The Mirror News

South Gippsland Hospital “financially viable” for now, despite State funding uncertainty

South Gippsland Hospital (SGH) in Foster is one of some 25 among Victoria’s 76 public health services told by the State Government that their usual annual funding will be cut by up to 30 per cent in 2024/2025 and to use their own financial assets if they have any.

The Mirror understands that the Victorian Department of Health met with executives of the affected health services late last week to advise them of the planned funding reductions.

It is believed that the savings derived from the cuts will be re-allocated to other health services within the State system, those whose budgets are in a cash deficit, in order to allow their hospital and care services to continue.

SGH won the 2023 Victorian Premier’s Best Small Health Service Award and was runner-up in the same category in 2022, with proven fiscal responsibility and soundness listed as part of the judging criteria.

SGH chief executive officer Paul Greenhalgh said that “I can confirm that we are one of the 25 mostly small rural health services in Victoria that have been directed to use some of their cash reserves for the rest of this and next financial year.

“This is also in the context of reduced State Government funding,” he said.

“So, SGH will be poorer this time next year, which isn’t ideal, but we will still be financially viable, with money in the bank to keep operations going. 

“There are real pressures across the system, and in a direct manner, I guess we’ve been asked to help because of broader system issues.

It is clear there are tensions within the system and questions are being asked about transparency and equity,” Mr Greenhalgh said.

“While it is a hard pill to swallow, the Department of Health have been supportive of SGH for many years, so you could say it’s swings and roundabouts.

“However, through excellent Board direction and executive management for many years, we have incrementally added to our State-funded acute care hospital service profile.

“SGH has also built up comprehensive and very successful community health and care services, such as the day respite service we offer at the Banksia Centre, that are enabled through Commonwealth funding and are now partially self-supporting.

“I have no doubt that this vision some years ago has ensured we are on solid financial ground and therefore SGH is able to meet the health and care needs of our community,” he said.

“We are going to have to review some aspects of how we work because of this situation, and changes will be made to some back-of-house arrangements.

“It’s important to note that there will be no changes to what services we offer for the foreseeable future, however there may be some reduction in capacity.

“Our doors will be open to serve those who need our help, whether it be in our birthing suite, urgent care setting, the inpatient ward, in our surgery unit, at one of our centres, or in your home,” Mr Greenhalgh said.  

“As for the health system reform discussion, including the possibility of a [Gippsland] regional amalgamation of 11 health services, we wait for the Government decision like everyone else.

“It is out of our control now, and when the decision is made, we will review the information and do all in our power to preserve our hospital service profile and our community care services.

“We know the Minister for Health is on record saying there will be no closures, which is great; we just need to ensure we keep our range of services running.

“This is an unsettling time for our staff however we have kept them in the loop, and they appear understanding of the complexity of the issue,” he said.

“Importantly, our clinical and support staff are showing up for work, as always, to provide the care you deserve, for which I am grateful, just like those receiving the health services they need in their own local area are, too.”

The Victorian Government’s draft Health Services Plan process, begun in late 2023, has prompted wide and strongly-held speculation that economic rationalisation of the State’s health services could result in amalgamation of services as a long-term cost-cutting measure.

However the Victorian Health Minister Mary-Anne Thomas was quoted on ABC Radio last week as saying that “there will be no hospital closures under my watch” but did not rule out the possibility of health service mergers.

An expert advisory committee appointed by the Government to advise on the draft Health Services Plan is apparently considering mergers as part of a range of options being investigated in regard to Victoria’s ongoing healthcare network, which currently consists of both large as well as many small, independently governed hospitals.

“We currently have 76 health services, all with their own boards,” Ms Thomas said.

“[This model] has served us well, but it is time to look at whether it is the right model for the future,” she said. “We are open to a range of ideas that might help us.”

One mooted scenario has Victoria’s 76 health services merging to become 12, with six health services for metropolitan Melbourne and regional Victoria divided into six sub-regions, with Gippsland becoming a single entity. Gippsland currently has 11 separate health services in operation, including South Gippsland Hospital in Foster, along with its immediate neighbours; Bass Coast Health Service at Wonthaggi, Gippsland Southern Health Service in Leongatha and Korumburra, Yarram and District Health Service, and Latrobe Regional Hospital in Traralgon.


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