Impacts on Queensland hospitals
What we know as an
industry is that when you put more out-of-pocket costs for patients, patients
choose not to come for their examination.
Ms Bronwyn Nicholson,
General Manager of the I-MED Radiology Network, Queensland
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.
Reduction to Queensland hospital funding
6.2 As a result of the 2014-15 Budget, more than $10 billion will be cut
from Queensland hospital funding over the eight years between 2017-18 and
2024-25. The PBO has calculated that Queensland will receive $10.7 billion less
in hospital funding from the Commonwealth over that period than if hospitals
were funded according to the 2011 agreement.
The annual funding differences are set out in Appendix 4.
The Queensland Department of Health (the department) provided a slightly
higher estimate, calculating that the state's public hospital funding reduction
would be $11.8 billion.
The department quantified the total cuts in the following terms:
To put that in some perspective, the reduction would
translate to 1.362 million fewer acute admitted patient separations,
125,000 fewer mental health separations, 2.155 million fewer emergency
department presentations and 4.926 [million] fewer non-admitted occasions of
service in Queensland alone over the period 2017-18 to 2024-25.
The department cautioned that the Commonwealth Government's stated aim
to 'improve the sustainability of health spending' would only occur 'by
shifting the costs to states and territories, with the risk that services will
have to be reduced if states and territories cannot find the alternative
sources of funding'.
Annual funding differences are set out in Appendix 4. The PBO has
calculated funding cuts to Queensland in the year 2024‑25 alone would
amount to $2.7 billion.
Unsuitable funding model
The government's decision to allocate hospital funding according to
population and CPI overturns an activity-based model that was increasing
cooperation between jurisdictions and services.
The committee heard that it would:
...break the link established in 2014-15 between Commonwealth
funding and efficient growth in public hospital services, reducing the
financial incentives for all aspect of the health system to work together to
The government's population-based funding model will have adverse
effects for a number of Queensland hospitals, especially in areas of 'lower
population with a high burden of disease'.
The department explained the shortcomings of the population-based model:
The proposed funding model assumes that all population groups
have the same need for public hospital services. For example, it does not take
account of the greater health needs of Indigenous people and people from rural
and remote locations. This is particularly important for Queensland, which has
the most decentralised population in Australia. Nor does it take account of the
ageing population or the changing cost of service provision due to
By way of example, the Cairns and Hinterland Hospital and Health Service
(CHHHS) explained that rather than being funded in proportion to their
'efficient growth' as per the 2011 agreement, current government policy would
reduce their funding by $609 million over the eight years to 2024-25. This is
despite their level of 'significant unmet demand, particularly from the Torres
and Cape communities'.
Queensland is particularly affected by the policy change due to having a
higher number of 'block funded hospitals' which have funding allocated
differently in recognition of their high fixed costs.
The CEO of CHHHS, Dr Newland, explained:
Our hospitals are block funded, so any changes in hospital
funding will affect us in that our patients requiring secondary and tertiary
care are transferred to Cairns... Any changes within bed availability or
service availability in Cairns directly impact on the most disadvantaged
populations in Australia.
The department argued that if the government's aim of sustainable health
spending is to be achieved, '[w]e need a funding mechanism that meets the needs
of the people in a transparent and predictable way'.
The Rural Doctors Association of Queensland called for a greater focus
on community needs:
...we ask that it not be reduced but, rather, that efficiencies
be found in collaborative care models in response to community needs, rather
than funding sourcing driving the model of care being delivered. We understand
that in some sites this could well require a current service needs assessment
and even service delivery assessment, and we would support this in the hope of better
meeting the health needs of our regional, rural and remote communities.
The department noted that states and territories signed a Heads of
Agreement with the Commonwealth on 1 April 2016 outlining funding arrangements
for the period 2017-18 to 2019-20, with a return to an '"efficient
growth" model of sorts'. They noted, however, that the 6.5 per cent cap on
Commonwealth funding would leave a shortfall:
The new arrangements restore some of the public hospital
funding that was withdrawn in the 2014-15 Budget – but only a small part. It is
projected the Heads of Agreement would restore $445 million over 2017-18 to
2019-20, but that there would still be a shortfall of $1,190 million compared
to the previous arrangements.
Impact on Queensland hospitals
As a result of the hospital funding cuts, the committee heard that
Queensland would risk running out of hospital beds and have
reduced capacity to provide services.
Departmental representatives provided a number of examples of the reduced ability
of hospitals to provide services over the eight years between 2017-18 and
2024-25. They explained that 'if we had received the funding we would expect to
be able to provide 2.155 million more emergency department
In the area of mental health alone, they told of '125,000 times that we would
have otherwise been able to provide that mental health service that we would
not be able to provide that service in that period.'
Job losses would be likely to result from hospital funding cuts, providing
a further obstacle to providing quality care in Queensland hospitals. The
department estimated that by 2024-25, the cuts to hospital funding in
Queensland would have resulted in 'an annual average total impact of reduction
in staff of 4,537'.
The committee heard evidence that, in the Gladstone region, hospital employees
are 'stretched to the maximum' and concerned about positions not being filled.
Servicing regional and remote areas of Queensland, the Royal Flying
Doctor Service advised that the withdrawal of funding from hospitals would have
a direct impact on health outcomes, explaining:
...it will lead to worse health outcomes and a worsening of an
ability to actually address chronic disease in terms of preventing—primary
prevention, secondary prevention—complications of chronic disease. It will
drive the medical services towards having to deal with the secondary
complications of chronic disease, which will be acute presentations. It will be
acute on chronic so it will end up costing money in the long run and it will be
very expensive in terms of human cost as well...
Ms Robin Saunders, a nurse appearing in a private capacity at the committee's
hearing in Gladstone in April 2016, told the committee that lack of funding is
preventing nursing staff from doing the best job they can. The Nursing Unit
Manager, a staff member who forms the hub of a nursing unit, is a position
which Ms Saunders described as being placed under enormous pressure, with staff
occupying this position at extreme risk of burn out.
Ms Saunders told the committee that the removal of staff due to funding cuts
placed patients at high risk. In particular, should the Nursing Unit Manager
positions continue to be massively overworked, or fail to be staffed, Ms Saunders
told the committee that:
Death is the ultimate risk, and that can happen to babies and
has probably happened to other people. It is danger to the client but it is
also burnout to the nursing staff. To operate in a position like that all the
time really burns out people fairly quickly. Or, actually, here they do not get
burnt out quickly; they get burnt out slowly. But they get burnt out. People do
not want to cooperate as much, and they are all on call a lot because it is a
small area that is a busy place. I think morale also becomes low. People feel
they are trying to do their best at work, they have all this education and they
are doing all these things to keep themselves up to a high standard so they can
give a high standard of care, which promotes the whole community. So there is
feeling unsafe and burnt out...When you listen to nurses, they actually are
blaming the fact that there is not enough money, that they do not have enough
staff, because not enough money is being allocated to their areas and so they
cannot have enough doctors, staff, beds and equipment that they need.
Ms Saunders described to the committee the situation in hospitals when
staff, such as unit nurses, had to backfill vacant positions as well as
continuing their own work:
...people [for example unit nurses] being taken away from their
proper jobs—what their job description is—and doing other work where they have
to be clinical. It means the work they were doing is left undone. They are not
backfilling, so vacancies are not being filled. People have to work longer.
People are called in more often. That is really the complaint from staff. The
positions are not being filled. The savings are being made by not filling the
positions. I think nurses, like most people, always have to try to be aware of
budget constraints et cetera, but it has gone a little bit far now in that
people are working too much for too long and not filling the positions they are
supposed to. And a lot of the positions are being cut and taken to Rockhampton
way of board health management, which is different from how it was before. We
had an infection control nurse and a quality assurance nurse—they were actually
full positions—and we had patient complaints and risk. There were three
positions and those positions have been taken to Rockhampton.
Other people have had it become part of their role to start
doing audits as well as doing their clinical work so those positions that are
not filled are still having some response from the Gladstone area. They have
been given extra jobs. I think we have 1.5 positions instead of three, but they
have gone to Rockhampton, which is quite hard. If you have a problem—say,
someone has been exposed to TB—that is a lot of follow-up. All the staff, all
the people, all the clients who have been exposed to that one person need
follow-up for a long time. If you do not have someone locally, that is a very
difficult thing to do.
Impact on vulnerable populations
The impact of the hospital funding cuts would be most acute in regional
and remote Queensland, according to witnesses and submitters.
Representatives of the CHHHS discussed the 'big impact' of the changes given
the 'significant burden of chronic disease and significant issues around the
ageing population' per capita in the area.
The CHHHS witnesses discussed the challenge of providing ongoing
hospital care for patients waiting for placement in aged care or mental health
facilities, or people with disabilities waiting for supportive accommodation.
This led to 'bed block' in a number of CHHHS hospitals, which prevents them
from meeting other performance targets:
High numbers of longer stay patients do increase bed block
within the Cairns and Hinterland Hospital and Health Service, and this adds to
the risks that the hospital and health service will fail to meet its National
Emergency Access Targets, and the National Elective Surgery Targets, due to a
shortage of acute beds. More importantly, the lack of these residential
aged-care places and home care packages also affects the welfare of our
patients and the care experience within our facilities.
Witnesses and submitters emphasised that the effects of hospital funding
cuts will have a widespread impact across the community, and will place greater
pressure on primary health providers. A CHHHS representative told the committee:
As you are aware hospitals are complex systems, so we have
experienced many occasions where increasing activity in one area has put
pressure on another part of the system which was less resourced or developed,
so that has required significant investment and redesign.
The Apunipima Cape York Health Council explained the interrelationship
between primary health care and hospital admissions as follows:
...the investment in primary health care is going to make a
difference to what is needed in secondary care—everything from preventable to
avoidable hospital admissions, including some of the mental health things as
well. It would be a shame to disinvest in primary health care and continue to
pay for acute care.
Mr Cleveland Fagan, Chief
Executive Officer and Dr Mark Wenitong, Public Health Medical Advisor from the
Apunipima Cape York Health Council, and Mr Brian Stacey, Head of Policy, Cape
York Partnership, spoke to the committee at a public hearing in Cairns on
16 November 2015.
The CHHHS witnesses told the committee that providing efficient hospital
service would become increasingly difficult following the cuts, and would
require alternative funding arrangements 'through privatisation and potential
disinvestment in other services'.
Future privatisation of the health sector was of concern to some
witnesses and submitters. The Queensland Nurses Union and the Public Hospitals
Health and Medicare Alliance of Queensland elaborated, both submitting that
'creating a crisis in health spending provides the Federal Government with the
impetus to promote and implement its agenda to privatise the health sector.
They warned the cuts to hospital funding pose 'massive financial risk for most
low and middle income Australians'.
The Federal Government's decision to remove bulk-billing incentives for diagnostic
imaging and pathology services
has to be considered in the context of hospital funding. Any increase in
out-of-pocket cost which flow from this decision will mean patients are unable
to or less likely to utilise imaging and pathology services and as a result more
likely access more costly hospital services. Ms Bronwyn Nicholson, General Manager
of the I-MED Radiology Network in Queensland described the situation that providers
of diagnostic imagining and pathology are facing, with the Federal Government's
cuts planned to take effect on 1 July 2016:
If the bulk-bill incentive is removed then all of those
patients who are currently bulk-billed, what we call general patients, will
most likely have to incur a gap. There has been no increase in the Medicare
levy for diagnostic imaging for more than 18 years. As an industry, we have
spent a lot of time and money making our services as efficient as possible. The
continued increase in the cost of wages and other things and the costs of
running our business mean that the margins in our industry are small—sub double
figures—and it continues to be difficult for us to maintain a profitable
business and provide these services in the community.
The removal of the bulk-bill incentive will most likely see
some providers, in my opinion, drop out because they will not be able to
sustain the service. They will have to introduce gaps. What we know as an
industry is that when you put more out-of-pocket costs for patients, patients
choose not to come for their examination. So there is a relatively large
discretionary component to health care and patients choose not to attend for an
examination recommended by their doctor on the basis of cost. That has health
outcome issues. People choose not to have the test and they have a delay in
diagnosis; therefore, their health outcomes are reduced over time. I guess that
is an issue for us and we are concerned about that.
Ms Nicholson gave the committee an example of the effects of the cuts to
pathology services specific to the Gladstone area:
...for a patient who requires an imaging guided biopsy, which
is quite a common procedure for us, the radiologist would need to be in the
room with the patient and put the needle in, using the imaging to guide that
and draw a sample for pathology. So these are services that require a
radiologist to be in attendance. For some of those procedures, in order for us
to have radiologists in regional areas, there is a particular cost to having
medical specialists, and we need to try to offset some of the cost of providing
those services. So we do have some gaps for some things but, as I said, the
majority of our procedures in CT, ultrasound and nuclear medicine are
bulk-billed services. So if the bulk-billing incentive for those services to be
provided to general patients is removed then that is a 10 per cent drop in our
revenue for those patients, and we would most likely have to backfill that with
an out-of-pocket expense to those patients. So whilst it would not affect
patients who are pensioners and healthcare card holders—we would still be able
to offer them bulk-billed services—there would be a large cohort of general
patients who would not be able to access services without having to pay a gap
in a private sector. I think that would inhibit a lot of people from choosing
us. We have certainly seen in Gladstone a change in the demographic of the
patients here over the last two to three years. As the industry and some of the
projects here have come to the end, there has certainly been a drop in the
patients' ability to pay in our community here in the last, probably, 18
months. So that has impacted us. Similarly, we see the same in Rockhampton... I
think that probably what we would see is more patients pushing into the public
sector. As Senator Moore said, a patient in Gladstone would be able to go to
casualty, seek medical help there, get a referral and come through the public
sector, so the cost of that examination would fall back onto the public
The committee attended a site visit
at Central Queensland Medical Imaging in Gladstone on 27 April 2016.
State government response
The Queensland Minister for Health and Ambulance Services, the Hon
Cameron Dick MP, described the hospital funding cuts as a 'sick blow' to
Queensland, stating they are 'widespread, come without consultation, and will
hit Queensland hard'.
In responding to the Federal Government's cuts in the Queensland 2015-16
Budget, the Queensland Government allocated $11.6 billion to public
healthcare services at 81.6 per cent of the department's budget, including an
additional $2.3 billion over four years 'to ensure that health and
ambulance services keep pace with the ongoing growth in demand'.
The committee commends the Queensland Government for refusing to
pass on the most immediate impacts of government's funding cuts to public
hospitals across the state, but notes that the shortfall in funding remains
The message from Queensland witnesses and submitters was loud and clear:
funding cuts would reduce the capacity of hospitals to meet the growing needs
of their patients. With an ageing population set to grow by 20 per cent over
the next decade, and an increasing share of the nation's chronic disease burden,
the government cannot afford to reduce the resources it dedicates to Queensland
The committee believes that the Queensland Government cannot continue to
cover the Commonwealth's planned funding reductions, which will grow steadily
over time to a total of $10.7 billion by 2024-25.
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 Australians. 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.
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