
Drs Keat and McDonald explained that a hospital can only run if it has
adequate staff and those in government need to remember that staff includes all
staff from clerical to doctors. As an example Drs Keat and McDonald advised the
committee of a situation at the Campbelltown Hospital:
Dr McDonald: We have 16 built rooms in our Outpatients, and
we can open five.
Dr Keat: Why?... Basically clinicians who are employed to be
paediatric endocrinologists want to open a clinic and they cannot because they
do not have clerical support for it. They are not allowed to.
CHAIR: That is the back office, is it?
Dr McDonald: You need somebody to greet the patient, to call
Medicare, to get the notes out. Because we do not have clerical support, we
have got a built Outpatients with 16 rooms, of which five are being used.
CHAIR: This is a really important part of demythologising the
language around the front-line staff and the backroom work.
Dr McDonald: And the clerk is front-line staff. The cleaners
Dr Keat: They are. For example, in our Outpatients, there are
issues with the hand sanitisers not being filled.
Senator MOORE: The neurologists would not be doing that!
Dr Keat: The neurologists would not be?
Senator MOORE: No. They would not be filling that up.
Dr Keat: But the crux of it is: these are all the little
things which build up. You are right about front-line. Everyone is front-line
staff. It is not just medical; it is all those other things which are
important. A hospital does not function without that. If I try and get the
district to give me benchmarks, or the ministry to give me benchmarks, about
what is expected for a particular support—we have about 30 to 40 medical staff
specialists in the department of nursing and we have the equivalent of 1.8 or
two full-time secretaries to help provide that support, so people are posting
out their own—
Dr McDonald: I pay to get my typing done, because I have got
a medical duty of care. It costs me 50 bucks a week to get my typing done, but
I am not going to put it through the system and have the letter arrive two
weeks later, when I can pay 50 bucks to a lady in Narellan to get the typing of
the hospital letters done.
The evidence from Drs Keat and McDonald demonstrates concerning examples
of highly inefficient and ineffective delivery of health care. This evidence
reveals the personal impacts of the pressures that the Federal Government's funding
cuts have placed on the hospital system. Dr McDonald told the committee that
the cost of making up the shortfall of the Federal Government's cuts was almost
equivalent to the cost of the entire NSW hospital budget for a whole year:
Dr McDonald: The annual hospitals budget, from New South
Wales, is about $20 billion. That is one year's salary, effectively. The total
Commonwealth spend on health is about nine-point-something per cent of the GDP,
about $140 billion a year, so a cost of $56 billion must affect patient care.
You cannot possibly cut that much and not affect patient care.
CHAIR: Or we could stop doing anything for one whole year.
Dr McDonald: You can close the system for a year or you can
fund to meet demand. But that is, virtually, a year's budget. The last time I
looked it was $18.3 billion so it is, virtually, a year's New South Wales
hospital budget worth of cuts.
The committee speaks to GPs,
Medicare Local representatives, and health consumers at a public hearing in
Penrith, Sydney on 12 March 2015.
Impacts on access to health care
The impact of the funding cuts will reach many areas of health, as the
following discussion with Professor Frankum demonstrates. Lack of access to
quality general practice health care, whether in metropolitan or rural areas,
drives people to seek care at hospitals. If the hospitals are not adequately
funded, and people cannot afford private care, access to health care is
CHAIR: ...what is the impact currently on your work practices
in the areas out of the city in the New South Wales, where particular medical
problems are emerging, and, as a plea for those people, what needs to happen
Prof. Frankum: You would be aware that I think seven of the
10 most disadvantaged suburbs in Australia—or New South Wales; I am not sure
which—are in south-western and Western Sydney. Campbelltown has I think three
of the most severely deprived suburbs in the state. The problem for those
people is access to services generally, but also access to quality general
practice and specialist services which are not always provided by the public
system and are unaffordable for some people.
Senator WILLIAMS: Is this in suburban Sydney?
Prof. Frankum: Absolutely.
Senator WILLIAMS: You ought to go and live in a country or
rural area like I have done all my life!
Prof. Frankum: I am not disputing that. That is a problem as
Senator WILLIAMS: At least they can travel half an hour or so
to get to specialists.
Prof. Frankum: Many cannot afford to go to specialists.
CHAIR: Exactly. They cannot afford the out-of-pockets.
Prof. Frankum: The waiting lists, for example, at some of our
public hospitals are enormous. I am an allergist and I do paediatric allergy as
well as adults. Our waiting list to have a food challenge for a child who we
are not sure is able to eat egg or milk or something, because of a previous
allergy, is two years. So this kid is at risk of anaphylaxis if they do eat it
and has to wait two years to find out if it is safe for them to eat it. If your
child has a complex surgical problem, access to Westmead or Randwick children's
hospitals is very problematic. There is good evidence that if you live in the
poorer suburbs there is much less access to all of those services. That is what
happens if funding does not continue to grow.
At its hearing in Gosford in March 2015, the Australian Paramedics
Association (APA) told the committee of the serious impacts that increasing
resource pressures are having on paramedics. Due to at-capacity emergency
departments, ambulances are being forced to 'ramp' until an emergency bed
Mr Jeff Andrew, Vice President of the APA explained that a two hour ramp at
peak periods is not unusual, and that a recent experience of a six hour 'ramp'
would become common.
Mr Andrew went on to state that 'it is fair to say the whole system is
When asked what additional pressures would result from the government's
decision to cut $56 billion over eight years from the hospital system combined
with the government's interventions in primary care, Mr Andrew responded:
I think we will get more sick patients if the primary health
care is not attended to. I mentioned some patients, like asthma patients and
patients with a chronic disease like emphysema, who have been better managed
because there are good strategies and care plans in place for them. Any budget
cuts in that area will only reflect to us getting them at a sicker state. There
will be a higher burden on the presentations in the health system.
At its hearing in Lismore in September 2014, the committee heard
evidence of the harsh reality that the pressures from funding cuts place on the
hospital system. Mr Gil Wilson, a clinical nurse specialist at the Lismore
Base Hospital, appearing in a private capacity, told the committee:
On funding, I have gone from a situation in my health career
of over 20 years of saying to people sitting in hospital, 'Ducky will be home
soon; she's fine,' to seeing people like that shoved out the door a day or two
early sometimes. I had a situation at the hospital the other night while I was
the after-hours manager. We were chockers. We have people lining up in the ED.
When I was handing over to the night manager, I said, 'I'm really sorry. We
have only three beds left and these patients are going to need them,' and then
the ward phoned up and said, 'Mr Jones has just died, so we have another bed.'
That is the wrong attitude to have. I hate the situation we are in now where things
are so tight that that is the sort of thing people are saying—'Yes, I can give
this guy in the ED a bed, but a poor old 92-year-old has had to pass away for
him to get it.' That is the reality of our world.
Mr Wilson's evidence also highlighted the major issue of cross-border
cost shifting, a situation in which hospitals in one state try to reduce their
costs by shifting patients across the border to another state:
Mr Wilson: ...Senator O'Neill, you mentioned something about
the border crossings before. I have an example for you. There was a patient in
Tweed Hospital. I cannot use names because of confidentiality. He was having a
big gastric bleed. Instead of being transferred to the Gold Coast where they
could have done something about it, he was transferred all the way down to
Lismore in the back of an ambulance—with a doctor and a bag full of blood, just
in case something happened. I raised this with the JCC, so this is on record
Senator McLUCAS: Where was he from?
Mr Wilson: It was at Tweed Hospital. I do not know where he
was actually from, but he came from Tweed Hospital. Gold Coast is where?
Lismore is where? They put him in the ambulance. If you do not know about that
situation, you can bleed out inside your stomach and have no external signs
very quickly. What was a doctor in the back of an ambulance with a box full of
blood going to do? That has been happening progressively since the change of
government in Queensland—the blocking of the border—but that is nothing to do
As the most populous states in Australia, NSW faces a crisis as a result
of the Coalition Government's hospital funding cuts. By forcing the state
government to scrape together funds year-to-year for hospital services, the
Federal Government cuts make forward planning virtually impossible. Without the
ability to invest with long‑term certainty in health-related infrastructure
and training, state governments ability to make the hospital system more
efficient is severely curtailed.
The committee believes that the New South Wales Government is not able
to sustain the increased funding needed for adequate hospital services without
adequate contributions from the Commonwealth. In NSW, the Commonwealth's
planned funding reductions will have grown to a total of $17.6 billion by
2024-25, and could easily threaten to overwhelm the NSW State Budget.
Long-term funding certainty allows for better planning for
infrastructure, managing staffing, waiting times and lists, and delivers
increased efficiencies overall. When hospitals are forced to operate on
year-to-year budgets, there is no capacity for planning ahead and making
efficient investment in staff and services.
The committee believes that without long-term funding, state and
territory public hospitals will not be able to achieve efficiencies and
adequately serve their citizens. The committee calls on the Federal Government
to create a long-term, sustainable, funding model for hospitals which allows
for appropriate contributions from governments, both state and federal.
The committee speaks to a
panel of GPs at a public hearing in Strathfield, Sydney, on 19
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